Answered: A check involves three parties. The…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. A check involves three parties. The person directed to receive the money is called the

a.endorser.

b.payee.

c.drawer.

d.drawee.

2. The time an asset is expected to last is called its

a.fiscal period.

b.depreciation.

c.useful life.

d.net loss value.

3. In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include

a.debiting Cash and crediting Miscellaneous Expense.

b.debiting Miscellaneous Expense and crediting Cash.

c.debiting Cash and crediting Owner's Capital.

d.debiting Accounts Payable and crediting Cash.

4. The journal entry to close revenue accounts includes

a.debiting the revenue accounts and crediting the drawing account.

b.debiting the revenue accounts and crediting Cash.

c.debiting the revenue accounts and crediting Income Summary.

d.debiting Income Summary and crediting the revenue accounts.

5. The petty cash payments record indicates classified expenditures as follows: Automobile Expense, $20; Supplies Expense, $12; Postage Expense, $6; and Miscellaneous Expense, $5. The journal entry to replenish the petty cash fund would include a credit to Cash for

a.$38.

b.$43.

c.$5.

d.$11.

6. Denise Cruz receives a regular salary of $900 a month and is entitled to overtime pay at the rate of one and one-half times the regular hourly rate for any time worked in excess of 40 hours per week. Cruz's overtime rate of pay is

a.$5.63.

b.$22.50.

c.$8.44.

d.$7.79.

7. The journal entry to close expense accounts includes

a.debiting Income Summary and crediting the expense accounts.

b.debiting the expense accounts and crediting the drawing account.

c.debiting the expense accounts and crediting Income Summary.

d.debiting the expense accounts and crediting the owner's capital account.

8. If a business records revenue when it is received and records the purchase of a building as an asset and makes adjustments to allocate the cost of the building over many accounting periods, the business accounting system is a(n)

a.adjustment basis of accounting.

b.cash basis of accounting.

c.modified cash basis of accounting.

d.accrual basis of accounting.

9. The Fair Labor Standards Act provides which of the following minimum rates to be paid to employees for all hours worked over 40 hours per week?

a.one and one-half times the regular rate

b.same rate as the regular rate

c.two and one-half times the regular rate

d.two times the regular rate

10. The total assets amount to $26,000 and the total liabilities amount to $18,000. The amount of the owner's equity is

a.$8,000.

b.$26,000.

c.$44,000.

d.$18,000.

11. To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

a.deposits in transit

b.amounts collected by the bank for the depositor's account

c.outstanding checks

d.service charge

12. The steps involved in handling all of the transactions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as

a.processing.

b.output.

c.input.

d.the accounting cycle.

13. The journal entry to close the income summary account (showing a profit) includes

a.debiting the drawing account and crediting Income Summary.

b.debiting the owner's capital account and crediting Income Summary.

c.debiting Income Summary and crediting the drawing account.

d.debiting Income Summary and crediting the owner's capital account.

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