question

The payment of a telephone bill for the month would include

answer

debiting Telephone Expense and crediting Cash

question

A T account has which of the following three major parts?

answer

a title, a debit side, and a credit side

question

If owner's equity and liabilities increased during the period, then assets must also have increased.

answer

True

question

The balance sheet reports assets, liabilities, and owner's equity on a specific date.

answer

True

question

Writing or using one of the latest technological advances to enter a transaction in the accounting records is called summarizing.

answer

False

question

A cash payment on a loan affects which of the following accounts?

answer

Cash and Notes Payable

question

Liability, owner's capital, and revenue accounts normally have

answer

credit balances

question

Any accounting period of twelve months' duration is usually referred to as a(n)

answer

Fiscal year

question

A credit

answer

is on the right side

question

The accounting equation may be expressed as

answer

owner's equity = assets - liabilities.

question

Examining a transaction or event to determine its fundamental significance to the business so that the relevant information may be properly processed is called

answer

analyzing

question

Service revenue received in cash is entered by

answer

debiting Cash and crediting Service Revenue.

question

If the revenue of a period exceeds the expenses, the excess represents a net loss.

answer

False

question

The accounting equation may be expressed as assets - liabilities = owner's equity.

answer

True

question

Corrections in accounts should be made by

answer

the ruling method.

question

The financial statement that should be completed first is the

answer

Income statement

question

The principal accounting officer of a company is called a pubic accountant.

answer

False

question

Jason purchased office equipment for $4,800 on account. This transaction would

answer

increase assets and increase liabilities.

question

Stephen purchased office supplies for $800 in cash. This transaction would

answer

increase one asset and decrease another asset.

question

Increases to owner's equity may be from

answer

revenue that is derived from sales of goods or services.

question

Financial statements commonly prepared by businesses include an income statement, a statement of owner's equity, and a balance sheet.

answer

True

question

Footings in T accounts

answer

are used for accounts with more than one debit or credit.

question

It is not necessary to measure a business transaction in dollars.

answer

False

question

An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.

answer

True

question

The financial statement that shows the state of the firm's assets, liabilities, and owner's equity on a specific date is called a(n)

answer

balance sheet.

question

The sum of the debits must equal the sum of the credits on the trial balance.

answer

True

question

An example of an expense is

answer

investments.

question

Payment of a telephone bill represents an increase in a(n)

answer

Expense

question

The person who reviews the operating and accounting control procedures adopted by management to make sure the controls are adequate may be referred to as a(n)

answer

internal auditor.

question

Stockholders own which type of business?

answer

corporation

question

The Financial Accounting Standards Board develops generally accepted accounting principles to provide some assurance that companies are reporting business activities in a similar manner.

answer

True

question

The accounts in the chart of accounts are arranged in

answer

numerical order

question

If cash is paid for office rent, the transaction includes

answer

debiting Rent Expense and crediting Cash.

question

Cash is used to pay for a car for personal use by the owner. The transaction includes

answer

debiting Capital and crediting Cash.

question

Increases are entered on the credit side of a(n)

answer

drawing account.

question

Generally accepted accounting principles are procedures and guidelines to be followed in the accounting/reporting process.

answer

True

question

Since financial information is communicated in accounting terms, accounting is said to be the "language of business."

answer

True

question

The person who records or enters information in accounting records may be referred to as a(n)

answer

Accounting Clerk

question

Stockholders may have very little influence on business decisions.

answer

True

question

The accounting function of classifying is

answer

sorting and grouping similar items together.

question

Reviewing the events that have taken place and determining how this affects the business is called interpreting.

answer

False

question

To debit an account is to enter an amount on the left side of the account.

answer

True

question

The purpose of accounting is to provide financial information about a business to individuals and organizations.

answer

True

question

The flow of data through the accounting information system includes analyzing transactions, journalizing, posting, and preparing a trial balance.

answer

True

question

If the owner of a company invested cash in a business enterprise, the transaction would include

answer

debiting Cash and crediting Capital.

question

The standard T account includes all of the following EXCEPT

answer

the current date.

question

The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting.

answer

True

question

Accountants design accounting information systems and analyze and interpret information.

answer

True

question

Because the first formal accounting record of a transaction is made in a journal from source document information, a journal is commonly referred to as a(n)

answer

book of original entry.

question

A chronological record of financial transactions expressed as debits and credits to accounts is provided by the

answer

Journal

question

A business that purchases a product from another business to sell to customers is called a

answer

merchandising business.

question

Payment of office rent represents a decrease in

answer

Cash

question

Bringing together various items of information to determine or explain a result is

answer

Summarizing

question

The accounting equation shows the relationship among the three basic accounting elements-assets, revenues, and owner's equity.

answer

False

question

The trial balance

answer

shows only debit balances.

