Accounting II Practice Test Multiple Choice Part 1 ; 2 – Flashcards

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Recording and reporting a business's financial information separately from the owner's financial information is an application of the accounting concept ____.
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Business Entity
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The amount remaining after the value of all liabilities is subtracted from the value of all assets is ____.
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owner's equity
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The accounting equation is most often stated as ____.
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Assets = Liabilities + Owner's Equity
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In the United States, recording business transactions in dollars is an application of the accounting concept ____.
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Unit of Measurement
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The account used to summarize the owner's equity in a business is ____.
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Capital
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If cash is increased by $2,000.00 when the owner invests cash in the business, then capital is ____.
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increased by $2,000.00
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When a transaction changes both sides of the accounting equation, ____.
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an increase on the left side must equal an increase on the right side
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When a business pays cash for supplies, ____
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assets increase and assets decrease
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When cash is decreased and supplies are increased by an equal amount, ____.
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liabilities and capital are not changed
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When a transaction changes only one side of the equation, if one account is increased, the other account on the same side must ____.
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decrease
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Prepaid Insurance is ____.
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an asset account
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Buying items and paying for them at a future date is ____.
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a common business practice
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When a business buys supplies on account, assets ____.
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increase
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When supplies are bought on account, the business to whom money is owed is ____.
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a liability account
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When cash is paid on account, ____.
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one asset and one liability are changed
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Total assets are $22,000.00. Supplies are bought on account for $1,500.00. The total assets are now ____.
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$23,500.00
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Total assets are $19,500.00. Cash is paid for $1,500.00 of supplies. The total assets are now ____.
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$19,500.00
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To start a business, the owner invested $8,000.00, bought $1,500.00 of supplies, insurance coverage of $500.00, and bought an additional $300.00 of supplies on account. Total assets are ____.
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$8,300.00
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A business has total cash of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. The balance of the cash account is now ____.
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$26,750.00
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A business has total assets of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. Total assets are now ____.
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$28,700.00
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A transaction that increases accounts receivable and increases owner's equity is ____.
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revenue
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A transaction that increases cash and decreases owner's equity is ____.
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none of the above
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Cash is increased by ____.
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revenue
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The asset most commonly withdrawn by business owners is ____.
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cash
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A decrease in owner's equity resulting from the operation of a business is ____.
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an expense
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A record summarizing all the information pertaining to a single item in the accounting equation is ____.
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an account
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In a T account, the debit side is ____.
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the left side
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The right side of a T account is the ____.
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credit side
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If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is ____.
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decreased
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The normal balance side of an asset account is the ____.
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debit side
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When the owner invests cash in a business, the owner's capital account is ____.
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increased by a credit
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When a business pays for insurance, Prepaid Insurance is ____.
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increased by a debit
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When a business buys an asset on one date and agrees to pay on a later date, the transaction is ____.
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on account
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When a business pays cash on account, a liability account is ____.
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decreased by a debit
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When cash is received from sales, the change in the owner's equity is usually ____.
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recorded in a separate revenue account
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When a business receives revenue, Sales is ____.
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increased by a credit
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The amount paid for rent is recorded as a debit to ____.
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Rent Expense
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When cash is paid for rent, Rent Expense is ____.
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increased by a debit
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When the owner withdraws cash, the owner's drawing account is ____.
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increased by a debit
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A drawing account has a normal ____.
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debit balance and is increased by a debit
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The values of all things owned (assets) are on the accounting equation's ____.
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left side
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The values of all equities or claims against the assets (liabilities and owner's equity) are on the accounting equation's ____.
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right side
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An amount recorded on the left side of a T account is ____.
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a debit
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The normal balance side of any liability account is ____.
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the credit side
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The normal balance side of an owner's capital account is ____.
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the credit side
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Debits must equal credits ____.
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in all transactions
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Decreases in an asset account are shown on a T account's ____.
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the credit side
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Decreases in any liability account are shown on a T account's ____.
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debit side
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Increases in an owner's capital account are shown on a T account's ____.
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credit side
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Increases in a revenue account are shown on a T account's ____.
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credit side
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The normal balance side of any revenue account is ____.
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credit side
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The normal balance side of any expense account is ____.
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debit side
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When services are sold on account for $500.00, ____.
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Sales is increased with a credit and Accounts Receivable is increased with a debit
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When $1,500.00 cash is received on account, ____.
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Accounts Receivable is decreased with a credit and Cash is increased with a debit
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A sale on account ____.
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increases an owner's equity account and increases an asset account
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