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| 1 | |
Which of the following is not an equity account? |
| | A) | Owner's Capital |
| | B) | Owner's Withdrawals |
| | C) | Revenue |
| | D) | Unearned Revenue |
| | E) | Expenses |
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| 2 | |
An account titled Prepaid Services would be classified as which of the following? |
| | A) | Asset account |
| | B) | Liability account |
| | C) | Revenue account |
| | D) | Expense account |
| | E) | None of the above |
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| 3 | |
A provider of health insurance received payment of $24,000 cash from a customer for insurance coverage for the next two years. Recording the receipt of this cash will require which of the following? |
| | A) | Withdrawals to be debited, an asset 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) | An asset to be debited, a liability to be credited |
| | E) | One asset to be debited, another asset to be credited |
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| 4 | |
A business had extra cash on hand and decided to lend it to another firm. The borrower signed a note to promise to repay the loan with interest at the end of one year. Recording the transaction requires which of the following? |
| | 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 |
| | E) | One asset to be debited, another asset to be credited One asset, Notes Receivable, has increased and this account should be debited. |
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| 5 | |
Solar Mow, makers and sellers of solar powered lawn mowers, pays an equipment maintenance fee for solar charging equipment it uses. This payment is made at the beginning of each month. Recording the transaction requires which of the following? |
| | 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 account to be credited |
| | E) | An option other than those provided |
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| 6 | |
Phillip Atwood received $5,000 after he completed excavation work for a local home builder. Recording the transaction requires which of the following? |
| | 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 |
| | E) | An option other than these provided |
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| 7 | |
Olivia, the proprietor, deposited $40,000 in the company's bank account. She received the money as the result of a settlement of a class action lawsuit and decided to invest it her business to help with expansion. Recording the transaction on the company books will require which of the following? |
| | 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 |
| | E) | One asset to be debited, another asset to be credited |
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| 8 | |
Solar Mow, makers and sellers of solar powered lawn mowers, purchased the rights to be exclusive users of a new process involving solar power conversion. The rights cost $75,000 and the purchase was made by signing a Note Payable. Recording the transaction requires which of the following? |
| | A) | An expense 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 |
| | E) | An option other than those provided |
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| 9 | |
The personal residence of Samuel Leonard was landscaped with all new trees, shrubs and flowers. This improvement was paid for with a check written against Samuel's business checking account. The landscaping provides no benefit to Samuel's business. What account must be debited for this transaction? |
| | A) | Samuel Leonard, Capital |
| | B) | Samuel Leonard, Withdrawals |
| | C) | Landscaping Improvements |
| | D) | Landscaping Expense |
| | E) | None of the above |
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| 10 | |
Which of the following is not correct with regard to how each item is increased or decreased, and its normal balance? | Item | Increases | Decreases | Normal Balance |
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| | A) | |
| | B) | | Liabilities | credit | debit | credit |
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| | C) | | Expenses | debit | credit | credit |
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| | D) | |
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| 11 | |
Which of the following is correct with regard to the trial balance when a $225 credit to Accounts Payable was posted in error to Unearned Revenue? | Amount out of balance | Column having larger total |
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| | A) | |
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| | E) | |
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| 12 | |
Which of the following is correct with regard to the trial balance when a $370 credit to Accounts Receivable was posted as a debit to Office Supplies? | Amount out of balance | Column having larger total |
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| | A) | |
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| | D) | |
| | E) | |
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| 13 | |
Which of the following is correct with regard to the trial balance when an error in which a $440 credit to Rental Revenue was not posted? | Amount out of balance | Column having larger total |
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| | A) | |
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| 14 | |
Which of the following statements is true? |
| | A) | Journalizing precedes posting |
| | B) | Revenue accounts are increased by debit entries |
| | C) | An account shows increase and decreases, but does not show the balance |
| | D) | Debit entries are entries involving the right-hand side on an account |
| | E) | Journalizing errors should be erased and a correct entry made |
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| 15 | |
You've discovered that a check written for $820 was credited in error to Accounts Receivable, rather than to Cash, for $280. The other portion of the entry included a debit to Supplies Expense for $280. The correcting entry should include which of the following? |
| | A) | A debit to Accounts Receivable for $820 |
| | B) | A credit to Supplies Expense for $540 |
| | C) | A credit to Cash for $280 |
| | D) | A debit to Supplies Expense for $540 |
| | E) | A credit to Cash for $540 |
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| 16 | |
Assets total $80,000 and Liabilities total $20,000. What is the debt ratio? |
| | A) | .10 |
| | B) | .25 |
| | C) | .50 |
| | D) | .75 |
| | E) | 1.00 |
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| 17 | |
The debt ratios of the company at the end of each of the past five years are listed below. Which year was the best year for this ratio? |
| | A) | 1998 .253 |
| | B) | 1999 .292 |
| | C) | 2000 .284 |
| | D) | 2001 .281 |
| | E) | 2002 .268 |
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| 18 | |
Below are steps of the transaction analysis process:- Prepare and analyze the trial balance.
- Analyze each transaction and event from source documents.
- Post journal information to ledger accounts.
- Record relevant transactions and events in a journal.
What is the correct order to these steps? |
| | A) | 1,2,3,4 |
| | B) | 3,1,2,4 |
| | C) | 1,3,4,2 |
| | D) | 2,4,1,3 |
| | E) | 2,4,3,1 |
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