Generally Accepted Accounting Principles and Premium Decorating
Chapter 9 — Test 1
Note: Most questions can be placed in more than one of the four achievement categories. The achievement chart designation provided here indicates the category that is predominant within the question. 1. For each of the following, choose the most appropriate response. 1) A one-year insurance policy was purchased for $960 on July 1, 20-1. On December 31, 20-1, it had an unexpired value of: a. $240. b. $480. c. $560. d. $400. e. none of the above. 2) The accountant did not prepare an entry to adjust the Supplies account at the end of the accounting period and, as a result: a. the Supplies account was overstated. b. the total expenses were understated. c. the net income was overstated. d. the owner’s equity was overstated. e. all of the above are true. 3) On the basis of the following data, what is the proper adjusting entry for June 30, the end of the fiscal year? • Supplies account balance before adjustment, $1 900 • Supplies physical inventory on June 30, $750 a. Debit Supplies $750; credit Supplies Expense $750. b. Debit Supplies Expense $750; credit Supplies $750. c. Debit Supplies Expense $1 900; credit Supplies $1 900. d. Debit Supplies $1 900; credit Supplies Expense $1 900. e. Debit Supplies Expense $1 150; credit Supplies $1 150. 4) The source of data for preparing closing entries is: a. the trial balance. b. the work sheet. c. the general ledger. d. all of the above. 5) Before the Income Summary account is closed, a credit balance represents the: a. total expenses for the accounting period. b. net loss for the accounting period. c. net income for the accounting period. d. total assets for the accounting period. 1. (cont.) 6) When all closing entries have been posted, a net income will be shown on the: a. credit side of the Drawings account. b. debit side of the Capital account. c. credit side of the Capital account. d. debit side of the Drawings account.
Note: Most questions can be placed in more than one of the four achievement categories. The achievement chart designation provided here indicates the category that is predominant within the question. 1. For each of the following, choose the most appropriate response. 1) A one-year insurance policy was purchased for $960 on July 1, 20-1. On December 31, 20-1, it had an unexpired value of: a. $240. b. $480. c. $560. d. $400. e. none of the above. 2) The accountant did not prepare an entry to adjust the Supplies account at the end of the accounting period and, as a result: a. the Supplies account was overstated. b. the total expenses were understated. c. the net income was overstated. d. the owner’s equity was overstated. e. all of the above are true. 3) On the basis of the following data, what is the proper adjusting entry for June 30, the end of the fiscal year? • Supplies account balance before adjustment, $1 900 • Supplies physical inventory on June 30, $750 a. Debit Supplies $750; credit Supplies Expense $750. b. Debit Supplies Expense $750; credit Supplies $750. c. Debit Supplies Expense $1 900; credit Supplies $1 900. d. Debit Supplies $1 900; credit Supplies Expense $1 900. e. Debit Supplies Expense $1 150; credit Supplies $1 150. 4) The source of data for preparing closing entries is: a. the trial balance. b. the work sheet. c. the general ledger. d. all of the above. 5) Before the Income Summary account is closed, a credit balance represents the: a. total expenses for the accounting period. b. net loss for the accounting period. c. net income for the accounting period. d. total assets for the accounting period. 1. (cont.) 6) When all closing entries have been posted, a net income will be shown on the: a. credit side of the Drawings account. b. debit side of the Capital account. c. credit side of the Capital account. d. debit side of the Drawings account.