Question 1

A transaction has been recorded in the general journal of Manella Company as follows:  Which of the following could be an explanation for this transaction?

Accepted Answer

The answer of A transaction has been recorded in the...

Question 2

A transaction has been recorded in the journal of Davis Company as follows:  Which of the following describes the effect of this transaction on the company's financial statements?

Accepted Answer

The given transaction code cannot be interpreted to determine its effect on financial statements. More information is needed to make a conclusion.

Question 3

Manhattan Company recorded an adjusting entry to accrue interest owed of $1,200 as of December 31, Year 1. When the related note was paid during Year 2, the company paid $2,250 in interest. Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.)

Accepted Answer

The answer of Manhattan Company recorded an adjusting entry to...

Question 4

Abbott Company purchased $6,500 of merchandise inventory on account. Which of the following entries would be required to record this transaction?

Accepted Answer

The entry required to record the purchase of merchandise inventory on account is a debit to Inventory and a credit to Accounts Payable. Option B shows this correctly, with a debit of $6,500 to Inventory and a credit of $6,500 to Accounts Payable. Option A is incorrect because it only shows a debit to Inventory; there needs to be a corresponding credit to Accounts Payable. Option C is incorrect because it shows a credit to Inventory, which is not correct when purchasing inventory on account. Option D is incorrect because it shows a credit to Cash, not Accounts Payable, indicating that the purchase was made with cash rather than on account.

Question 5

Which of the following statements about the entry to record depreciation is true?

Accepted Answer

The entry to record depreciation involves a credit to a contra-asset account, which is Accumulated Depreciation. This account is used to reduce the value of the asset being depreciated over time. Therefore, option D is the correct choice. Options A, B, and C are incorrect as they do not reflect the proper accounting treatment for depreciation. The entry to record depreciation involves a debit to Depreciation Expense and a credit to Accumulated Depreciation, which is a contra-asset account. This means that the credit is not to the asset being depreciated or a liability, but to a separate account that reduces the carrying value of the asset on the balance sheet.

Question 6

On August 1, Year 1, Bellisa Company issued a $46,000 6%, 5-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1?

Accepted Answer

The answer of On August 1, Year 1, Bellisa Company...

Question 7

Vargas Company purchased a computer for $4,000 on January 1, Year 1. The computer is estimated to have a 4-year useful life and a $1,000 salvage value. What adjusting entry would Vargas record on December 31, Year 1 to recognize expense related to use of the computer?

Accepted Answer

The answer of Vargas Company purchased a computer for $4,000...

Question 8

The following entry is taken from the journal of a merchandising company:  What is the effect of this entry on the company's financial statements?

Accepted Answer

The answer of The following entry is taken from the...

Question 9

The Youngstown Company recorded the following adjustment in general journal format:  Which of the following choices accurately reflects how this event would affect the company's financial statements?

Accepted Answer

The answer of The Youngstown Company recorded the following adjustment...

Question 10

Peterson Corporation recorded an adjusting entry using T-accounts as follows:   Which of the following reflects how this adjustment affects the company's financial statements?

Accepted Answer

The answer of Peterson Corporation recorded an adjusting entry using...

Question 11

Vargas Company purchased a computer for $3,000 on January 1, Year 1. The computer is estimated to have a 5-year useful life and a $500 salvage value. What adjusting entry would Vargas record on December 31, Year 1 to recognize expense related to use of the computer?

Accepted Answer

The answer of Vargas Company purchased a computer for $3,000...

Question 12

Abbott Company purchased $7,600 of merchandise inventory on account. Which of the following entries would be required to record this transaction?

Accepted Answer

The answer of Abbott Company purchased $7,600 of merchandise inventory...

Question 13

The adjusting entry to record an expense related to the use of a delivery van would involve which of the following?

Accepted Answer

The adjusting entry to record an expense related to the use of a delivery van would involve a debit to Depreciation Expense. This is because when a company uses a delivery van for business purposes, the van gradually loses value due to wear and tear, which is recognized as depreciation expense over time. Therefore, an adjusting entry is needed to recognize the depreciation expense for the period. Options A and B are related to the recording of the cost of the delivery van and its accumulated depreciation, but not to the recording of the expense related to its use. Option D is not applicable as it is not related to the recognition of an expense.

Question 14

The Lazarus Company recorded the following adjustment in general journal format:  Which of the following choices accurately reflects how this event would affect the company's financial statements?

