ACC231 Spring 2017
Student Name Student ID Number
Date of Exam Friday, February 3, 2017
Time Period Start time: 2:05 End time: 2:45
Number of Exam Pages 14 (including this cover sheet)
Additional Materials Allowed Cordless calculators may be used. The calculator
must be standalone with no communication or data
storage features.
Both the examination paper and multiple choice scantron must be submitted.
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Course Abbreviation and Number: ACC 231
Course Title: Uses of Accounting Information
Class # 17543
Professor Mindy Wolfe
ACC231 Spring 2017
1. The ________ issues pronouncements that are guidelines for accounting practice in the
U.S.
A) GAAP
B) SEC
C) FASB
D) IRS
Answer: C
2. The guidelines that describe the rules of accounting in the U.S. are called:
A) IFRS.
B) GAAP.
C) FASB.
D) SEC.
Answer: B
3. The guidelines that describe the rules of accounting internationally are called:
A) IFRS.
B) GAAP.
C) FASB.
D) SEC.
Answer: A
4. Which of the following is considered an asset?
A) Accounts Payable
B) Sales
C) Accounts Receivable
D) Common Stock
Answer: C
5. A business purchases a computer for cash. What effect does this have on the accounting
equation?
A) Stockholders' Equity and Assets increase.
B) There is no change in Total Assets.
C) Assets increase and Liabilities decrease
D) Stockholders' Equity and Liabilities increase.
Answer: B
6. Crispy's is famous for their cupcakes. Crispy'sTotal Assets were $350,000 and Total
Liabilities were $135,500. How much was Crispy's Stockholders' Equity?
A) $485,500
B) $350,000
C) $214,500
D) Some other number
Answer: C
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ACC231 Spring 2017
7. Liabilities are defined as:
A) earnings retained in the business.
B) amounts owed to lenders or creditors.
C) stockholders' claims to assets.
D) future economic benefits of a company.
Answer: B
8. Assets are defined as:
A) earnings retained in the business.
B) amounts owed to others.
C) stockholders' claims to assets.
D) economic resources of a company.
Answer: D
9. Which of the following are NOT part of Stockholders' Equity?
A) Profits retained in the business
B) Money lent to a business
C) The owners' claim on the assets of a company
D) Money invested in a business by its owners
Answer: B
10. Which of the following is a disadvantage of the corporate form of business?
A) Ease of raising capital
B) Double taxation
C) Limited resources
D) Limited liability
Answer: B
11. If revenues are recognized and recorded when earned, the company is using the:
A) cash basis of accounting.
B) accrual basis of accounting.
C) adjustment basis of accounting.
D) the expense basis of accounting.
Answer: B
12. Your company purchases office equipment for $1,300 on account from Supplies-for-Less.
The journal entry you would record is a:
A) debit to Office Equipment and a credit to Cash.
B) credit to Cash and a debit to Office Equipment Expense.
C) debit to Office Equipment and a credit to Accounts Payable.
D) debit to Accounts Payable and a credit to Cash.
Answer: C
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ACC231 Spring 2017
13. Salaries of $1,025 were incurred and paid in cash. The journal entry would include a:
A) debit to Salaries Expense and a credit to Cash.
B) credit to Salaries Expense and a debit to Cash.
C) debit to Accounts Payable and a credit to Cash.
D) debit to Accounts Payable and a credit to Salary Expense.
Answer: A
14. Your company performed a service for a client and charged $10,000 which was paid in
cash at the time of service. The journal entry to record this transaction is a:
A) debit to Revenue and a credit to Cash for $10,000.
B) debit to Cash and a credit to Revenue for $10,000.
C) debit to Cash and a credit to Dividends for $10,000.
D) debit to Revenue and a credit to Dividends for $10,000.
Answer: B
15. Given the following T-Account information, what is the balance of the supplies account?
Supplies
DR CR
1/4 $250
1/12 $420 1/16 $195
A) $475 debit balance
B) $475 credit balance
C) $670 debit balance
D) $195 credit balance
Answer: A
16. The ________ keeps a running balance of an individual account.
A) general journal
B) Balance Sheet
C) general ledger
D) posting reference
Answer: C
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ACC231 Spring 2017
17. What is a Trial Balance?
A) A financial statement that reports the assets, liabilities, and stockholders’ equity of a
business at a specific point in time.
B) A list of all the accounts of a business and their balances; one purpose is to verify
that total debits equal total credits.
C) A financial statement that reports the revenues and expenses of a business during a
given period of time.
D) The chronological accounting record of the transactions of a business.
Answer: B
18. The ___________ account tracks a company's cumulative earnings less dividends.
A) Retained Earnings
B) Cash
C) Common Stock
D) Revenues
Answer: A
19. Expenses paid in advance such as rent and insurance are classified as prepaid expenses.
What type of account is prepaid rent?
