Ivy Tech Community College ACCT Exit Exam Review Questions With Complete Solutions
Course
ACCT ACCT 101
1. Accounting Equation
Question:
If assets are $50,000 and liabilities are $30,000, what is owner’s equity?
Solution:
Accounting equation:
Assets = Liabilities + Equity
Equity=Assets−Liabilities=50,000−30,000=20,000Equity = Assets - Liabilities = 50,000 - 30,000
= 20,000Equity=Assets−Liabilities=50,000−30,000=20,000
Answer: $20,000
2. Journal Entry (Revenue)
Question:
A company earns $5,000 cash revenue. Record the journal entry.
Solution:
Debit Cash $5,000
Credit Revenue $5,000
Entry:
Dr Cash 5,000
Cr Service Revenue 5,000
3. Accrual vs Cash Basis
Question:
Explain the difference.
Solution:
Cash basis: Records transactions when cash changes hands
Accrual basis: Records revenue/expenses when earned/incurred, not when cash is
received
,4. Depreciation (Straight-Line)
Question:
A machine costs $12,000, salvage value $2,000, useful life 5 years. Find annual depreciation.
Solution:
(12,000−2,000)/5=10,000/5=2,000(12,000 - 2,000) / 5 = 10, =
2,000(12,000−2,000)/5=10,000/5=2,000
Answer: $2,000 per year
5. Adjusting Entry (Prepaid Expense)
Question:
$1,200 insurance paid in advance covers 12 months. After 3 months, what is expense?
Solution:
Monthly expense = 1, = 100
3 months expense = 100 × 3 = 300
Answer: Insurance Expense = $300
6. Inventory (Cost of Goods Sold)
Question:
Beginning inventory $10,000, purchases $25,000, ending inventory $8,000. Find COGS.
Solution:
COGS=10,000+25,000−8,000=27,000COGS = 10,000 + 25,000 - 8,000 =
27,000COGS=10,000+25,000−8,000=27,000
Answer: $27,000
7. Gross Profit
Question:
Sales = $40,000, COGS = $25,000. Find gross profit.
Solution:
, Gross Profit=40,000−25,000=15,000Gross\ Profit = 40,000 - 25,000 =
15,000Gross Profit=40,000−25,000=15,000
Answer: $15,000
8. Accounts Receivable
Question:
A company has credit sales of $18,000 and collects $12,000. What is ending receivables?
Solution:
18,000−12,000=6,00018,000 - 12,000 = 6,00018,000−12,000=6,000
Answer: $6,000
9. Current Ratio
Question:
Current assets = $20,000, current liabilities = $10,000. Find current ratio.
Solution:
Current Ratio=20,000/10,000=2.0Current\ Ratio = 20,,000 =
2.0Current Ratio=20,000/10,000=2.0
Answer: 2.0
10. Retained Earnings
Question:
Beginning retained earnings $5,000, net income $3,000, dividends $1,000. Ending retained
earnings?
Solution:
5,000+3,000−1,000=7,0005,000 + 3,000 - 1,000 = 7,0005,000+3,000−1,000=7,000
Answer: $7,000
11. Adjusting Entry (Unearned Revenue)
Question:
A company receives $6,000 for services to be performed over 6 months. After 2 months, what
revenue is recognized?
Course
ACCT ACCT 101
1. Accounting Equation
Question:
If assets are $50,000 and liabilities are $30,000, what is owner’s equity?
Solution:
Accounting equation:
Assets = Liabilities + Equity
Equity=Assets−Liabilities=50,000−30,000=20,000Equity = Assets - Liabilities = 50,000 - 30,000
= 20,000Equity=Assets−Liabilities=50,000−30,000=20,000
Answer: $20,000
2. Journal Entry (Revenue)
Question:
A company earns $5,000 cash revenue. Record the journal entry.
Solution:
Debit Cash $5,000
Credit Revenue $5,000
Entry:
Dr Cash 5,000
Cr Service Revenue 5,000
3. Accrual vs Cash Basis
Question:
Explain the difference.
Solution:
Cash basis: Records transactions when cash changes hands
Accrual basis: Records revenue/expenses when earned/incurred, not when cash is
received
,4. Depreciation (Straight-Line)
Question:
A machine costs $12,000, salvage value $2,000, useful life 5 years. Find annual depreciation.
Solution:
(12,000−2,000)/5=10,000/5=2,000(12,000 - 2,000) / 5 = 10, =
2,000(12,000−2,000)/5=10,000/5=2,000
Answer: $2,000 per year
5. Adjusting Entry (Prepaid Expense)
Question:
$1,200 insurance paid in advance covers 12 months. After 3 months, what is expense?
Solution:
Monthly expense = 1, = 100
3 months expense = 100 × 3 = 300
Answer: Insurance Expense = $300
6. Inventory (Cost of Goods Sold)
Question:
Beginning inventory $10,000, purchases $25,000, ending inventory $8,000. Find COGS.
Solution:
COGS=10,000+25,000−8,000=27,000COGS = 10,000 + 25,000 - 8,000 =
27,000COGS=10,000+25,000−8,000=27,000
Answer: $27,000
7. Gross Profit
Question:
Sales = $40,000, COGS = $25,000. Find gross profit.
Solution:
, Gross Profit=40,000−25,000=15,000Gross\ Profit = 40,000 - 25,000 =
15,000Gross Profit=40,000−25,000=15,000
Answer: $15,000
8. Accounts Receivable
Question:
A company has credit sales of $18,000 and collects $12,000. What is ending receivables?
Solution:
18,000−12,000=6,00018,000 - 12,000 = 6,00018,000−12,000=6,000
Answer: $6,000
9. Current Ratio
Question:
Current assets = $20,000, current liabilities = $10,000. Find current ratio.
Solution:
Current Ratio=20,000/10,000=2.0Current\ Ratio = 20,,000 =
2.0Current Ratio=20,000/10,000=2.0
Answer: 2.0
10. Retained Earnings
Question:
Beginning retained earnings $5,000, net income $3,000, dividends $1,000. Ending retained
earnings?
Solution:
5,000+3,000−1,000=7,0005,000 + 3,000 - 1,000 = 7,0005,000+3,000−1,000=7,000
Answer: $7,000
11. Adjusting Entry (Unearned Revenue)
Question:
A company receives $6,000 for services to be performed over 6 months. After 2 months, what
revenue is recognized?
