MGT 103 MIDTERM 1 PRACTICE QUESTIONS &
VERIFIED ANSWERS
Paid $100 for one year's rent. The journal entry would include:
a. A credit to accounts payable
b. A credit to cash
c. A credit to rent revenue
d. No journal entry is needed - Answers - b. A credit to cash
Purchased $500 of supplies on account. The journal entry would include:
a. A debit to inventory expense
b. A debit to accounts receivable
c. A debit to supplies
d. No journal entry is needed - Answers - c. A debit to supplies
True or False: An overstatement of ending inventory would cause net income to be
overstated. - Answers - True
Accrued interest on a note receivable at the end of the period equals $120. Omission of
this entry would cause which of the following:
a. Net income is understated and retained earnings is understated
b. Net income is overstated and retained earnings is overstated
c. Net income is understated and retained earnings is overstated
d. No effect on the income statement - Answers - a. Net income is understated and
retained earnings is understated
Employees are owed $3,000 of wages at the end of the year. Omission of the adjusting
entry would include:
a. Net income is overstated and assets are overstated
b. Net income is overstated and liabilities are understated
c. Net income overstated and liabilities are overstated
d. None of the above - Answers - b. Net income is overstated and liabilities are
understated
A general journal:
a. contains one record for each account
b. chronologically lists all transactions expressed in debits and credits
c. lists all the increases and decreases in each account in one place - Answers - b.
chronologically lists all transactions expressed in debits and credits
(a = trial balance, c = general ledger)
A journal entry to record a payment on account would include:
a. debit to Accounts Receivable
VERIFIED ANSWERS
Paid $100 for one year's rent. The journal entry would include:
a. A credit to accounts payable
b. A credit to cash
c. A credit to rent revenue
d. No journal entry is needed - Answers - b. A credit to cash
Purchased $500 of supplies on account. The journal entry would include:
a. A debit to inventory expense
b. A debit to accounts receivable
c. A debit to supplies
d. No journal entry is needed - Answers - c. A debit to supplies
True or False: An overstatement of ending inventory would cause net income to be
overstated. - Answers - True
Accrued interest on a note receivable at the end of the period equals $120. Omission of
this entry would cause which of the following:
a. Net income is understated and retained earnings is understated
b. Net income is overstated and retained earnings is overstated
c. Net income is understated and retained earnings is overstated
d. No effect on the income statement - Answers - a. Net income is understated and
retained earnings is understated
Employees are owed $3,000 of wages at the end of the year. Omission of the adjusting
entry would include:
a. Net income is overstated and assets are overstated
b. Net income is overstated and liabilities are understated
c. Net income overstated and liabilities are overstated
d. None of the above - Answers - b. Net income is overstated and liabilities are
understated
A general journal:
a. contains one record for each account
b. chronologically lists all transactions expressed in debits and credits
c. lists all the increases and decreases in each account in one place - Answers - b.
chronologically lists all transactions expressed in debits and credits
(a = trial balance, c = general ledger)
A journal entry to record a payment on account would include:
a. debit to Accounts Receivable
