Question 1

Which of the following accounts is classified as a contra-asset and is a permanent account?

Accepted Answer

Accumulated Depreciation

Question 2

A company receives cash from customers for services to be performed next month. Which account should be credited?

Accepted Answer

Unearned Revenue

Question 3

Which of the following accounts is closed to Retained Earnings at the end of the period?

Accepted Answer

Dividends

Question 4

A company records $$\5$$,000$$ in Sales Revenue and $$\$$500 in $$Sales Returns and Allowances. What is the net sales revenue?

Accepted Answer

$$\4$$,500$

Question 5

Which account is both a contra-liability and a permanent account?

Accepted Answer

Discount on Bonds Payable

Question 6

A company pays $$\1$$,200$ for a one-year insurance policy. Which account is debited at the time of payment?

Accepted Answer

Prepaid Insurance

Question 7

Which of the following is an equity account that represents contributions from owners and is a permanent account?

Accepted Answer

Common Stock

Question 8

A company estimates that $$\2$$,000$ of its accounts receivable will not be collected. Which account is credited to record this estimate?

Accepted Answer

Allowance for Bad Debts

Question 9

Which account is classified as a contra-equity and is a permanent account?

Accepted Answer

Treasury Shares

Question 10

A company records depreciation of $$\3$$,000$ for its equipment. Which account is credited?

Accepted Answer

Accumulated Depreciation

Question 11

Which of the following accounts is closed to Income Summary at the end of the period?

Accepted Answer

Rent Expense

Question 12

A company issues $$\10$$,000$$ in bonds at a discount of $$\$$500. $$What is the carrying value of the bonds?

Accepted Answer

$$\9$$,500$

Question 13

Which account is classified as a liability and is a permanent account?

Accepted Answer

Notes Payable

Question 14

A company purchases equipment for $$\20$$,000$ and estimates its useful life to be 5 years with no salvage value. What is the annual depreciation expense using straight-line method?

Accepted Answer

$$\4$$,000$

Question 15

Which of the following is a revenue account that is closed to Income Summary?

Accepted Answer

Sales Revenue

Question 16

A company receives $$\1$$,000$$ in advance from a customer. At the end of the month, $$\$$600 of $$services have been performed. What is the journal entry to recognize the earned revenue?

Accepted Answer

Debit Unearned Revenue $$\600$, Credit Service Revenue $$\$$600$$

Question 17

Which account is classified as an asset and is a permanent account?

Accepted Answer

Inventory

Question 18

A company declares and pays $$\2$$,000$ in dividends. Which account is debited when the dividend is paid?

Accepted Answer

Dividends

Question 19

Which of the following is a contra-revenue account that is closed to Income Summary?

Accepted Answer

Sales Discounts

Question 20

A company has $$\8$$,000$$ in Sales Revenue, $$\$$500 in $$Sales Returns and Allowances, and $$\300$ in Sales Discounts. What is the net sales?

Accepted Answer

$$\7$$,200$

Classification and Closing of Financial Accounting Accounts

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