Multiple Choice Quiz

Multiple Choice Quiz
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1	Which of the following statements is FALSE? (LO 1, 6)
		A)	The double-entry accounting system requires that total debits always equal total credits.
		B)	The difference between the total debit and credit amounts for an account is called the account balance.
		C)	The right side of a T-account is the debit side and the left side of a T-account is the credit side.
		D)	The primary purpose of the trial balance is to verify the equality of debits and credits.


2	How are the recording rules of double-entry accounting related to assets, liabilities, and stockholders' equity accounts summarized? (LO 1, 2)
		A)	Debits decrease asset accounts; credits decrease liability and stockholders' equity accounts.
		B)	Debits decrease asset accounts; credits increase liability and stockholders' equity accounts.
		C)	Debits increase asset accounts; credits decrease liability and stockholders' equity accounts.
		D)	Debits increase asset accounts; credits increase liability and stockholders' equity accounts.


3	How are the recording rules of double-entry accounting related to revenue and expense accounts summarized? (LO 1, 2)
		A)	Debits increase expense accounts; credits increase revenue accounts.
		B)	Debits increase expense accounts; credits decrease revenue accounts.
		C)	Debits decrease expense accounts; credits increase revenue accounts.
		D)	Debits decrease expense accounts; credits decrease revenue accounts.


4	Which of the following is a claims exchange transaction? (LO 3)
		A)	Purchasing equipment for cash
		B)	Providing services on account
		C)	Recording the adjusting entry to accrue salaries
		D)	Recording the adjusting entry to expense supplies used


5	Marshall Corporation was established on January 1, 2005, when it acquired $50,000 cash from issuing common stock. What would be a result of this transaction? (LO 3)
		A)	Debit Common Stock
		B)	Credit Common Stock
		C)	Credit Cash
		D)	Credit Retained Earnings


6	Mason Company received a bill for $1,000 for advertisements that it placed in a trade magazine. Mason plans to pay the bill at a later date. What would be a result of this transaction? (LO 3)
		A)	Credit Cash
		B)	Debit Accounts Receivable
		C)	Credit Accounts Payable
		D)	Credit Advertising Expense


7	Use the following information to answer questions 7 and 8: On September 1, 2005, Morgan Company borrowed $25,000 from the First State Bank. >What would be a result of this borrowing transaction in Morgan Company's accounting records? (LO 3)
		A)	Debit Notes Payable
		B)	Debit Cash
		C)	Credit Note Revenue
		D)	Debit Notes Receivable


8	Which of the following is the correct journal entry to record in Morgan Company's records on September 1, 2005? (LO 5)
		A)	A
		B)	B
		C)	C
		D)	D


9	Mayfield Consulting provided $30,000 of consulting services on account. Which of the following is the correct journal entry to record this transaction? (LO 5)
		A)	A
		B)	B
		C)	C
		D)	D


10	Mayfield Consulting collected $20,000 cash from customer account receivables. Which of the following is the correct journal entry to record this transaction? (LO 5)
		A)	A
		B)	B
		C)	C
		D)	D


11	On December 1, 2005, Mayfield Consulting collected $10,000 cash in advance from a customer for services to be provided from January 1, 2006 through April 30, 2006. Which of the following is the correct journal entry to record this transaction? (LO 5)
		A)	A
		B)	B
		C)	C
		D)	D


12	On December 1, 2005, Mayfield Consulting collected $10,000 cash in advance from a customer for services to be provided from December 1, 2005 through March 31, 2006. Which of the following is the correct adjusting journal entry to record on December 31, 2005? (LO 4, 5)
		A)	A
		B)	B
		C)	C
		D)	D


13	Is the normal balance of the following accounts a debit or a credit? (LO 2)
		A)	Debit Debit Credit Credit
		B)	Credit Debit Debit Debit
		C)	Debit Credit Credit Credit
		D)	Credit Credit Debit Debit


14	Is the normal balance of the following accounts a debit or a credit? (LO 2)
		A)	Debit Debit Credit Credit
		B)	Credit Debit Debit Debit
		C)	Debit Credit Credit Credit
		D)	Credit Credit Debit Debit


15	Gentry Consulting Company is preparing the closing entries at the end of the accounting period. Gentry has normal balances in the following accounts:
		A)	A
		B)	B
		C)	C
		D)	D


16	Anderson Company paid $4,800 cash in advance for a six-month lease to rent office space beginning on November 1, 2005. Which of the following is the correct adjusting journal entry to record the portion of rent used up through December 31, 2005? (LO 4, 5)
		A)	A
		B)	B
		C)	C
		D)	D


17	Clark Company is preparing the closing entries at the end of the accounting period. Clark has normal balances in the following accounts:
		A)	$ 68,000
		B)	$ 73,000
		C)	$ 85,000
		D)	$102,000


18	Which of the following is a FALSE statement? (LO 1, 4, 5, 7)
		A)	Accountants record data from source documents (e.g., invoices, timecards) into a journal.
		B)	The collection of all accounts used by a particular business is a general ledger.
		C)	The process of copying information from journals to the general ledger is called posting.
		D)	Adjusting and closing entries are prepared before the preparation of the financial statements.


19	Perry Company experienced an accounting event that was recorded in the company's general journal as indicated below:
		A)	A
		B)	B
		C)	C
		D)	D


20	Patton Company experienced an accounting event that is recorded in the following T-accounts:
		A)	A
		B)	B
		C)	C
		D)	D


21	The Regal Company had the following normal account balances at the end of 2006.
		A)	$3,800
		B)	$4,000
		C)	$4,500
		D)	$4,700


22	The Precious Metals Company had the following normal account balances at the end of 2006. If these accounts were presented in a trial balance, what would be the total of the debit column? (LO 2, 6)
		A)	$16,500
		B)	$15,600
		C)	$12,800
		D)	$12,600


23	Use the following information to answer questions 23, 24, and 25: Which company has the highest return on assets? (LO 8)
		A)	Company A
		B)	Company B
		C)	Company C
		D)	Company D


24	Which company's creditors had the lowest level of debt risk (debt to assets)? (LO 8)
		A)	Company A
		B)	Company B
		C)	Company C
		D)	Company D


25	Which company displays the best use of financial leverage (return on stockholders' equity)? (LO 8)
		A)	Company A
		B)	Company B
		C)	Company C
		D)	Company D

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Home > Chapter 3 > Multiple Choice Quiz

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	More Resources
		Check Figures Excel Templates TopicTackler Plus Review Problems Flashcards PowerPoint Presentations Narrated Slides iPod Content
	eBook
		Chapter Opener Debit-Credit Terminology Collins Consultants Case Overview of Debit-Cred... The General Ledger Assessing the Effectiv... Assessing Debt Risk Real-World Data Scope of Coverage A Look Back A Look Forward Self-Study Review Prob... Key Terms Questions Exercises-Series A Problems-Series A Exercises-Series B Problems-Series B Analyze Think Communic... Comprehensive Problem