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Revenue recognition and other practice exam questions

1. Ã? Revenue should be recognized when:?Ã? 
Ã? 
- cash is received.
Ã?  - the service is performed.
Ã?  - the customer places an order.
Ã?  - the customer charges an order.

2. Ã? Which statement(s) concerning cash is (are) true??Ã? 
Ã? 
- cash will always have more debits than credits.
Ã?  - cash will never have a credit balance.
Ã?  - cash is increased by debiting.
Ã?  - all of the above.

3. Ã? A debit may signify a(n):?Ã? 
Ã?  - decrease in asset accounts.
Ã?  - decrease in liability accounts.
Ã?  - increase in the capital account.
Ã?  - decrease in the drawing account.

4. Ã? The payment for the monthly rent will require the following entry:?Ã? 
Ã? 
- Debit Cash and Debit Rent Expense.
Ã?  - Credit Cash and Credit Rent Expense.
Ã?  - Debit Rent Expense and Credit Cash.
Ã?  - Credit Rent Expense and Debit Cash.

5. Ã? Which of the following is true regarding normal balances of accounts??Ã? 
Ã? 
- All accounts have a normal debit balance.
- The normal balance of all accounts will have either a positive or negative balance.
- Accounts that have a normal debit balance will only have debit entries, never credit entries.
Ã?  - The normal balance is the side of the account that increases the account.

Ã? 6. Ã? An overpayment error was discovered in computing and paying the wages of a Jamison Tree Trimming employee. When Jamison receives cash from the employee for the amount of the overpayment, which of the following entries will Jamison make??Ã? 

- Cash, debit; Wages Expense, credit.
Ã?  - wages Payable, debit; Wages Expense, credit.
Ã?  - Wages Expense, debit, Cash, credit.
Ã?  - Cash, debit; Wages Payable, credit.

7. Ã? Supplies purchased on account were incorrectly recorded as Office Equipment. The correcting entry would be:?Ã? 

Ã?  - Supplies, debit; Office Equipment, credit.
Ã?  - Accounts Receivable, debit; Supplies, credit.
Ã?  - Office Equipment, debit; Supplies Expense, credit.
Ã?  - Supplies, debit; Accounts Payable, credit.

8. Ã? If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be overstated.

Ã?  TRUE
Ã?  FALSE

9. Ã? If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry??Ã? 

- decreases the balance of an owner's equity account.
Ã? - increases the balance of a liability account.
Ã? - increases the balance of an asset account.
Ã? - decreases the balance of an expense account.

10. Ã? Which account would normally not require an adjusting entry?

Ã?  - Wages Expense
Ã?  - Accounts Receivable
Ã?  - Accumulated Depreciation
Ã?  - Smith, Capital

11. Ã? The balance in the supplies account, before adjustment at the end of the year is $725. The proper adjusting entry if the amount of supplies on hand at the end of the year is $300 would be:?Ã? 
Ã? 
- debit Cash $300, credit Supplies $300
Ã? - debit Supplies Expense $425, credit Supplies $425
Ã? - debit Supplies Expense $300, credit Supplies $300
Ã? - debit Supplies $425, credit Supplies Expense $425

12. Ã? The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statements by having:?Ã? 

- expenses understated and therefore net income overstated
Ã? - revenues understated and therefore net income understated
Ã? - expenses understated and therefore net income understated
Ã? - expenses overstated and therefore net income understated

Solution Preview

Accounting Practice Problems
1. Revenue should be recognized when:?

- cash is received.
- ***the service is performed. (do the thing for the customer)
- the customer places an order.
- the customer charges an order.

2. Which statement(s) concerning cash is (are) true??

- cash will always have more debits than credits.
- cash will never have a credit balance. (can be overdrawn but it is a bad idea!)
- ***cash is increased by debiting.
- all of the above.

3. A debit may signify a(n):?
- decrease in asset accounts.
- **decrease in liability accounts.
- increase in the capital account.
- decrease in the drawing account.

4. The payment for the monthly rent will require the following entry:?

- Debit Cash and Debit Rent Expense.
- Credit Cash and Credit Rent Expense.
- ***Debit Rent Expense and Credit Cash.
- Credit Rent Expense and Debit Cash.

5. Which of the following is ...

Solution Summary

Your tutorial indicates the best choice with instructional comments.

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