ACCT 101 EXAMPLE PROBLEMS EXAM
QUESTIONS
WITH VERIFIED ANSWERS
Question:
1. Amounts owed to suppliers for supplies purchased on account are an example of a(n):
Revenue. Liability. Expense. Asset.
Answer:
Liability
Question:
2. A company had the following amounts at the end of the year: Cash $ 11,200; Supplies
Expense 1,500; Dividends 2,600; Service Revenue 23,500; Prepaid Rent 4,300; Salaries
Expense 8,200; Accounts Payable 12,700; Land 36,900; What amount would the company
report for net income? Multiple Choice; $6,900; $42,300; $13,800; $11,200
Answer:
$13,800; Service Revenue ($23,500) − Supplies Expense ($1,500) − Salaries Expense
($8,200) = $13,800.
Question:
3. In what order are the following financial statements prepared: (1) balance sheet, (2)
income statement, and (3) statement of stockholders' equity? 2, 3, 1; 1, 2, 3; 3, 2, 1; 1, 3, 2
Answer:
2,3,1
Question:
4. A company receives a $50,000 cash deposit from a customer on October 15, but will not
provide services until November 20. Which of the following statements is true? The
company records nothing on October 15. The company records cash collection on
November 20. The company records deferred revenue on October 15. The company
records service revenue on October 15.
Answer:
The company records deferred revenue on October 15.
Question:
5. Emmitt had the following final balances after the first year of operations: assets,
$55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What
is the amount of Emmitt's liabilities? $30,000; $13,000; $7,000; $55,000
Answer:
$30,000; Assets ($55,000) = Liabilities ($30,000) + Stockholders' Equity ($25,000).
Question:
6. Which of the following is a balance sheet item? Cash; Utilities Expense; Net Income;
Dividends
Answer:
Cash
, Question:
7. Tyler Incorporated receives $150,000 from investors in exchange for shares of its
common stock. Tyler Incorporated records this transaction with a: Debit to Investments.
Credit to Service Revenue. Credit to Common Stock. Credit to Retained Earnings.
Answer:
Credit to common stock
Question:
8. Daniel Dino Restaurant owes employees' salaries of $15,000. How would this
transaction be recorded? Debit Salaries Expense, credit Salaries Payable; Debit Salaries
Expense, credit Cash; Debit Salaries Payable, credit Salaries Expense; Debit Salaries
Payable, credit Cash
Answer:
Debit Salaries Expense, credit Salaries Payable
Question:
9. Xenon Corporation borrows $75,000 from First Bank. Xenon Corporation records this
transaction with a: Credit to Notes Payable. Debit to Investments. Credit to Interest
Expense. Credit to Retained Earnings.
Answer:
Credit to notes payable
Question:
10. The ending Retained Earnings balance of Carriage, Incorporated decreased by $1.4
million from the beginning of the year. The company declared a dividend of $5.2 million
during the year. What was the net income for the year? $1.4 million; $6.6 million; $4.9
million; $3.8 million
Answer:
$3.8 million; Beginning Retained Earnings ($0) + Net Income ($3.8) − Dividends ($5.2) =
Ending Retained Earnings (−$1.4)
Question:
11. Pumpkin Incorporated sold $500 in pumpkins to a customer on account on January 1.
On January 11, Pumpkin collected the cash from that customer. What is the impact on
Pumpkin's accounting equation from the collection of cash? Decrease assets and decrease
liabilities. Increase assets and increase liabilities. Decrease assets and increase liabilities.
No net effect to the accounting equation.
Answer:
No net effect to the accounting equation
Question:
12. Paying salaries to employees for the current period would have what effect on the
accounting equation? Liabilities increase and stockholders' equity decreases. Assets
decrease and stockholders' equity decreases. Assets decrease and liabilities decrease.
Liabilities decrease and stockholders' equity increases.
Answer:
Assets decrease and stockholders' equity decreases.
