Accounting 1 Exam | Questions and Answers – WGU
1. 1. Jones Dairy purchased a new milking machine for $40,000 cash. To record the transaction on Jones' books,
you would:
a. debit an asset account and credit an asset account.
b. debit an asset account and credit a liability account.
c. debit an asset account and debit a liability account.
d. debit an asset account and credit owner's equity.: a. debit an asset account and credit an asset account.
2. 2. Rent Expense typically would have:
a. a debit balance.
b. a credit balance.
c. a zero balance.
d. no entries since expenses don't go on the balance sheet.: a. a debit balance.
3. 3. If the beginning balance in the Machinery account is $35,000, and if the ending balance in the Machinery
account is $57,000, then:
a. $22,000 of machinery was sold.
b. $22,000 of machinery was purchased.
c. the market value of machinery was $57,000 at year-end.
d. purchases and sales of machinery cannot be determined from the informa- tion given.: d. purchases and sales of
machinery cannot be determined from the information given.
4. 4. A double-entry system of accounting requires that each transaction or event be recorded:
a. as an increase or decrease to stockholders' equity.
b. in at least two different financial statements.
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c. in at least two different accounts.
d. in two different types of accounts (e.g., an asset and a liability; an asset and a revenue, etc.).: c. in at least two
different accounts.
5. 5. After the adjusting entries have been posted to the unadjusted trial balance, the adjusted trial
balance is then used to:
a. Make the journal entries.
b. Post the journal entries.
c. Prepare the financial statements.
d. Make the adjusting journal entries.: c. Prepare the financial statements.
6. 6. At the end of an accounting period when accounts are ready to be closed, which of the following activities
must be performed?
a. Make adjusting entries
b. Make closing entries
c. Prepare post closing trial balance
d. (b) and (c): d. (b) and (c)
7. 7. The Prepaid Insurance account has an account balance of $3,000. At the end of an accounting period, the
controller has decided that $2,000 of the balance has expired. Which of the following adjusting entries should be
made?
a. Prepaid Insurance 2,000 Insurance
Expense 2,000
b. Insurance Expense 2,000 Prepaid
Insurance 2,000
c. Prepaid Insurance 1,000 Insurance
Expense 1,000
d. Insurance Expense 1,000
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, Accounting 1 Exam | Questions and Answers – WGU
Prepaid Insurance 1,000: b. Insurance Expense 2,000 Prepaid Insurance 2,000
8. 8. Gross profit is calculated by:
a. subtracting total expenses from total revenues.
b. subtracting cost of goods sold from net sales.
c. subtracting the ending inventory from cost of goods sold.
d. adding cost of goods sold to net sales.: b. subtracting cost of goods sold from net sales.
9. 9. The Income Statement is the financial statement prepared:
a. first
b. second
c. third
d. fourth: a. first
10. 10. Cramer Corp. reported the following for 2012: total assets, $90,000; total liabilities, $35,000;
common stock, $40,000. Therefore, retained earnings was:
a. $5,000
b. $40,000
c. $20,000
d. $15,000: d. $15,000
11.11. Which of the following would not be considered a current asset?
a. Inventories
b. Prepaid expenses
c. Long-term Investments
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d. Accounts receivable due in 6 months: c. Long-term Investments
12.12. In a Classified Balance Sheet, the current assets are listed
a. in alphabetical order
b. in descending order by amount
c. in any order
d. according to how readily each asset can be converted into cash: d. according to how readily each asset can be
converted into cash
13.13. Assume that Jones Company purchased $100 of inventory on credit. If Jones Company uses the Periodic
Inventory system the journal entry to record this purchase would be:
a. Purchases 100
Accounts Payable 100
b. Purchases 100
Cash 100
c. Inventory 100
Accounts Payable 100
d. Inventory 100
Cash 100: a. Purchases 100
Accounts Payable 100
14.14. Jones Company began the year with $100 of merchandise inventory. During the year Jones purchased
inventory that cost $200 and also paid $15 of freight costs on the purchased inventory. At the end of the year
Jones Company determined that the cost of its ending inventory was $50. Given these facts Jones should report
cost of goods sold totaling:
a. $50
b. $200
c. $215
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1. 1. Jones Dairy purchased a new milking machine for $40,000 cash. To record the transaction on Jones' books,
you would:
a. debit an asset account and credit an asset account.
b. debit an asset account and credit a liability account.
c. debit an asset account and debit a liability account.
d. debit an asset account and credit owner's equity.: a. debit an asset account and credit an asset account.
