MGMT 200 - Exam 1 - Purdue University Latest Update 2024 Version 165 Questions and Verified Correct Answers Guaranteed Success A concert promoter received $50,000 in cash deposits from students in September for a concert to be held in December. Which of the following statements is true?
- The promoter records revenue in September.
- The promoter records the cash collections in
- The promoter records deferred revenue in
December.
September.
D. The promoter records nothing in September. - CORRECT ANSWER: C. The
promoter records deferred revenue in September.
A fitness club receives $540 from a customer for six physical training classes. The training classes will be performed later.After providing four training classes to the customer, what should the fitness club record on the income statement using the accrual method of accounting?
- Service revenue of $540
- Unearned revenue of $360
- Service revenue of $360
D. Cash of $180 - CORRECT ANSWER: C. Service revenue of $360
A transaction is any event, external or internal, that is recognized in a set of financial statements.
- True
B. False - CORRECT ANSWER: a. True
A trial balance:
- list all accounts and their balances.
- detects all errors that could be made during the
- lists only revenue and expense accounts.
- will help detect omitted journal entries. - CORRECT ANSWER: A. list all accounts
journalizing or posting steps of the accounting cycle.
and their balances.
Adjusting accounts is the process of
- zeroing out account balances to prepare for the next period.
- reducing revenues by deducting expenses to measure income.
- posting transactions as they occur during the period. 1 / 4
D. updating accounts at the end of an accounting period. - CORRECT ANSWER: D.
updating accounts at the end of an accounting period
Adjusting entries are the same as correcting journal entry errors in accounting period.
- True
B. False - CORRECT ANSWER: A. true
Adjusting entries are useful in apportioning costs among two or more accounting periods.
- True
B. False - CORRECT ANSWER: A. True
Adjusting entries:
- Often include the Cash account.
- Usually are recorded at the beginning of the
- Always involve at least one income statement
- Adjust the balance of revenue and expense
accounting period.
account and one balance sheet account.
accounts to zero. - CORRECT ANSWER: C. Always involve at least one income
statement account and one balance sheet account.
After preparing a trial balance, which situation(s) indicate(s) a potential adjustment(s)?
- Prepaid insurance account has a credit balance
- A liability account for royalties due on product
- Product sales account for the current month is
sales has a debit balance
less than half of the previous month's balance
D. All of the above - CORRECT ANSWER: D. All of the above
All transactions can be easily assigned to specific accounting periods.
- True
B. False - CORRECT ANSWER: B. False
Allegheny Co., Inc. engages in the following cash payments:
What is the total amount of cash paid for financing activities?
Salaries & wages $ 1,000 Borrowing from a bank $50,000 Purchase equipment $10,000 Dividends to stockholders $15,000
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A. $66,000
B. $65,000
C. $55,000.
D. $50,000 - CORRECT ANSWER: C. $55,000
An advantage of a classified balance sheet is that it is
easy to see:
- If the company is likely to be profitable in future periods.
- If current assets are large enough to pay current liabilities.
- If the company is profitable in the current period.
D. If dividends have been paid to stockholders. - CORRECT ANSWER: B. If current
assets are large enough to pay current liabilities.
Assets can be best described as
- resources owned by the company having future
- collection of resources belonging to the
- cash owned by the company.
benefit to the company.
company and the claims on these resources.
D. owners' investment in the business - CORRECT ANSWER: A. resources owned by
the company having future benefit to the company.
Assume that Clifford Gardens, Inc. performed landscaping services of $1,250 on account for an office complex. How would this transaction affect Clifford Gardens?
- Decrease liabilities by $1,250, and increase equity
- Increase both assets and liabilities by $1,250.
- Increase equity and increase assets by $1,250.
by $1,250.
D. Increase equity and increase liabilities by $1,250. - CORRECT ANSWER: C.
Increase equity and increase assets by $1,250.
At December 31, Burlingame, Inc., an air quality service business, had total assets of $100,000 and equity of $10,000. How much were Burlingame's liabilities?
A. $50,000
B. $80,000
C. $90,000
D. $110,000 - CORRECT ANSWER: C. $90,000
assets ‐ equity = liabilities
$100,000 ‐ $10,000 = $90,000
Bampton, Inc. received a $650 invoice for electric 3 / 4
power used in its business for the current month and immediately paid it. Its journal entry to record this transaction includes a
- Debit to Utilities Expense for $650
- Debit to Accounts Payable for $650
- Credit to Utility Expense for $650
- Debit to Cash for $650 - CORRECT ANSWER: A. Debit to Utilities Expense for $650
Below is Birmingham Corporation's Wages Payable T‐account.The $6,000 amount could represent which of the following?
Wages Payable Beg. 10,000 6,000 3,000 End. 7,000
- Cash received from employees
- Cash payments to employees for services performed
- Wages earned and not paid
D. Recording expense for wages - CORRECT ANSWER: B. Cash payments to
employees for services performed
Below is the Cambridge Corporation's Prepaid Rent T‐ account.The $10,000 amount could represent which of the following?
Prepaid Rent Beg. 1,000
10,000
7,000 End. 4,000
- Payment of rent in advance
- Use of rented warehouse space
- Recording a rent payable
D. Cash received for rental income from customers - CORRECT ANSWER: A.
Payment of rent in advance
Closing journal entries are made at the end of an accounting period to return the balance in all temporary accounts to zero and to transfer the net income or loss and the dividends to retained earnings.
- True
B. False - CORRECT ANSWER: A. True
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