Wall Street Prep Accounting Crash Course Exam (Version 1 & 2) Includes
Accurate And Verified Questions
A company that sells smartphones and other computer devices has collected $500,000 in cash and an
additional $100,000 is due within the next 30 days for sales that it has made. It has already shipped all
the merchandise. Which of the following show the correct journal entries for these activities?
A) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings for
$500,000, Credit Deferred Revenue for $100,000.
B) Credit cash for $500,000, Credit Accounts Receivable for $100,000, Debit Retained Earnings for
$600,000.
C) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings for
$600,000.
D) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Inventory for $600,000.
E) Credit cash for $500,000, Credit Accounts Receivable for $100,000, Debit Inventory for $600,000. -
ANSWER-C) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings
for $600,000.
A company that sells smartphones prepays $20,000 to cover the next 12 months' worth of utilities.
Which of the following shows the correct journal entries for these activities?
A) Debit retained earnings for $20,000 and credit cash for $20,000.
B) Credit retained earnings for $20,000 and debit cash for $20,000.
C) Debit prepaid expenses for $20,000 and credit cash for $20,000.
D) Credit prepaid expenses for $20,000 and debit cash for $20,000. - ANSWER-C) Debit prepaid expenses
for $20,000 and credit cash for $20,000.
On June 30, 2020, a company that sells smartphones prepaid $50,000 to cover the next 12 months'
worth of utilities. 6 months later, the company reports their annual results.
Assuming no adjustments have been made since the original journal entries, what journal entries should
be made when reporting the annual results?
A) No adjustment is required until June 30, 2021.
B) Credit prepaid expenses for $25,000 and debit retained earnings for $25,000.
,C) Debit prepaid expenses for $25,000 and credit retained earnings for $25,000.
D) Debit prepaid expenses for $25,000 and credit cash for $25,000. - ANSWER-B) Credit prepaid
expenses for $25,000 and debit retained earnings for $25,000.
Imagine two identical companies, with only one difference - Company A reports using LIFO, while
Company B reports using FIFO. Assume that prices of inventories steadily rise over time.
Which of the following is correct?
A) Company A will report lower net income than company B
B) Company A will report higher PP&E than company B.
C) Company A will report higher total assets than company B.
D) Company A and Company B will have identical shareholders equity balances. - ANSWER-A) Company A
will report lower net income than company B
Amazonia, an online retailer, lost $50 million in inventory due to a fire. Which of the following journal
entries will likely occur as a result?
A) $50 million debit to inventory and $50 million credit to retained earnings
B) $50 million debit to inventory and $50 million credit to cash
C) $50 million credit to inventory and $50 million debit to retained earnings
D) $50 million credit to inventory and $50 million debit to cash - ANSWER-C) $50 million credit to
inventory and $50 million debit to retained earnings
On January 1, 2020, a company purchases equipment with a useful life of 5 years for $50 million. The
company uses straight-line depreciation and has assumed no residual value for the company. On January
1, 2023, the company sells the equipment for $45 million.
Which of the following is correct?
A) When the company sells the equipment, it will recognize a $15 million gain on sale on the income
statement.
B) When the company sells the equipment, it will recognize a $5 million loss on sale on the income
statement.
C) When the company sells the equipment, it will recognize a $25 million gain on sale on the income
statement.
,D) When the company sells the equipment, it will recognize a $45 million gain on sale on the income
statement. - ANSWER-C) When the company sells the equipment, it will recognize a $25 million gain on
sale on the income statement.
During 2014, Boston Company's assets increased $95,500 and the liabilities decreased $17,300. Boston
Company's stockholders' equity at December 31, 2014 was $211,500. What amount was stockholders'
equity at January 1, 2014? - ANSWER-$98,700
Consider a single business transaction's impact on the balance sheet. Which of the following could NOT
possibly occur as a result of this single transaction?
A) An increase in an asset and a decrease in an asset.
B) A decrease in stockholders' equity and a decrease in an asset.
C) An increase in a liability and a decrease in an asset.
D) An increase in stockholders' equity and an increase in an asset. - ANSWER-C) An increase in a liability
and a decrease in an asset.
A company's June 1, 2014 balance sheet reported total assets of $150,000 and total liabilities of $60,000.
