ACC 201 FINAL EXAM QUESTIONS
AND ANSWERS ALL CORRECT
Which of the following is a true statement about closing the books of a corporation?
a. Expenses are closed to the Expense Summary account.
b. Only revenues are closed to the Income Summary account.
c. Revenues and expenses are closed to the Income Summary account.
d. Revenues, expenses, and the Dividends account are closed to the Income Summary
account. - Answer-c. Revenues and expenses are closed to the Income Summary
account.
A post-closing trial balance will show:
a. zero balances for all accounts.
b. zero balances for balance sheet accounts.
c. only balance sheet accounts.
d. only income statement accounts. - Answer-c. only balance sheet accounts
The following information is from the Income Statement of the Dirt Poor Laundry
Service:
Revenues
Service Revenue $6,500
Expenses
Salaries and Wages expense $ 2,450
Advertising expense 500
Rent expense 300
Supplies expense 200
Insurance expense 100
Total expenses 3,550
Net Income $2,950
The entry to close the expense accounts includes a:
a. credit to Income Summary for $3,550.
b. debit to Income Summary for $3,550.
c. debit to Salaries and Wages Expense for $2,450.
,d. credit to Retained Earnings for $3,550. - Answer-b. debit to Income Summary for
$3,550.
Which of the following steps in the accounting cycle usually occurs only at the end of a
company's annual accounting period?
a. Post to the ledger accounts.
b. Prepare financial statements.
c. Prepare adjusting trial balance.
d. Prepare a post-closing trial balance. - Answer-d. Prepare a post-closing trial balance
Sales revenue minus (less) cost of goods sold =
a. gross profit.
b. net profit.
c. net income.
d. marginal income. - Answer-a. gross profit
In a perpetual inventory system, cost of goods sold is recorded
a. on a daily basis.
b. on a monthly basis.
c. on an annual basis.
d. each time a sale occurs. - Answer-d. each time a sale occurs
A company using a perpetual inventory system that returns goods previously purchased
on credit would
a. debit Accounts Payable and credit Inventory.
b. debit Sales and credit Accounts Payable.
c. debit Cash and credit Accounts Payable.
d. debit Accounts Payable and credit Purchases. - Answer-a. debit Accounts Payable
and credit Inventory.
When using a perpetual inventory system, why are discounts credited to Inventory?
a. The discounts are debited to discount expense and thus the credit has to be made to
merchandise inventory.
b. The discounts reduce the cost of the inventory.
c. The discounts are a reduction of business expenses.
d. None of these answers choices are correct. - Answer-b. The discounts reduce the
cost of the inventory
Under the perpetual system, cash freight costs incurred by the buyer for the transporting
of goods is recorded in which account?
a. Freight Expense
, b. Freight-In
c. Inventory
d. Freight-Out - Answer-c. Inventory
The entry to record the return of goods from a customer would include a
a. debit to Sales Revenue.
b. credit to Sales Revenue.
c. debit to Sales Returns and Allowances.
d. credit to Sales Returns and Allowances. - Answer-c. debit to Sales Returns and
Allowances
The entry to record the receipt of payment within the discount period on a sale of $900
with terms of 2/10, n/30 will include a
a. credit to Sales Discounts for $18.
b. debit to Sales Revenue for $882.
c. credit to Accounts Receivable for $900.
d. credit to Sales Revenue for $900. - Answer-c. credit to Accounts Receivable for $900.
If total liabilities decreased by $25,000 and stockholder's equity increased by $5,000
during a period of time, then total assets must change by what amount and direction
using that same time period? - Answer-$20,000 decrease
Which of the following would not be reported on the balance sheet?
A. Accounts Receivable
B. Accounts Payable
C. Advertising Expense
D. Cash - Answer-C. Advertising Expense
The Accounts Payable account:
A. has a normal credit balance
B. is increased by a debit
C. is an asset
D. is increased when a company receives cash from customers - Answer-A. has a
normal credit balance
The best definition of assets is the
A. cash owned by the company.
B. collections of resources belonging to the company and the claims on these
resources.
