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| 1 | |
What is the proper order of the following steps in the accounting process? I. Prepare and analyze the trial balance II. Record relevant transactions and events in a journal III. Analyze each transaction and event from source documents IV. Post journal information to ledger accounts
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| | A) | III., IV., I., II. |
| | B) | I., II., III., IV. |
| | C) | III., II., IV., I. |
| | D) | III., II., I., IV. |
| | E) | II., III., I., IV. |
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| 2 | |
Sales tickets, checks, purchase orders, and bills from suppliers are examples of which of the following? |
| | A) | Financial statements |
| | B) | Accounts |
| | C) | Source documents |
| | D) | Non-financial documents |
| | E) | None of the above |
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| 3 | |
Which of the following is defined as resources owned or controlled by a company that have expected future benefits? |
| | A) | Assets |
| | B) | Liabilities |
| | C) | Equity |
| | D) | Expenses |
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| 4 | |
Which of the following is the first step in the accounting process? |
| | A) | Prepare the trial balance |
| | B) | Record the transaction |
| | C) | Post the journal to the ledger |
| | D) | Analyze the source document |
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| 5 | |
Which of the following is held by a seller and refers to promises of a payment from a customer? |
| | A) | Note payable |
| | B) | Account payable |
| | C) | Account receivable |
| | D) | Common Stock |
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| 6 | |
Which of the following accounts is not an asset account? |
| | A) | Accounts receivable |
| | B) | Prepaid insurance expense |
| | C) | Land |
| | D) | Service Revenue |
| | E) | Cash |
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| 7 | |
Which of the following amounts can be found on a balance sheet? |
| | A) | The amount of supplies on hand |
| | B) | The amount of supplies used up |
| | C) | The amount of supplies purchased in a fiscal year |
| | D) | None of the above would be found on a Balance Sheet |
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| 8 | |
Which of the following is not a liability? |
| | A) | Accounts Payable |
| | B) | Accounts Receivable |
| | C) | Salaries Payable |
| | D) | Notes Payable |
| | E) | Mortgage Payable |
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| 9 | |
Which of the following is a formal written promise to pay a definite sum of money on demand or at a fixed or determinable future date? |
| | A) | Account payable |
| | B) | Account receivable |
| | C) | Note payable |
| | D) | Prepaid insurance policy |
| | E) | Both an account payable and an account receivable |
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| 10 | |
Which of the following is an equity account? |
| | A) | Common Stock |
| | B) | Dividends |
| | C) | Retained Earnings |
| | D) | A and B, only |
| | E) | A, B, and C |
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| 11 | |
An account titled Unearned Fees 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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| 12 | |
Which of the following would be used to record a transaction where the customer pays in advance for products or services before they are earned. (For Example, when a baseball team receives season ticket proceeds, it would use this account.) |
| | A) | Dividends |
| | B) | Prepaid account |
| | C) | Unearned revenue account |
| | D) | Accounts Payable |
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| 13 | |
Which of the following transactions would decrease stockholders’ equity? |
| | A) | Receiving payment on a customer account receivable |
| | B) | Purchasing supplies |
| | C) | Selling a service |
| | D) | Selling shares of common stock |
| | E) | Paying the current month’s rent |
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| 14 | |
When a company pays dividends which of the following is true? |
| | A) | Assets are increased |
| | B) | Equity is decreased |
| | C) | Revenue is increased |
| | D) | Expenses are increased |
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| 15 | |
The word "debit" means the following: |
| | A) | To increase any account |
| | B) | To decrease any account |
| | C) | left side |
| | D) | right side |
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| 16 | |
The dividends account is a(n): |
| | A) | Asset |
| | B) | Liability |
| | C) | Equity |
| | D) | Expense |
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| 17 | |
Which of the following is a list of all accounts a company uses and includes an identification number assigned to each account? |
| | A) | A ledger |
| | B) | A chart of accounts |
| | C) | A journal |
| | D) | A trial balance |
| | E) | A source document |
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| 18 | |
What would be a likely account number for the accounts payable account? |
| | A) | 111 |
| | B) | 201 |
| | C) | 311 |
| | D) | 401 |
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| 19 | |
Which of the following statements are true concerning debits and credits? |
| | A) | Debit means left and credit means right. |
| | B) | Debit means increase and credit means decrease. |
| | C) | A debit to a liability account increases the account. |
| | D) | Debit and credit amounts do not have to equal for each transaction. |
| | E) | Both A and B above are correct. |
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| 20 | |
Which of the following statements correctly reflects an account and its normal balance? |
| | A) | Interest revenue has a normal debit balance |
| | B) | Salary expense has a normal credit balance |
| | C) | Accounts receivable has a normal debit balance |
| | D) | Accounts payable has a normal debit balance |
| | E) | Dividends has a normal credit balance |
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| 21 | |
Item Increases Decreases Normal Balance |
| | A) | Assets debit credit debit |
| | B) | Liabilities credit debit credit |
| | C) | Expenses debit credit debit |
| | D) | Revenue debit credit credit |
| | E) | Equity credit debit credit |
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| 22 | |
Which of the following accounts is an equity account? |
| | A) | Common stock |
| | B) | Dividends |
| | C) | Rent expense |
| | D) | Fees earned |
| | E) | All of the above |
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| 23 | |
Double-entry accounting requires which of the following? |
| | A) | Each transaction must have only one account debited. |
| | B) | Each transaction must have the same number of debit and credit accounts affected. |
| | C) | Each transaction must affect, and be recorded in, at least two accounts. |
| | D) | Each transaction must only affect the normal balance sides of accounts. |
| | E) | All of the above |
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| 24 | |