During June 2014, the company completed the following transactions:
- Paid a note payable using $10,000 cash (no interest was paid)
- Collected a $9,000 accounts receivable
- Paid a $5,000 accounts payable
- Purchased a truck for $5,000 cash and by signing a $20,000 note payable from a bank.
The company's June 30, 2014 balance sheet would report which of the following?
A) $150,000 assets, $60,000 liabilities, $90,000 Stockholder's Equity
B) $155,000 assets, $65,000 liabilities, $90,000 Stockholder's Equity
C) $160,000 assets, $75,000 liabilities, $85,000 Stockholder's Equity
D) $170,000 assets, $100,000 liabilities, $70,000 Stockholder's Equity - ANSWER-Option B) $155,000
assets, $65,000 liabilities, $90,000 Stockholder's Equity
A company's June 1, 2014 balance sheet reported total assets of $120,000 and total liabilities of $40,000.
During June 2014, the following transactions occurred:
1. The company issued stock and collected cash totaling $30,000.
, 2. The company paid an account payable of $6,000.
3. The company purchased supplies for $1,000 with cash.
4. The company purchased land for $60,000 by paying $10,000 with cash and signing a note payable for
the balance.
What is total stockholders' equity after the transactions above? - ANSWER-$110,000
Lemon has provided the following information for its recent year of operation:
- The common stock account balance at the beginning of the year was $20,000 and the year-end balance
was $25,000.
- The additional paid-in capital account balance increased $2,500 during the year.
- The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was
$91,000.
- Net income was $26,000.
How much were Lemon's dividends during its recent year of operation? - ANSWER-$10,000
(Ending retained Earnings = Beginning Retained Earnings + Net Income - Dividends declared)
At the beginning of April, Jamie Corporation's assets totaled $240,000 and liabilities totaled $60,000.
During April, the following summarized transactions occurred:
- Additional shares of stock were sold for $20,000 cash.
- A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note
payable.
- Short-term investments costing $9,000 were purchased using cash.
- $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for the
loan.
How much are Jamie's total assets at the end of April? - ANSWER-$345,000
ABC Company's total stockholders' equity at the beginning of the year was $200,000. During the year
ABC reported the following:
- Net loss of $30,000.
- Stock issued in exchange for land totaling $80,000.
Accurate And Verified Questions
A company that sells smartphones and other computer devices has collected $500,000 in cash and an
additional $100,000 is due within the next 30 days for sales that it has made. It has already shipped all
the merchandise. Which of the following show the correct journal entries for these activities?
A) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings for
$500,000, Credit Deferred Revenue for $100,000.
B) Credit cash for $500,000, Credit Accounts Receivable for $100,000, Debit Retained Earnings for
$600,000.
C) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings for
$600,000.
D) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Inventory for $600,000.
E) Credit cash for $500,000, Credit Accounts Receivable for $100,000, Debit Inventory for $600,000. -
ANSWER-C) Debit cash for $500,000, Debit Accounts Receivable for $100,000, Credit Retained Earnings
for $600,000.
A company that sells smartphones prepays $20,000 to cover the next 12 months' worth of utilities.
Which of the following shows the correct journal entries for these activities?
A) Debit retained earnings for $20,000 and credit cash for $20,000.
B) Credit retained earnings for $20,000 and debit cash for $20,000.
C) Debit prepaid expenses for $20,000 and credit cash for $20,000.
D) Credit prepaid expenses for $20,000 and debit cash for $20,000. - ANSWER-C) Debit prepaid expenses
for $20,000 and credit cash for $20,000.
On June 30, 2020, a company that sells smartphones prepaid $50,000 to cover the next 12 months'
worth of utilities. 6 months later, the company reports their annual results.
Assuming no adjustments have been made since the original journal entries, what journal entries should
be made when reporting the annual results?
A) No adjustment is required until June 30, 2021.
B) Credit prepaid expenses for $25,000 and debit retained earnings for $25,000.
,C) Debit prepaid expenses for $25,000 and credit retained earnings for $25,000.
D) Debit prepaid expenses for $25,000 and credit cash for $25,000. - ANSWER-B) Credit prepaid
expenses for $25,000 and debit retained earnings for $25,000.
Imagine two identical companies, with only one difference - Company A reports using LIFO, while
Company B reports using FIFO. Assume that prices of inventories steadily rise over time.
Which of the following is correct?
A) Company A will report lower net income than company B
B) Company A will report higher PP&E than company B.