QUESTIONS
WITH VERIFIED ANSWERS
Question:
1. Amounts owed to suppliers for supplies purchased on account are an example of a(n):
Revenue. Liability. Expense. Asset.
Answer:
Liability
Question:
2. A company had the following amounts at the end of the year: Cash $ 11,200; Supplies
Expense 1,500; Dividends 2,600; Service Revenue 23,500; Prepaid Rent 4,300; Salaries
Expense 8,200; Accounts Payable 12,700; Land 36,900; What amount would the company
report for net income? Multiple Choice; $6,900; $42,300; $13,800; $11,200
Answer:
$13,800; Service Revenue ($23,500) − Supplies Expense ($1,500) − Salaries Expense
($8,200) = $13,800.
Question:
3. In what order are the following financial statements prepared: (1) balance sheet, (2)
income statement, and (3) statement of stockholders' equity? 2, 3, 1; 1, 2, 3; 3, 2, 1; 1, 3, 2
Answer:
2,3,1
Question:
4. A company receives a $50,000 cash deposit from a customer on October 15, but will not
provide services until November 20. Which of the following statements is true? The
company records nothing on October 15. The company records cash collection on
November 20. The company records deferred revenue on October 15. The company
records service revenue on October 15.
Answer:
The company records deferred revenue on October 15.
Question:
5. Emmitt had the following final balances after the first year of operations: assets,
$55,000; stockholders' equity, $25,000; dividends, $3,000; and net income, $10,000. What
is the amount of Emmitt's liabilities? $30,000; $13,000; $7,000; $55,000
Answer:
$30,000; Assets ($55,000) = Liabilities ($30,000) + Stockholders' Equity ($25,000).
Question:
6. Which of the following is a balance sheet item? Cash; Utilities Expense; Net Income;
Dividends
Answer:
Cash
, Question:
7. Tyler Incorporated receives $150,000 from investors in exchange for shares of its
common stock. Tyler Incorporated records this transaction with a: Debit to Investments.
Credit to Service Revenue. Credit to Common Stock. Credit to Retained Earnings.
Answer:
Credit to common stock
Question:
8. Daniel Dino Restaurant owes employees' salaries of $15,000. How would this
transaction be recorded? Debit Salaries Expense, credit Salaries Payable; Debit Salaries
Expense, credit Cash; Debit Salaries Payable, credit Salaries Expense; Debit Salaries
Payable, credit Cash
Answer:
Debit Salaries Expense, credit Salaries Payable
Question:
9. Xenon Corporation borrows $75,000 from First Bank. Xenon Corporation records this
transaction with a: Credit to Notes Payable. Debit to Investments. Credit to Interest
Expense. Credit to Retained Earnings.
Answer:
Credit to notes payable
Question:
10. The ending Retained Earnings balance of Carriage, Incorporated decreased by $1.4
million from the beginning of the year. The company declared a dividend of $5.2 million
during the year. What was the net income for the year? $1.4 million; $6.6 million; $4.9
million; $3.8 million
Answer:
$3.8 million; Beginning Retained Earnings ($0) + Net Income ($3.8) − Dividends ($5.2) =
Ending Retained Earnings (−$1.4)
Question:
11. Pumpkin Incorporated sold $500 in pumpkins to a customer on account on January 1.
On January 11, Pumpkin collected the cash from that customer. What is the impact on
Pumpkin's accounting equation from the collection of cash? Decrease assets and decrease
liabilities. Increase assets and increase liabilities. Decrease assets and increase liabilities.
No net effect to the accounting equation.
Answer:
No net effect to the accounting equation
Question:
12. Paying salaries to employees for the current period would have what effect on the
accounting equation? Liabilities increase and stockholders' equity decreases. Assets
decrease and stockholders' equity decreases. Assets decrease and liabilities decrease.
Liabilities decrease and stockholders' equity increases.
Answer:
Assets decrease and stockholders' equity decreases.
