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| 1.
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The proprietor of a restaurant purchased a three-year insurance policy. Recording the purchase of the policy requires |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | one asset to be debited, another asset to be credited |
| | D) | withdrawals to be debited, an asset to be credited |
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| 2.
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A business purchased equipment by issuing a one-year note payable. The entire amount of the note is due at the end of one year. Recording the transaction requires |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | an asset to be debited, capital to be credited |
| | D) | withdrawals to be debited, an asset to be credited |
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| 3.
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Olivia, the proprietor, deposited $40,000 in the company's bank account. She got the money from selling all of her General Motors common stock. Recording the transaction on the company books will require |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | an asset to be debited, capital to be credited |
| | D) | withdrawals to be debited, an asset to be credited |
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| 4.
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Solar Mow, makers and sellers of solar powered lawn mowers, paid the rent for the month of January on January 1. Recording the transaction requires |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | an expense to be debited, an asset to be credited |
| | D) | an asset to be debited, a revenue to be credited |
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| 5.
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Solar Mow, makers and sellers of solar powered lawn mowers, determined that its chief executive officer should attend a workshop on solar energy to be held on the beach at Waikiki, Honolulu. The workshop cost $2,000, including air fare, meals, and lodging. The firm charged the cost of the trip with a local travel agency. Recording the transaction requires |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | an expense to be debited, a liability to be credited |
| | D) | an asset to be debited, revenue to be credited |
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| 6.
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Peter Atli received $5,000 for some excavation work to be done when the weather permits. Peter figures it will be at least three weeks before he can start the job. Recording the transaction requires |
| | A) | an asset to be debited, a liability to be credited |
| | B) | a liability to be debited, an asset to be credited |
| | C) | withdrawal to be debited, an asset to be credited |
| | D) | an asset to be debited, revenue to be credited |
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| 7.
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Which of the following statements is not true? |
| | A) | Journalizing errors should be erased and a correct entry made |
| | B) | Asset accounts are increased by debit entries |
| | C) | Debit entries are entries involving the left-hand side of an account |
| | D) | Journalizing precedes posting |
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| 8.
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The personal telephone bill of Junior Sample was paid by issuing a cheque from the business chequing account. No business calls had been made from Junior's personal phone. What account must be debited for this transaction? |
| | A) | Junior, Capital |
| | B) | Cash |
| | C) | Junior, Withdrawals |
| | D) | Telephone Expense |
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| 9.
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An account entitled Unearned Fees would be classified as a(an) |
| | A) | asset account |
| | B) | liability account |
| | C) | revenue account |
| | D) | expense account |
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| 10.
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Which of the following statements is false? |
| | A) | Chart of accounts is a list of all accounts used by a company. It includes the identification number assigned to each account. |
| | B) | Journal is a record where transactions are recorded before they are recorded in accounts. |
| | C) | Ledger is a record containing all accounts used by a business. It includes the records of all transactions of every account, and their balances. |
| | D) | Trial balance is list of accounts and their balances at a point in time. It is also called the book of final entry. |
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| 11.
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Which of the following is a liability account? |
| | A) | Prepaid expenses |
| | B) | Unearned revenues |
| | C) | Notes receivable |
| | D) | Rent Expense |
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| 12.
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Which of the following statement is not true? |
| | A) | The normal balance for an asset account is debit. |
| | B) | The normal balance for a liability account is credit. |
| | C) | The normal balance for a revenue account is debit. |
| | D) | The normal balance for an expense account is debit. |
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| 13.
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Sue Jenkins, the sole owner of Hey good-looking Hairdressing, invested $5,500 in the company when she opens the business in November. During the month, she earned $3,200 of revenue, and spent $1,650 on expenses. At the end of November, she withdrew $650 for personal expenses. What is the ending equity? |
| | A) | $6,400 |
| | B) | $900 |
| | C) | $7,700 |
| | D) | $7,050 |
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| 14.
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Which of the following statement is true? |
| | A) | Debit means increase of an account. |
| | B) | Credit means decrease of an account. |
| | C) | Double-entry accounting means that the transactions should be recorded twice. |
| | D) | A compound journal entry is one that affects three or more accounts. |
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