ACG Exam 1 Questions with Answers 2021

ACG Exam 1 Questions with Answers 2021 1. At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Common Stock, $20,000; Retained Earnings, $65,000. Assuming other than liabilities these are the only accounts the company has, liabilities for the period were: A) $210,000 B) $70,000 C) $190,000 D) $170,000 E) There is not enough information to answer the question. 2. Trading securities purchased for $400,000 were valued at $380,000 at the end of the year. The adjusting entry to record this difference included a credit to: A) Unrealized Gain on Investments. B) Retained Earnings. C) Short-term Investments. D) Cash E) none of the accounts. No adjusting entry is required. 3. A liability that arises from an expense that has not yet been paid is a(n): A) accrued expense. B) accrued revenue. C) deferred expense D) prepaid expense. E) unearned expense. 4. Failure to make an adjusting entry to recognize accrued interest payable would cause an: A) Overstatement of expenses, liabilities, and stockholders' equity B) Understatement of expenses, liabilities, and stockholders' equity. C) Understatement of assets and stockholders' equity D) Understatement of expenses and stockholders' equity and an overstatement of liabilities. E) None of the above. 5. Stock investments that are to be sold in the near future with the intent of generating profits on the sale are: A) investments. B) debt securities. C) Stockholders' Equity. D) available-for-sale investments. E) trading investments. 6. The Last Bank lends money to a customer on a six month note. The entry Last Bank will record for the issuance of the note is: A) debit Cash and credit Notes Payable. B) debit Note Receivable and credit Service Revenue. C) debit Note Receivable and credit Cash. D) debit Service Revenue and credit Note Receivable. E) debit Cash and credit Note Receivable. 1 7. Which of the following statements regarding accounts is TRUE? A) An asset is increased by a debit and decreased by a credit. B) Revenue is increased by a debit; an expense is increased by a credit. C) A liability is increased by a debit and decreased by a credit. D) Dividends are decreased by debits and increased by credits. E) None of the above. 8. Which of the following transactions would increase total assets? I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000 III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200 A) I and III B) All of these answers are correct. C) I and II D) I, II, and III E) None of the above. 9. Performing services on account would: A) increase net income and stockholders' equity. B) decrease revenues and decrease stockholders' equity. C) decrease liabilities and increase stockholders' equity. D) decrease both assets and liabilities. E) increase assets and decrease stockholders' equity. 10. The following accounts are up-to-date and need no adjustment at the end of the period: A) cash, dividends and unearned rent. B) cash, common stock and prepaid rent. C) prepaid rent, supplies and unearned rent. D) cash, land and common stock. E) All of the above accounts require adjustments at the end of the period. 11. Accounting information is subject to the constraint(s) of: A) relevance and faithful representation B) comparability and consistency. C) comparability and verifiability. D) timeliness. E) cost. 2 12. The Houston Rockets basketball team receives $5,000 for season tickets on August 1. By December 31, they have earned $2,000 of the revenue. The adjusting entry to be made on December 31 by the Houston Rockets includes a: A) credit to Prepaid Revenue of $2,000. B) credit to Unearned Revenue of $2,000. C) debit to Unearned Revenue of $2,000. D) debit to Service Revenue of $2,000. E) debit to Prepaid Revenue of $2,000. 13. Revenues are recorded when: A) cash is received from the customer. B) the company signs a contract. C) the work is completed on the job, whether or not the cash is received. D) work is begun on the job. E) None of the above. 14. Which of the following is a false statement regarding a trial balance: A) A trial balance lists all accounts with their debit or credit balance. B) A trial balance shows whether debits equal credits. C) A trial balance ensures the financial statements are free of all errors. D) On a trial balance assets are listed first, then liabilities, and then stockholders' equity. E) All of the above are true statements. 15. Which section of the Statement of Cash Flows is the most important? A) Operating Activities B) Financing Activities C) Investing Activities D) All sections are equally important. E) The most important section is determined by the type of business. 16. On September 1, 2009, Beard Entertainment paid $4,000 for September, October, November and December's rent in advance. The company recorded this transaction by increasing the balance in the Prepaid Rent account. The balance in the Prepaid Rent account as of October 31, 2009, will be A) $1,000. B) $-0-. C) $3,000. D) $4,000. E) $2,000. 3 17. Bigg and Talle Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $5,000,000, and management estimates 2% will be uncollectible. Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $16,000. The amount of expense reported on the income statement will be: A) $116,000 B) $100,000 C) $84,000 D) $16,000 E) None of the above. 18. Anderson Company receives their utility bill for the month of April in the amount of $1,000. What journal entry should Anderson Company record when the bill is received, assuming they will not pay the bill until its due date two weeks after the bill is received? A) Utility Expense $1,000 Accounts Payable $1,000 B) Cash $1,000 Utility Expense $1,000 C) Utility Expense $1,000 Cash $1,000 D) Accounts Payable $1,000 Utility Expense $1,000 E) No entry is recorded until the bill is paid. 19. On September 1, Banger Bros. Company paid $9,000 for one year of rent, in advance. Which of the following accounts and amounts will appear on an adjusted trial balance prepared on December 31? A) Rent Expense, $3,000 B) Rent Expense, $6,000 C) Rent Expense, $9,000 D) Prepaid Rent, $3,000 E) Prepaid Rent, $9,000 20. In what order are financial statements generally prepared? A) Income Statement, Statement of Retained Earnings, and Balance Sheet B) Balance Sheet, Income Statement, and Statement of Retained Earnings C) Statement of Retained Earnings, Balance Sheet, and Income Statement D) Statement of Retained Earnings, Income Statement, and Balance Sheet E) Income Statement, Balance Sheet, and Statement of Retained Earnings