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ACCY111 Quiz 2 PRACTICE QUIZ

(The actual quiz will have 30 questions to be answered in 45 minutes). Please bring a pencil and an
eraser and a UOW approved calculator to your quiz.

Question 1
What type of account is unearned income?
a. Liability
b. Income
c. Expense
d. Asset

Question 2
During 2011 The Style Hairdressing Salon paid out $41 000 in wages from its bank account. At year-
end 2011 wages owing but unpaid were $2 400. The salon uses accrual accounting. How much would
be reported as wages expense for 2011?
a. $38 600
b. $41 000
c. $43 400
d. $42 600

Question 3
The office supplies inventory account of Tan Traders shows a balance of $1 600 on 31 December 2011.
The adjusting entry to record office supplies of $550 issued to staff in the 12 months up to 31 December
2011 is:
a. Debit office supplies inventory $550; credit office supplies expense $550
b. Debit office supplies inventory $1 050; credit office supplies expense $1 050
c. Debit office supplies expense $550; credit office supplies inventory $550
d. Debit office supplies expense $1 600; credit office supplies inventory $1 600

Question 4
The current liability is:
a. Accrued Delivery Expenses
b. Accounts Receivable
c. Electricity Expense
d. Long-term Loan

Question 5
Which of these is not an advantage of using a worksheet to assist in preparing the financial
statements?
a. All the information is assembled in one place
b. It aids in the preparation of interim financial statements for internal use
c. Reports can be prepared before making closing entries
d. It means that the ledger can be dispensed with

Question 6
Closing the accounts refers to:
a. Establishing zero balances in the balance sheet accounts
b. Establishing a zero balance in the cash at bank account
c. Establishing zero balances in all ledger accounts
d. Transferring income and expense account balances to the profit and loss summary
account, which is then closed to the equity account

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Question 7
Accounting entries made to reduce the temporary accounts to zero balances are known as:
a. Correcting entries
b. Adjusting entries
c. Closing entries
d. Reversing entries

Question 8
Which of these is not recorded on a worksheet?
a. Closing entries
b. Drawings
c. Adjusting entries
d. Profit for the period

Question 9
Which statement relating to closing entries is incorrect?
a. The closing process is simple with a computerised accounting system
b. Closing entries are only made once a year
c. Closing entries are made each time a trial balance is prepared
d. The need for closing entries arises from the accounting period assumption

Question 10
The major purpose of a post-closing trial balance is to:
a. Verify the worksheet calculations
b. Determine if any adjusting entries have been omitted
c. Test for equality of debits and credits in the general ledger to ensure the opening
position is correct for the next period
d. Make sure that all post-closing account balances are equal to the pre-closing account balances

Question 11
Adjustments for the expiration of prepayment would include:
a. Accrual of wages expense
b. Deferral of revenues collected in advance
c. Consumption of office supplies purchased in previous period
d. Deferral of rent paid in advance

Question 12
Our records include an account for a debtor, W. Funnell. Opening balance was $400 Dr, discounts
allowed $32; sales made (on credit) to him during the month amounts to $218; cash received from
Funnell $312; returns by Funnell amounted to $61. The balance of the account
at the end of the month should be:
a. $335 Dr
b. $277 Dr
c. $277 Cr
d. $213 Dr

Question 13
Bahamas Co.'s Prepaid Insurance account shows a balance of $900, representing a payment on
1/7/2014 of a three year insurance premium. The correct adjusting entry on 31/12/1014, the close of
the annual accounting period is:
a) Debit Insurance Expense $150; credit Prepaid Insurance $150
b) Debit Insurance Expense $300; credit Prepaid Insurance $300
c) Debit Prepaid Insurance $150; credit Insurance Expense $150
d) Debit Prepaid Insurance $25; credit Insurance Expense $25

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Question 14
Los Angeles Traders received a $750 advance payment from a customer for work to be carried out in
the next accounting period. The accounting entry to initially record the $750 is:
a) Debit unearned income $750; credit cash at bank $750
b) Debit cash at bank $750; credit unearned income $750
c) Debit cash at bank $750; credit creditor $750
d) Debit income earned $750; credit cash at bank $750

Question 15
The Rent Revenue account has a year-end balance of $1,600. This is the result of twelve monthly entries
of $100 each plus a $400 entry made on 27th June regarding a receipt in advance of rent for the period
1st July to October of the following financial year. The adjusting entry required on 30th June includes a:
a) Debit to Accrued Rent Receivable of $400
b) Credit to Accrued Rent Receivable of $400
c) Debit to the Owner's Capital account for $400
d) Credit to Unearned Rent for $400

Question 16
On the first day of the year Los Angeles Traders purchased a forklift truck for $12 000 which is to be
depreciated by 25% a year. At the end of the first year:
a) Depreciation expense in the income statement is $3 000 and the carrying value of the
forklift in the balance sheet is $12 000
b) Depreciation expense in the income statement is $3 000 and the carrying value of the
forklift in the balance sheet is $15 000
c) Depreciation expense in the income statement is $3 000 and the carrying value
of the forklift in the balance sheet is $9 000
d) Depreciation expense in the income statement is $0 and the carrying value of the
forklift in the balance sheet is $12 000
Question 17
Current assets may be listed in the balance sheet in the order of their liquidity. Liquidity is:
a) Another name for the operating cycle
b) A measure of how many buyers there are for the asset
c) Whether the asset is secured over a liability
d) The average length of time it takes to convert an asset into cash

Question 18
Cost of goods available for sale is equal to:
a) Net purchases - ending inventory
b) Beginning inventory - ending inventory
c) Beginning inventory + net purchases
d) Beginning inventory + net purchases - ending inventory