ACCOUNTING ENTRANCE EXAM PRACTICE QUESTION SET ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET J M TULL SCHOOL OF ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET Important PRINT your response A B C D or E that best completes the statement or answers the question next to the following Multiple Choice Questions TOPIC Introducing Accounting in Business 1 If the liabilities of a business increased 75 000 during a period of time and the equity in the business decreased 30 000 during the same period the assets of the business must have A Decreased 105 000 B Decreased 45 000 C Increased 30 000 D Increased 45 000 E Increased 105 000 2 A company paid off 30 000 of its accounts payable in cash What would be the effects of this transaction on the accounting equation A Assets 30 000 increase liabilities no effect equity 30 000 increase B Assets 30 000 decrease liabilities 30 000 decrease equity no effect C Assets 30 000 decrease liabilities 30 000 increase equity no effect D Assets no effect liabilities 30 000 decrease equity 30 000 increase E Assets 30 000 decrease liabilities no effect equity 30 000 decrease 3 Determine the net income of a company for which the following information is available 180 000 10 000 20 000 400 000 Employee salaries expense Interest expense Rent expense Consulting revenue A 190 000 B 210 000 C 230 000 D 400 000 E 610 000 accounting equation are A Total assets decrease and equity increases B Both total assets and total liabilities decrease C Total assets total liabilities and equity are unchanged D Both total assets and equity are unchanged and liabilities increase E Total assets increase and equity decreases work completed A 10 000 accounts receivable 10 000 accounts payable B 10 000 accounts receivable 10 000 accounts payable C 10 000 accounts receivable 10 000 cash D 10 000 accounts receivable 10 000 revenue E 10 000 accounts receivable 10 000 revenue 4 A company collected 42 000 cash on its accounts receivable The effects of this transaction as reflected in the 5 How would the accounting equation of a company be affected by the billing of a client for 10 000 of consulting ACCOUNTING ENTRANCE EXAM PRACTICE QUESTION SET TOPIC Analyzing and Recording Business Transactions 6 On September 30 the Cash account of Value Company had a normal balance of 5 000 During September the account was debited for a total of 12 200 and credited for a total of 11 500 What must have been the balance in the Cash account on September 1 A A 0 balance B A 4 300 debit balance C A 4 300 credit balance D A 5 700 debit balance E A 5 700 credit balance 7 Wisconsin Rentals purchased office supplies on credit The general journal entry made by Wisconsin Rentals will include a A Debit to Accounts Payable B Debit to Accounts Receivable C Credit to Cash D Credit to Accounts Payable E Credit to Retained Earnings 8 Zed Bennett opened an art gallery and as a dealer and completed these transactions 1 Started the gallery Artery by investing 40 000 cash and equipment valued at 18 000 in exchange for common stock 2 Purchased 70 of office supplies for cash 3 Paid 1 200 cash for the receptionist s salary 4 Sold a painting for an artist and collected a 4 500 cash commission on the sale 5 Completed an art appraisal and billed the client 200 What was the balance of the cash account after these transactions were posted A 12 230 B 12 430 C 43 230 D 43 430 E 61 430 9 Of the following errors which one by itself will cause the trial balance to be out of balance A A 200 cash salary payment posted as a 200 debit to Cash and a 200 credit to Salaries Expense B A 100 cash receipt from a customer in payment of his account posted as a 100 debit to Cash and a 10 credit to Accounts Receivable Cash C A 75 cash receipt from a customer in payment of his account posted as a 75 debit to Cash and a 75 credit to D A 50 cash purchase of office supplies posted as a 50 debit to Office Equipment and a 50 credit to Cash E An 800 prepayment from a customer for services to be rendered in the future was posted as an 800 debit to Unearned Revenue and an 800 credit to Cash ACCOUNTING ENTRANCE EXAM PRACTICE QUESTION SET 10 An asset created by prepayment of an expense is A Recorded as a debit to a prepaid expense account B Recorded as a debit to an unearned revenue account C Recorded as a credit to an unearned revenue account D Recorded as a credit to a prepaid expense account E Not recorded in the accounting records until the earnings process is complete TOPIC Adjusting Accounts and Preparing Financial Statements 11 ABC Co leased a portion of its store to another company for eight months beginning on October 1 2004 This other company paid the entire rent of 6 400 cash on October 1 which ABC Co recorded as unearned revenue The journal entry made by ABC Co at year end on December 31 2004 would include A A debit to Rent Earned for 2 400 B A credit to Unearned Rent for 2 400 C A debit to Cash for 6 400 D A credit to Rent Earned for 2 400 E A debit to Unearned Rent for 4 000 12 Prior to recording adjusting entries the Office Supplies account had a 359 normal balance A physical count of the supplies showed 105 of unused supplies The required adjusting entry is A Debit Office Supplies 105 and credit Office Supplies Expense 105 B Debit Office Supplies Expense 105 and credit Office Supplies 105 C Debit Office Supplies Expense 254 and credit Office Supplies 254 D Debit Office Supplies 254 and credit Office Supplies Expense 254 E Debit Office Supplies Expense 105 and credit Office Supplies 254 13 A company purchased a new truck at a cost of 42 000 on July 1 2004 The truck is estimated to have a useful life of 6 years and a salvage value of 3 000 Which of the following will be included in the journal entry recorded on December 31 2004 A Debit Depreciation Expense 3 500 B Credit Accumulated Depreciation 3 250 C Debit Depreciation Expense 4 000 D Credit Accumulated Depreciation 6 500 E Debit Depreciat ion Expense 7 000 14 On April 30 2004 a three year insurance policy was purchased for 18 000 cash with coverage to begin immediately What is the amount of Prepaid Insurance that would appear on the company s financial statements for the year ended December 31 2004 A 500 B 4 000 C 6 000 D 14 000 E 13 500 15 The Retained Earnings account has a credit balance of 17 000 before closing entries are made If total revenues for the period are 55 200 total expenses are 39 800 and dividends are 9 000 what is …