Question: “Equipment with an estimated market value of $30,000 is offered for sale at $45,000. It is acquired for $15,000 in cash and a $20,000 note payable. The amount used in the buyer’s accounting records is…”
Answer Choices:
a. $45,000
b. $35,000
c. $30,000
d. $15,000
Answer: b
Question: “When undertaking horizontal analysis, the significance of the various increases and decreases in the revenue and expense items should be investigated…”
Answer Choices:
a. only if they are favorable from one year to the next.
b. to see if operations can be improved.
c. only if they impact the balance sheet.
d. only if they are unfavorable from one year to the next.
Answer: b. to see if operations can be improved.
Question: “The process of posting is transferring the debits and credits from the…”
Answer Choices:
a. T accounts to the ledger
b. journal to the ledger
c. T accounts to the journal
d. ledger to the journal
Answer: b
Question: “The right side of a T account is called the…”
Answer Choices:
a. entry side
b. credit side
c. balance side
d. debit side
Answer: b
Question: “A statement of owner’s equity reports the changes in the owner’s equity for a period of time.”
Answer Choices:
True
False
Answer: True
Question: “There are four transactions that affect owner’s equity. (a) What two types of transactions increase owner’s equity? (b) What two types of transactions decrease owner’s equity?”
Answer Choices:
(Not multiple choice)
Answer: Increases: Owner investments, Revenues Decreases: Owner withdrawals, Expenses
Question: “Earning revenue…”
Answer Choices:
a. increases assets, decreases owner’s equity
b. increases one asset, decreases another asset
c. increases assets, increases owner’s equity
d. decreases assets, increases liabilities
Answer: c
Question: “Comparing net income of the current period with the net income of the prior period will indicate…”
Answer Choices:
a. the increase or decrease in the company’s assets
b. whether the company’s operating performance has improved
c. the company’s cash flows for the period
d. the amount the company owes to creditors
Answer: b
Question: “Debts owed by a business are referred to as…”
Answer Choices:
a. expenses
b. accounts receivable
c. liabilities
d. owner’s equity
Answer: c
Question: “If a fee of $3,550 earned from a client was debited to Accounts Receivable for $3,220 and credited to Fees Earned for $3,550, which of the following statements is true?”
Answer Choices:
a. The credit total of the trial balance would be higher by $330.
b. The wrong account would be credited.
c. The trial balance totals would be equal.
d. The debit total of the trial balance would be higher by $330.
Answer: a
Question: “The chart of accounts is a…”
Answer Choices:
a. list of the accounts in the ledger
b. group of accounts for a business
c. list of all the accounts with their balances
d. list of all income and expense accounts
Answer: a
Question: “Which of the following is not true of accounting principles?”
Answer Choices:
a. The FASB has primary responsibility for developing accounting principles.
b. A new accounting principle can be adopted with stockholders’ approval.
c. Following GAAP allows accounting information users to compare one company to another.
d. Financial accountants follow GAAP.
Answer: b
Question: “The unadjusted trial balance is prepared…”
Answer Choices:
a. prior to determining the account balance in the ledger
b. after the journal entries are posted
c. only if errors are suspected
d. prior to posting the journal entries
Answer: b
Question: “The journal serves as a…”
Answer Choices:
a. summary of the transactions in each account to determine the account balance.
b. record of initial entry of transactions into the accounting system.
c. group of accounts for the business entity.
d. list of the accounts that can be used by the business entity.
Answer: b
Question: “The statement of cash flows consists of three sections: Cash Flows from (Used for) Operating Activities, Cash Flows from (Used for) Income Activities, and Cash Flows from (Used for) Equity Activities.”
Answer Choices:
True
False
Answer: False
Question: “Profit is the difference between…”
Answer Choices:
a. the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services
b. assets and liabilities
c. the incoming cash and outgoing cash
d. the assets purchased with cash contributed by the owner and the cash spent to operate the business
Answer: a
Question: “The journal entry for fees of $17,300 earned on account would include…”
Answer Choices:
a. debit Cash $17,300; credit Accounts Receivable $17,300
b. debit Fees Earned $17,300; credit Accounts Receivable $17,300
c. debit Cash $17,300; credit Fees Earned $17,300
d. debit Accounts Receivable $17,300; credit Fees Earned $17,300
Answer: d
Question: “Which of the following asset accounts is increased when a receivable is collected?”
Answer Choices:
a. Cash
b. Accounts Receivable
c. Accounts Payable
d. Supplies
Answer: a
Question: “Owner’s withdrawals…”
Answer Choices:
a. increase cash
b. decrease expenses
c. increase expenses
d. decrease owner’s equity
Answer: d
Question: “The asset created by a business when it makes a sale on account is termed…”
Answer Choices:
a. prepaid expense
b. accounts receivable
c. accounts payable
d. unearned revenue
Answer: b