2. 2. Rent Expense typically would have:
a. a debit balance.
b. a credit balance.
c. a zero balance.
d. no entries since expenses don't go on the balance sheet.: a. a debit balance.
3. 3. If the beginning balance in the Machinery account is $35,000, and if the ending balance in the Machinery
account is $57,000, then:
a. $22,000 of machinery was sold.
b. $22,000 of machinery was purchased.
c. the market value of machinery was $57,000 at year-end.
d. purchases and sales of machinery cannot be determined from the informa- tion given.: d. purchases and sales of
machinery cannot be determined from the information given.
4. 4. A double-entry system of accounting requires that each transaction or event be recorded:
a. as an increase or decrease to stockholders' equity.
b. in at least two different financial statements.
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, Accounting 1 Exam | Questions and Answers – WGU
c. in at least two different accounts.
d. in two different types of accounts (e.g., an asset and a liability; an asset and a revenue, etc.).: c. in at least two
different accounts.
5. 5. After the adjusting entries have been posted to the unadjusted trial balance, the adjusted trial
balance is then used to:
a. Make the journal entries.
b. Post the journal entries.
c. Prepare the financial statements.
d. Make the adjusting journal entries.: c. Prepare the financial statements.
6. 6. At the end of an accounting period when accounts are ready to be closed, which of the following activities
must be performed?
a. Make adjusting entries
b. Make closing entries
c. Prepare post closing trial balance
d. (b) and (c): d. (b) and (c)
7. 7. The Prepaid Insurance account has an account balance of $3,000. At the end of an accounting period, the
controller has decided that $2,000 of the balance has expired. Which of the following adjusting entries should be
made?
a. Prepaid Insurance 2,000 Insurance
Expense 2,000
b. Insurance Expense 2,000 Prepaid
Insurance 2,000
c. Prepaid Insurance 1,000 Insurance
Expense 1,000
d. Insurance Expense 1,000
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, Accounting 1 Exam | Questions and Answers – WGU
Prepaid Insurance 1,000: b. Insurance Expense 2,000 Prepaid Insurance 2,000
8. 8. Gross profit is calculated by:
a. subtracting total expenses from total revenues.
b. subtracting cost of goods sold from net sales.
c. subtracting the ending inventory from cost of goods sold.
d. adding cost of goods sold to net sales.: b. subtracting cost of goods sold from net sales.
9. 9. The Income Statement is the financial statement prepared:
a. first
b. second
c. third
d. fourth: a. first
10. 10. Cramer Corp. reported the following for 2012: total assets, $90,000; total liabilities, $35,000;
common stock, $40,000. Therefore, retained earnings was:
a. $5,000
b. $40,000
c. $20,000
d. $15,000: d. $15,000
11.11. Which of the following would not be considered a current asset?
a. Inventories
b. Prepaid expenses
c. Long-term Investments
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d. Accounts receivable due in 6 months: c. Long-term Investments
12.12. In a Classified Balance Sheet, the current assets are listed
a. in alphabetical order
b. in descending order by amount
c. in any order
d. according to how readily each asset can be converted into cash: d. according to how readily each asset can be
converted into cash
13.13. Assume that Jones Company purchased $100 of inventory on credit. If Jones Company uses the Periodic
Inventory system the journal entry to record this purchase would be:
a. Purchases 100
Accounts Payable 100
b. Purchases 100
Cash 100
c. Inventory 100
Accounts Payable 100
d. Inventory 100
Cash 100: a. Purchases 100
Accounts Payable 100
14.14. Jones Company began the year with $100 of merchandise inventory. During the year Jones purchased
inventory that cost $200 and also paid $15 of freight costs on the purchased inventory. At the end of the year
Jones Company determined that the cost of its ending inventory was $50. Given these facts Jones should report
cost of goods sold totaling:
a. $50
b. $200
c. $215
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