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,...
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.
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