C) Company A will report higher total assets than company B.
D) Company A and Company B will have identical shareholders equity balances. - ANSWER-A) Company A
will report lower net income than company B
Amazonia, an online retailer, lost $50 million in inventory due to a fire. Which of the following journal
entries will likely occur as a result?
A) $50 million debit to inventory and $50 million credit to retained earnings
B) $50 million debit to inventory and $50 million credit to cash
C) $50 million credit to inventory and $50 million debit to retained earnings
D) $50 million credit to inventory and $50 million debit to cash - ANSWER-C) $50 million credit to
inventory and $50 million debit to retained earnings
On January 1, 2020, a company purchases equipment with a useful life of 5 years for $50 million. The
company uses straight-line depreciation and has assumed no residual value for the company. On January
1, 2023, the company sells the equipment for $45 million.
Which of the following is correct?
A) When the company sells the equipment, it will recognize a $15 million gain on sale on the income
statement.
B) When the company sells the equipment, it will recognize a $5 million loss on sale on the income
statement.
C) When the company sells the equipment, it will recognize a $25 million gain on sale on the income
statement.
,D) When the company sells the equipment, it will recognize a $45 million gain on sale on the income
statement. - ANSWER-C) When the company sells the equipment, it will recognize a $25 million gain on
sale on the income statement.
During 2014, Boston Company's assets increased $95,500 and the liabilities decreased $17,300. Boston
Company's stockholders' equity at December 31, 2014 was $211,500. What amount was stockholders'
equity at January 1, 2014? - ANSWER-$98,700
Consider a single business transaction's impact on the balance sheet. Which of the following could NOT
possibly occur as a result of this single transaction?
A) An increase in an asset and a decrease in an asset.
B) A decrease in stockholders' equity and a decrease in an asset.
C) An increase in a liability and a decrease in an asset.
D) An increase in stockholders' equity and an increase in an asset. - ANSWER-C) An increase in a liability
and a decrease in an asset.
A company's June 1, 2014 balance sheet reported total assets of $150,000 and total liabilities of $60,000.
During June 2014, the company completed the following transactions:
- Paid a note payable using $10,000 cash (no interest was paid)
- Collected a $9,000 accounts receivable
- Paid a $5,000 accounts payable
- Purchased a truck for $5,000 cash and by signing a $20,000 note payable from a bank.
The company's June 30, 2014 balance sheet would report which of the following?
A) $150,000 assets, $60,000 liabilities, $90,000 Stockholder's Equity
B) $155,000 assets, $65,000 liabilities, $90,000 Stockholder's Equity
C) $160,000 assets, $75,000 liabilities, $85,000 Stockholder's Equity
D) $170,000 assets, $100,000 liabilities, $70,000 Stockholder's Equity - ANSWER-Option B) $155,000
assets, $65,000 liabilities, $90,000 Stockholder's Equity
A company's June 1, 2014 balance sheet reported total assets of $120,000 and total liabilities of $40,000.
During June 2014, the following transactions occurred:
1. The company issued stock and collected cash totaling $30,000.
, 2. The company paid an account payable of $6,000.
3. The company purchased supplies for $1,000 with cash.
4. The company purchased land for $60,000 by paying $10,000 with cash and signing a note payable for
the balance.
What is total stockholders' equity after the transactions above? - ANSWER-$110,000
Lemon has provided the following information for its recent year of operation:
- The common stock account balance at the beginning of the year was $20,000 and the year-end balance
was $25,000.
- The additional paid-in capital account balance increased $2,500 during the year.
- The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was
$91,000.
- Net income was $26,000.
How much were Lemon's dividends during its recent year of operation? - ANSWER-$10,000
(Ending retained Earnings = Beginning Retained Earnings + Net Income - Dividends declared)
At the beginning of April, Jamie Corporation's assets totaled $240,000 and liabilities totaled $60,000.
During April, the following summarized transactions occurred:
- Additional shares of stock were sold for $20,000 cash.
- A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note
payable.
- Short-term investments costing $9,000 were purchased using cash.
- $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for the
loan.
How much are Jamie's total assets at the end of April? - ANSWER-$345,000
ABC Company's total stockholders' equity at the beginning of the year was $200,000. During the year
ABC reported the following:
- Net loss of $30,000.
- Stock issued in exchange for land totaling $80,000.