The ABC Corporation purchased a three-year insurance policy for $20,000 cash. Recording the purchase of the insurance policy 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, equity to be credited |
| | D) | Equity to be debited, an asset to be credited |
| | E) | One asset to be debited, another asset to be credited |
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| 25 | |
A business purchased forklift 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 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, equity to be credited |
| | D) | A liability to be debited, another liability to be credited |
| | E) | One asset to be debited, another asset to be credited |
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| 26 | |
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 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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| 27 | |
Phillip Anderson received $6,000 for some excavation work to be done when the weather permits. Phillip figures it will be at least three weeks before he can start the job. 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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| 28 | |
The corporation treasurer deposited $40,000 in the company's bank account. The cash was received from selling 4,000 shares of the company's common stock. 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, equity to be credited |
| | D) | Dividends to be debited, an asset to be credited |
| | E) | One asset to be debited, another asset to be credited |
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| 29 | |
Equity increases occur from: |
| | A) | Purchases of supplies |
| | B) | Revenues and stock issuances |
| | C) | Expenses and dividends |
| | D) | Payment of an account payable |
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| 30 | |
The ordering of accounts in a trial balance is: |
| | A) | Alphabetical |
| | B) | From the highest dollar to the lowest dollar value |
| | C) | From the lowest dollar to the highest dollar value |
| | D) | In chart of account order |
| | E) | Random |
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| 31 | |
The Statement of Retained Earnings: |
| | A) | Reports information about how retained earnings changed over a period of time |
| | B) | Reports all sources of cash received and paid over a period of time |
| | C) | Reports the financial position of a business at a given point in time |
| | D) | All of the above |
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| 32 | |
Assets total $100,000 and Liabilities total $10,000. What is the debt ratio? |
| | A) | 1.00 |
| | B) | .75 |
| | C) | .50 |
| | D) | .20 |
| | E) | .10 |
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| 33 | |
The debt ratios of the company at the end of each of the past five years are listed below. In which year did the poorest ratio occur? |
| | A) | 1999 .358 |
| | B) | 2000 .490 |
| | C) | 2001 .301 |
| | D) | 2002 .439 |
| | E) | 2003 .299 |
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| 34 | |
Which of the following items are not found in a journal entry? |
| | A) | Date of the transaction |
| | B) | Dollar amount of each debit and credit |
| | C) | Explanation of each transaction |
| | D) | Cumulative balance of each account affected by the entry |
| | E) | Titles of affected accounts |
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| 35 | |
The process of transferring journal entry information to the ledger is called which of the following? |
| | A) | Journalizing |
| | B) | Posting |
| | C) | Balancing |
| | D) | Analyzing |
| | E) | None of the above |
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| 36 | |
Which of the following is correct with regard to the trial balance when
an error in which a $120 debit to Office Supplies was not posted? |
| | A) | Amount out of balance: $120; Column having larger total: Credit |
| | B) | Amount out of balance: $240; Column having larger total: Debit |
| | C) | Amount out of balance: $ 00; Column having larger total: Neither |
| | D) | Amount out of balance: $120; Column having larger total: Debit |
| | E) | Amount out of balance: $240; Column having larger total: Credit |
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| 37 | |
Which of the following is correct with regard to the trial balance when a $120 credit to Office Supplies was posted in error to Fees Earned? |
| | A) | Amount out of balance: $120; Column having larger total: Credit |
| | B) | Amount out of balance: $240; Column having larger total: Debit |
| | C) | Amount out of balance: $ 00; Column having larger total: Neither |
| | D) | Amount out of balance: $120; Column having larger total: Debit |
| | E) | Amount out of balance: $240; Column having larger total: Credit |
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| 38 | |
Which of the following is correct with regard to the trial balance when a
$120 debit to Office Supplies was posted as a credit to Office Equipment? |
| | A) | Amount out of balance: $120; Column having larger total: Credit |
| | B) | Amount out of balance: $240; Column having larger total: Debit |
| | C) | Amount out of balance: $ 00; Column having larger total: Neither |
| | D) | Amount out of balance: $120; Column having larger total: Debit |
| | E) | Amount out of balance: $240; Column having larger total: Credit |
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| 39 | |
Beginning Retained Earnings totaled $12,000. Stockholder investment during the period totaled $50,000. The ending Retained Earnings balance is $32,000. If dividends of $10,000 were paid during the period, what was the net income of the business? |
| | A) | Net income, $20,000 |
| | B) | Net loss, $2,000 |
| | C) | Net income, $2,000 |
| | D) | Net income, $30,000 |
| | E) | None of the above |
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| 40 | |
Rental revenues were $15,000, total expenses were $45,000, and net income was $55,000. What was the amount of other revenues? |
| | A) | $75,000 |
| | B) | $85,000 |
| | C) | $65,000 |
| | D) | $100,000 |
| | E) | Cannot be determined from information provided |
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| 41 | |
The net profit or loss for a specific period of time is reported on which of the following? |
| | A) | Income statement |
| | B) | Balance sheet |
| | C) | Statement of cash flows |
| | D) | Trial balance |
| | E) | None of the above |
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| 42 | |
The financial position of the business on a given date is reported on which of the following? |
| | A) | Income statement |
| | B) | Balance sheet |
| | C) | Retained earnings statement |
| | D) | Statement of cash flows |
| | E) | None of the above |
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| 43 | |
Which of the following accounts would not appear on the income statement? |
| | A) | Professional fees earned |
| | B) | Unearned revenue |
| | C) | Rent earned |
| | D) | Office supplies expense |
| | E) | All of the above would appear on the income statement |
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