ACG 2021 Exam 1 sample questions and answers PDF

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Accounting practice exam...

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ACG 2021 Exam 1 Sample Questions

1. 1/1/12 – Total assets = $150,000. 12/31/12 – Total assets = $200,000; 1/1/12 – Total Stockholders’ Equity = $100,000. 12/31/12 – Total Stockholders’ Equity = $125,000. Amount of change and direction for liabilities at 12/31/12? a. Decrease of $30,000 b. Decrease of 15,000 c. Increase of $25,000 d. Increase of $15,000 2. When a company performs a service on account for a customer, which of the following would occur? a. Expenses would decrease b. Assets would decrease c. Net income would decrease d. Stockholders’ equity would increase 3. Paying rent in advance for one full year would include a a. Debit to cash and a credit to accounts receivable b. Debit to supplies and a credit to accounts receivable c. Debit to prepaid rent and a credit to cash d. Debit to rent expense and a credit to cash 4. If the credit amount of an entry to record the sale of common stock for cash was not posted: a. Stockholders’ Equity would be understated b. Assets would be overstated c. Assets would be understated d. Stockholders’ Equity would be overstated 5. What will be the result if no adjusting entry is made at the end of the accounting period to record the actual use of supplies? a. Liabilities would be overstated b. Assets would be overstated c. Assets would be understated d. Liabilities would be understated

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6. On 12/1/12, ABC Company receives $1,200 in advance for an annual contract to provide pest control services in the future over the next 12 months. Revenue will be earned equally each month. As of 12/31/12 ABC Company: a. Would have an $1,100 liability b. Would have a $1,100 asset c. Would have $100 expense d. Would have $1,100 revenue 7. The financial statements for ABC Company are prepared on July 31, 2013 based on an accrual accounting basis. No interest for July has been paid for the monies borrowed under the three year promissory note signed on 1/1/13. The interest is due monthly based on the principal balance of $10,000 and an annual interest rate of 6%. How should ABC account for the interest? a. Debit interest receivable and credit interest payable in the amount of $600 for each account. b. Debit interest expense and credit interest payable in the amount of $50 for each account. c. Do not record at this time. Record the interest when the bank sends the bill. d. Debit interest payable and credit interest expense in the amount of $50 for each account. 8. Equipment worth $100,000 with a useful life of 10 years is purchased on 1/1/13. Using straightline depreciation, what journal entry needs to be recorded at year-end 12/31/13 if no adjusting entries have been recorded throughout the year? a. Debit depreciation expense and credit accumulated depreciation in the amount of $10,000 for each account. b. Debit depreciation expense and credit accumulated depreciation in the amount of $833 for each account. c. Credit depreciation expense and debit accumulated depreciation in the amount of $833 for each account. d. Credit depreciation expense and debit accumulated depreciation in the amount of $10,000 for each account.

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