question

A decrease in owner's equity may result from a(n)

answer

withdrawal of cash from the business by the owner.

question

A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities.

answer

True

question

Posting from the journal to the ledger does NOT involve which of the following steps?

answer

Enter the description of the entry.

question

The steps in the journalizing process include all of the following EXCEPT

answer

enter the balance.

question

The Posting Reference column of the journal provides a cross-reference between the

answer

journal and ledger.

question

Prepaid Insurance is an expense account.

answer

False

question

Forms and papers that provide information about a business transaction are called

answer

source documents.

question

Accounts that affect owner's equity are

answer

expenses, capital, and drawing.

question

Every entry in the journal should include all of the following EXCEPT

answer

the balance of the accounts affected.

question

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

answer

True

question

Asset and expense accounts normally have

answer

credit balances.

question

The terms "profit and loss statement" or "operating statement" are sometimes used as synonyms for the balance sheet.

answer

False

question

A credit represents a decrease in

answer

An asset

question

A debit

answer

is on the left side

question

Instead of T accounts, businesses are more likely to use a

answer

four-column account.

question

A partnership is owned by stockholders or shareholders.

answer

False

question

The income statement provides information about events over a period of a month, year, or other period of time.

answer

True

question

Revenue accounts normally have debit balances.

answer

False

question

The month in the journal is recorded

answer

as the first entry on a page.

question

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

answer

double-entry accounting.

question

If the person who is named as payee on a check transfers the right to receive the money by signing his/her name on the back of the check, the signature is called a

answer

blank endorsement.

question

The depreciation system used by many businesses for tax purposes is the

answer

Modified Accelerated Cost Recovery System.

question

Owner's equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by the owner is $15,000; and total withdrawals by the owner is $5,000. The owner's equity at the end of the period is

answer

$75,000.

question

The total revenue of the month of June amounted to $6,500; total expenses amounted to $3,500; and withdrawals amounted to $600. The net income for the month amounted to

answer

$3,000

question

The Income Summary account is used to

answer

close revenue accounts and expense accounts and update the owner's capital account.

question

The journal entry to close the income summary account (showing a profit) includes

answer

debiting Income Summary and crediting the owner's capital account.

question

The balance in an expense account is closed to a(n)

answer

income summary account.

question

The third pair of columns on a 10-column work sheet prepared at the end of the period would be the

answer

Income Statement columns.

question

A petty cash fund of $200 has $17 in cash, $180 in petty cash vouchers, and $3 in miscellaneous receipts not included with the petty cash vouchers. The proper journal entry to replenish the fund would include a credit to Cash for

answer

$183

question

A form of balance sheet that lists the liabilities and the owner's equity sections below the assets section is called the

answer

Report form

question

The fifth pair of columns on a 10-column work sheet prepared at the end of the period would be the

answer

Balance Sheet columns.

question

The steps involved in handling all of the transactions and events completed during an accounting period, beginning with placing data in a book of original entry and ending with a post-closing trial balance, are referred to collectively as

answer

the accounting cycle.

question

When assets are recorded at original value, they are recorded under the

answer

historical cost principle.

question

Which step is taken at the end of the accounting period?

answer

prepare a post-closing trial balance

question

The adjusting entry for the depreciation of office equipment for the period includes

answer

debiting Depreciation Expense-Office Equipment and crediting Accumulated Depreciation-Office Equipment.

question

To record wages earned but not paid under the modified cash accounting method,

answer

no entry is required.

question

Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include

answer

debiting Cash and crediting Interest Earned.

question

A separate explanation of each closing entry is necessary.

answer

False

question

What is the correct sequence for closing the temporary accounts?

answer

revenue accounts, expense accounts, Income Summary, drawing account

question

The matching principle in accounting requires the matching of

answer

revenue earned with the expenses incurred to produce the revenue.

question

Owner's equity can be increased through

answer

investments by the owner.

question

The journal entry to close expense accounts includes

answer

debiting Income Summary and crediting the expense accounts.

question

Net income is shown on the work sheet as a

answer

debit in the Income Statement column.

question

Check No. 450, a payment of $45 for the telephone bill, was incorrectly entered on the check stub as $54. Which of the following adjustments needs to be made?

answer

increase the book balance

question

A credit journal entry to the cash short and over account is used to record a cash overage.

answer

True

question

A check involves three parties. The person directed to receive the money is called the

answer

payee

question

The petty cash payments record indicates classified expenditures as follows: Automobile Expense, $20; Supplies Expense, $12; Postage Expense, $6; and Miscellaneous Expense, $5. The journal entry to replenish the petty cash fund would include a credit to Cash for

answer

$43

question

Which of the following steps of the accounting cycle are in the correct order?