Accepted Answer

The adjustment recorded in the general journal indicates that the company has earned $2,000 in revenue that has not yet been recorded. This means that revenue for the period has been understated by $2,000.

Option A is incorrect because it shows an overstatement of revenue by $2,000, which is the opposite effect of the adjustment recorded in the journal.

Option B is incorrect because it shows an understatement of both revenue and net income by $2,000, which is incorrect. The adjustment recorded in the journal only affects revenue and not expenses, so net income would only be affected if expenses were also adjusted.

Option D is incorrect because it shows an understatement of revenue by $2,000 instead of an overstatement, which is the opposite effect of the adjustment recorded in the journal.

Question 15

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.
Increase = I Decrease = DNot Affected = NA
A transaction recorded as a debit to Accounts Receivable and a credit to a revenue account.

Accepted Answer

The answer of Indicate how each event affects the financial...

Question 16

On August 1, Year 1, Bellisa Company issued a $10,000 6%, 1-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1?

Accepted Answer

The answer of On August 1, Year 1, Bellisa Company...

Question 17

Callahan Corporation recorded an adjusting entry using T-accounts as follows:   Which of the following reflects how this adjustment affects the company's financial statements?

Accepted Answer

The adjustment recorded would increase both the company's assets and expenses, causing a decrease in net income and retained earnings. This would be reflected in Option B, where cash and rent expense increase, the net income decreases, and retained earnings decrease. Option A shows a decrease in assets, but the adjustment recorded would actually increase assets. Option C shows an increase in both assets and liabilities, which would not be the case with this adjustment. Option D shows an increase in liabilities, but the adjustment recorded would not have affected liabilities.

Question 18

A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. Which of the following is the result of this error?

Accepted Answer

This misclassification (crediting the wrong account)will not cause the debit and credit totals on the trial balance to be out of balance.Crediting an asset (Cash)instead of crediting a liability (Interest Payable)would understate total assets and understate total liabilities.That error has no effect on net income.

Question 19

A transaction has been recorded in the general journal of Deluty Company as follows:  Which of the following describes the effect of this transaction on the company's financial statements?

Accepted Answer

The answer of A transaction has been recorded in the...

Question 20

Manhattan Company recorded an adjusting entry to accrue interest owed of $300 as of December 31, Year 1. When the related note was paid during Year 2, the company paid $450 in interest. Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.)

Accepted Answer

The answer of Manhattan Company recorded an adjusting entry to...

Quiz 13: The Double-Entry Accounting System

A transaction has been recorded in the general journal of Manella Company as follows: Which of the following could be an explanation for this transaction?

A transaction has been recorded in the journal of Davis Company as follows: Which of the following describes the effect of this transaction on the company's financial statements?

Abbott Company purchased $6,500 of merchandise inventory on account. Which of the following entries would be required to record this transaction?

Which of the following statements about the entry to record depreciation is true?

On August 1, Year 1, Bellisa Company issued a $46,000 6%, 5-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1?

Vargas Company purchased a computer for $4,000 on January 1, Year 1. The computer is estimated to have a 4-year useful life and a $1,000 salvage value. What adjusting entry would Vargas record on December 31, Year 1 to recognize expense related to use of the computer?

The following entry is taken from the journal of a merchandising company: What is the effect of this entry on the company's financial statements?

The Youngstown Company recorded the following adjustment in general journal format: Which of the following choices accurately reflects how this event would affect the company's financial statements?

Peterson Corporation recorded an adjusting entry using T-accounts as follows: Which of the following reflects how this adjustment affects the company's financial statements?

Vargas Company purchased a computer for $3,000 on January 1, Year 1. The computer is estimated to have a 5-year useful life and a $500 salvage value. What adjusting entry would Vargas record on December 31, Year 1 to recognize expense related to use of the computer?

Abbott Company purchased $7,600 of merchandise inventory on account. Which of the following entries would be required to record this transaction?

The adjusting entry to record an expense related to the use of a delivery van would involve which of the following?

The Lazarus Company recorded the following adjustment in general journal format: Which of the following choices accurately reflects how this event would affect the company's financial statements?

On August 1, Year 1, Bellisa Company issued a $10,000 6%, 1-year note to Citizens Bank. Which of the following entries reflects the adjustment required as of December 31, Year 1?

Callahan Corporation recorded an adjusting entry using T-accounts as follows: Which of the following reflects how this adjustment affects the company's financial statements?

A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. Which of the following is the result of this error?

A transaction has been recorded in the general journal of Deluty Company as follows: Which of the following describes the effect of this transaction on the company's financial statements?