A) Liabilities
B) Revenues
C) Expenses
D) Assets
Answer: D
20. You have exam B. Please fill in the B bubble for Q. 20 on your scantron.
21. Which of the following is NOT a liability?
A) Accounts Payable
B) Interest Payable
C) Rent Expense
D) All of the above are liabilities.
Answer: C
22. Accounts Payable, Taxes Payable, and Notes Payable:
A) increase on the debit side, decrease on the credit side and are assets.
B) decrease on the debit side, increase on the credit side and are liabilities.
C) increase on the debit side, decrease on the credit side and are expenses.
D) decrease on the debit side, increase on the credit side and are revenues.
Answer: B
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ACC231 Spring 2017
23. An example of accounts with normal debit balances would be:
A) liabilities.
B) expenses.
C) revenues.
D) Stockholders' Equity.
Answer: B
24. In December 2016 Trivago had an IPO (initial public offering) in which they received
$300m in cash from investors in exchange for Trivago common stock. To record the sale
of stock Trivago would record the following journal entry:
A) debit to Cash for $300m and a credit to Sales for $300m.
B) debit to Cash for $300m and a credit to Common Stock for $300m.
C) debit to Common Stock for $300m and a credit to Cash for $300m.
D) debit to Cash for $300m and a credit to Dividends for $300m.
Answer: B
25. Coyote Co. paid $8,000 rent in advance. Coyote Co.’s journal entry would require a:
A) debit to Cash, credit to Rent Expense.
B) debit to Cash, credit to Prepaid Rent.
C) debit to Rent Expense, credit to Cash.
D) debit to Prepaid Rent, credit to Cash.
Answer: D
26. At the beginning of the period, the Supplies account has a balance of $700. At the end of
the period, the balance in the account was $475. The adjusting entry would be:
A) debit Supplies Expense, $475; credit Supplies, $475.
B) debit Supplies, $475; credit Supplies Expense, $475.
C) debit Supplies Expense, $225; credit Supplies, $225.
D) debit Supplies, $225; credit Supplies Expense, $225.
Answer: C
27. A piece of equipment cost $700 and has a salvage value of $500. If it has a 5-year life,
the annual depreciation expense under straight-line depreciation would be:
A) $140.
B) $40.
C) $500.
D) $200.
Answer: B
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ACC231 Spring 2017
28. The difference between the original cost of office equipment and accumulated
depreciation–office equipment is called:
A) market value.
B) salvage value.
C) book value.
D) original value.
Answer: C
29. Annual depreciation on equipment at Charmed, Inc.is $1,800. The adjusting entry to
record one month's worth of depreciation would be:
A) Debit Depreciation Expense $150, credit Cash $150
B) Debit Depreciation Expense $150, credit Accumulated Depreciation $150
C) Debit Depreciation Expense $1,800 credit Cash $1,800
D) Debit Depreciation Expense $1,800, credit Accumulated Depreciation $1,800
Answer: B
30. The matching principle in accounting requires the matching of:
A) revenue earned with the assets used to produce the revenue.
B) revenue earned with the assets used less the liabilities incurred.
C) revenue earned with the liabilities used to produce the revenue.
D) revenue earned with the expenses incurred to produce the revenue.
Answer: D
31. The total revenues of $6,700, total expenses of $3,900 and dividends of $900 were
recorded in the closing entries. The net income for the month was:
A) $5,800.
B) $2,800.
C) $1,900.
D) $3,700.
Answer: B
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ACC231 Spring 2017
32. In 2016 Nike’s net income was $3.8B. They recorded $32.4B in Revenues and $28.6B in
expenses. Their closing entry for 2016 is:
A) DR Revenue $32.4B
CR Expenses $28.6B
CR Retained Earnings $ 3.8B
B) DR Expenses $28.6B
DR Retained Earnings $ 3.8B
CR Revenue $32.4B
C) DR Retained Earnings $28.6B
CR Common Stock $28.6B
D) DR Retained Earnings $28.6B
CR Dividends $28.6B
Answer: A
33. Revenues, Accounts Receivable, and Common Stock have normal balances of:
A) credit, debit, and credit, respectively.
B) debit, debit, and credit, respectively.
C) credit, credit, and credit, respectively.
D) debit, debit, and debit, respectively.
Answer: A
Extra Credit
34. Kar Buffs, Inc. washed 130 cars this past month. They charge $10 per car for a wash. The
company's only expenses during this month were $93 utilities/water, $300 wages and $41
for soap. The wages were paid during the month, but the utility bill and soap bills were
not. What is Acme's income or loss for this month assuming Kar Buffs uses accrual
accounting?
A) It is impossible to calculate from the given information, because the amount of
revenue received in cash is not known.
B) $1,000 net income
C) $907 net income
D) $866 net income
Answer: D
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