answer

prepare a trial balance, make adjustments, prepare financial statements

question

After the closing entries are journalized and posted, which of the following accounts would NOT have a balance?

answer

Delivery Fees

question

Supplies originally cost $500, but only $150 worth of supplies were used this period. The adjusting entry would be

answer

debit Supplies Expense, $150; credit Supplies, $150.

question

The cost of an asset that is subject to depreciation is called

answer

depreciable cost.

question

If a business records revenues when earned, regardless of whether cash has been received, and records expenses when they are incurred, the accounting system is a(n)

answer

accrual basis of accounting.

question

To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

answer

outstanding checks

question

If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is

answer

$16,000

question

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include

answer

debiting Miscellaneous Expense and crediting Cash.

question

When posting an adjusting entry to the general ledger, write

answer

"adjusting" in the Item column.

question

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500, and outstanding checks total $300. The adjusted bank balance and book balance is

answer

$1,200

question

The bank statement for a checking account normally shows the

answer

amount of deposits and other credits added during the period.

question

The order in which financial statements should be prepared is

answer

income statement, statement of owner's equity, balance sheet.

question

To reconcile the bank statement, which of the following amounts would be added to the checkbook balance?

answer

amounts collected by the bank for the depositor's account

question

The amount reported in the Balance Sheet columns of the work sheet for the owner's capital represents the

answer

beginning balance plus additional investments.

question

On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as

answer

outstanding checks.

question

A net loss is shown on the work sheet as a(n)

answer

debit in the Balance Sheet columns.

question

After the closing entries have been posted, which of the following accounts would NOT have a balance?

answer

Miscellaneous Expense

question

After the accounts are closed and the journal entries have been posted, which of the following accounts would have a balance?

answer

Supplies

question

A special form of receipt showing the name of the payee, the purpose of the payment, and the account to be charged for each petty cash payment is known as a

answer

petty cash voucher.

question

The balance sheet reports

answer

Assets

question

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?

answer

Service charge

question

The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the

answer

Income Statement columns.

question

To prove the equality of the debit and credit balances in the general ledger accounts after the closing entries have been journalized and posted, prepare the

answer

post-closing trial balance.

question

To record the purchase of assets on account under the modified cash basis of accounting method,

answer

debit the asset and credit Accounts Payable.

question

The time an asset is expected to last is called its

answer

useful life

question

An asset cost $33,000. It has an expected useful life of 5 years and an expected salvage value of $3,000. Depreciation expense for the first year of the asset's life using the straight-line method is

answer

$6,000

question

To complete transactions with the bank, electronic funds transfer (EFT) systems use

answer

computer

question

The second pair of columns on a 10-column work sheet prepared at the end of the period would be the

answer

Adjustments columns.

question

Each check should be identified by its

answer

ABA number

question

When recording closing entries in the general journal, which of the following is written in the Description column?

answer

"closing entries"

question

Changes in owner's equity that result from investments or withdrawals of assets by the owner are included in the

answer

statement of owner's equity.

question

To reconcile the bank statement, which of the following amounts would be added to the bank statement balance?

answer

outstanding checks

question

The process of bringing the book and the bank balance into agreement is called

answer

reconciling the bank statement.

question

A check involves three parties. The person who orders the bank to pay a certain amount of money is called the

answer

endorser.

question

A check involves three parties. The bank in which the drawer has money on deposit is called the

answer

drawee.

question

The total assets amount to $24,000 and the total liabilities amount to $18,000. The amount of the owner's equity is

answer

$6,000

question

An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)

answer

contra-account.

question

To use an ATM machine, the depositor must have a

answer

PIN number

question

The check written to establish the petty cash fund is entered in the journal by

answer

debiting Petty Cash and crediting Cash.

question

A debit to Accounts Receivable for $50 and a credit to Cash for $50 would be an accurate journal entry to record

answer

not sufficient funds (NSF) checks.

question

What is the purpose of the post-closing trial balance?

answer

to prove the balances in the general ledger accounts are correct

question

The journal entry to close the income summary account (showing a net loss) includes

answer

debiting the owner's capital account and crediting Income Summary.

question

A typical account number for a contra-account would be

answer

185.1

question

Matching the cost of an asset with the revenue it is expected to produce is called

answer

depreciation.

question

To sign the back of a check with the name of the company and "Pay to any bank" is an example of a

answer

restrictive endorsement.

question

The owner's equity in a business amounted to $56,000 at the beginning of the year and $100,000 at the end of the year. The owner had made no additional investments and had withdrawn $19,000 during the year. The net income for the year amounted to

answer

$63,000

question

In completing the work sheet, what is the reason for adding the net income for the year to the Balance Sheet Credit column?

answer

Owner's equity is not up-to-date.

question

The journal entry to close revenue accounts includes

answer

debiting Income Summary and crediting the revenue accounts.

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