Multiple Choice:

1. Double-entry accounting is an accounting system:
2. That records each transaction twice.
3. That records the effects of transactions and other events in at least two accounts with equal debits and credits.
4. In which each transaction effects and is recorded in two or more accounts, but that could include two debits and not credits.
5. That may only be used if T-accounts are used.
6. In which each transaction affects and is recorded in two or more accounts, but that could include two credits and not debits.

1. A Perpetual Inventory System would include all of the following except:
2. Continuous records are kept of the quantity.
3. The balance in cost of goods sold equals the cost of merchandise sold to customers at all times.
4. Helps to manage inventory more effectively and thus avoid running out of stock.
5. The inventory not yet sold is counted periodically.

1. On a Classified Balance Sheet, Accumulated Depreciation will be categorized under:
2. Long-term liability.
3. Expenses.
4. Property, Plant, and Equipment.
5. None of the above.

1. Which of the following does not accurately represent the accounting equation?
2. Assets - Liabilities = Stockholder's Equity.
3. Assets - Stockholder's Equity = Liabilities.
4. Assets + Liabilities = Stockholder's Equity.
5. Assets = Liabilities + Stockholder's Equity.

1. External users of financial accounting information include all of the following except
2. Lenders such as bankers
3. Governmental agencies such as the IRS
4. Employees of a business
5. Potential investors

1. Brown Business Associates collected $2,000 cash on its Accounts Receivable. The effects of this transaction as reflected in the accounting equation are:
2. Total assets decreases and equity increases.
3. Both total assets and total liabilities decrease.
4. Total assets, total liabilities, and equity are unchanged.
5. Both total assets and equity are unchanged and liabilities increase.
6. Both total liabilities and equity increase, while total assets decrease.

1. FOB Shipping Point means that:
2. Buyer pays the freight.
3. Seller pays the freight.
4. Goods are shipped free on board (FOB) to the buyers place.
5. Trucking company pays the freight

1. A business' assets total $150,000 and its liabilities total $30,000. What is the total stockholder's equity of the business?
2. $120,000.
3. $180,000.
4. $100,000.
5. $150,000.
6. None of the above.

1. The buyer received an invoice from the seller for merchandise with a list price of $1000 and credit terms of 2/15, n/30. The term 2/15 in the credit terms denotes which of the following?
2. The discount percentage and the number of days to the end of the month.
3. Only the discount period.
4. The discount percentage and the number of days in the credit period.

d.. The discount percentage and the number of days in the discount period.

1. A Periodic Inventory system will include all of the following except:
2. No detailed records of the inventory are maintained during the accounting period.
3. Inventory figure is accurate only on the balance sheet date.
4. It is less costly to maintain but may lead to lost sales.
5. Continuous records are kept of the cost of individual items as they are bought and sold.

QUESTION #1

ADC Bicycle Rental was organized on January 1 2015. During the month the following transactions were carried out by ADC Bicycle Rental:

Jan 01 Sold capital stock to investors for $50,000.

Jan 03 Purchased supplies on account for $300.

Jan 04 Purchased 10 bicycles for $5,000; made a 50% cash down payment with the balance due in 30 days.

Jan 05 Paid $5,800 in cash for a small shed to store the bicycles.

Jan 09 Hired a part-time assistant to help out on weekends at $14 per hour.

Jan 10 Paid a maintenance person $150 to clean the grounds.

Jan 13 Received $1,940 in cash for rentals.

Jan 17 Paid $300 for the supplies purchased on Jan 3.

Jan 18 Paid a $110 repair bill on bicycles.

Jan 23 Billed a company $220 for bicycle rentals for an employee outing.

Jan 27 Received $1,920 in cash for rentals.

Jan 29 Paid the assistant $480.

1. Analyze the company's business transactions, and prepare journal entries to record the transactions.
2. Set up the following T accounts and post all the journal entries: Cash; Accounts Receivable; Supplies; Shed; Bicycles; Accounts Payable; Rental Revenue; Wages Expense; Stockholders Equity; Maintenance Expense; Repair Expense.
3. Summarize your balances and prepare a Trial Balance for the month of January.
4. Prepare an Income Statement for the month of January.
5. Prepare a Statement of Stockholder's Equity at January 31.
6. Prepare a Balance Sheet for the month of January.

Important: Present proper Journal Entries, Financial Reports, and show posting to the T Accounts.

QUESTION #2

Assume that at the end of the accounting period there is a balance of $3,400 in Service Revenue, and $1,800 in Lab Fee Revenue. There is a total of $1,400 of Rent Expense and $1,100 of Wages Expense. There is a Withdrawal of $500. Prepare the required Closing Entries. The accounting period ends December 31