C. owners' investment in the business.
AND ANSWERS ALL CORRECT
Which of the following is a true statement about closing the books of a corporation?
a. Expenses are closed to the Expense Summary account.
b. Only revenues are closed to the Income Summary account.
c. Revenues and expenses are closed to the Income Summary account.
d. Revenues, expenses, and the Dividends account are closed to the Income Summary
account. - Answer-c. Revenues and expenses are closed to the Income Summary
account.
A post-closing trial balance will show:
a. zero balances for all accounts.
b. zero balances for balance sheet accounts.
c. only balance sheet accounts.
d. only income statement accounts. - Answer-c. only balance sheet accounts
The following information is from the Income Statement of the Dirt Poor Laundry
Service:
Revenues
Service Revenue $6,500
Expenses
Salaries and Wages expense $ 2,450
Advertising expense 500
Rent expense 300
Supplies expense 200
Insurance expense 100
Total expenses 3,550
Net Income $2,950
The entry to close the expense accounts includes a:
a. credit to Income Summary for $3,550.
b. debit to Income Summary for $3,550.
c. debit to Salaries and Wages Expense for $2,450.
,d. credit to Retained Earnings for $3,550. - Answer-b. debit to Income Summary for
$3,550.
Which of the following steps in the accounting cycle usually occurs only at the end of a
company's annual accounting period?
a. Post to the ledger accounts.
b. Prepare financial statements.
c. Prepare adjusting trial balance.
d. Prepare a post-closing trial balance. - Answer-d. Prepare a post-closing trial balance
Sales revenue minus (less) cost of goods sold =
a. gross profit.
b. net profit.
c. net income.
d. marginal income. - Answer-a. gross profit
In a perpetual inventory system, cost of goods sold is recorded
a. on a daily basis.
b. on a monthly basis.
c. on an annual basis.
d. each time a sale occurs. - Answer-d. each time a sale occurs
A company using a perpetual inventory system that returns goods previously purchased
on credit would
a. debit Accounts Payable and credit Inventory.
b. debit Sales and credit Accounts Payable.
c. debit Cash and credit Accounts Payable.
d. debit Accounts Payable and credit Purchases. - Answer-a. debit Accounts Payable
and credit Inventory.
When using a perpetual inventory system, why are discounts credited to Inventory?
a. The discounts are debited to discount expense and thus the credit has to be made to
merchandise inventory.
b. The discounts reduce the cost of the inventory.
c. The discounts are a reduction of business expenses.
d. None of these answers choices are correct. - Answer-b. The discounts reduce the
cost of the inventory
Under the perpetual system, cash freight costs incurred by the buyer for the transporting
of goods is recorded in which account?
a. Freight Expense
, b. Freight-In
c. Inventory
d. Freight-Out - Answer-c. Inventory
The entry to record the return of goods from a customer would include a
a. debit to Sales Revenue.
b. credit to Sales Revenue.
c. debit to Sales Returns and Allowances.
d. credit to Sales Returns and Allowances. - Answer-c. debit to Sales Returns and
Allowances
The entry to record the receipt of payment within the discount period on a sale of $900
with terms of 2/10, n/30 will include a
a. credit to Sales Discounts for $18.
b. debit to Sales Revenue for $882.
c. credit to Accounts Receivable for $900.
d. credit to Sales Revenue for $900. - Answer-c. credit to Accounts Receivable for $900.
If total liabilities decreased by $25,000 and stockholder's equity increased by $5,000
during a period of time, then total assets must change by what amount and direction
using that same time period? - Answer-$20,000 decrease
Which of the following would not be reported on the balance sheet?
A. Accounts Receivable
B. Accounts Payable
C. Advertising Expense
D. Cash - Answer-C. Advertising Expense
The Accounts Payable account:
A. has a normal credit balance
B. is increased by a debit
C. is an asset
D. is increased when a company receives cash from customers - Answer-A. has a
normal credit balance
The best definition of assets is the
A. cash owned by the company.
B. collections of resources belonging to the company and the claims on these
resources.
C. owners' investment in the business.
