1. When recording transactions in two or more accounts and the totals of the debits and credits are equal, it's called
A. debiting.
B. crediting.
C. posting.
D. double-entry bookkeeping.
2. When using a periodic inventory method, which account is increased when you buy merchandise inventory?
A. Cost of Goods Sold
B. Beginning Inventory
C. Ending Inventory
D. Purchases
3. Carrie billed her legal clients $6,000 for legal work completed during the month. This transaction will
A. cause a $6,000 increase in revenues and liabilities.
B. cause a $6,000 increase in revenues and a decrease in liabilities.
C. cause a $6,000 increase in assets and revenues.
D. not be recorded until the cash is collected.
4. The person or company that borrows money and signs a promissory note payable is the
A. drawee.
B. drawer.
C. payee.
D. maker.
5. A partnership is a business that
A. is easy to form.
B. ends with the death of a partner.
C. is owned by more than one person.
D. All of the above
6. Characteristics of a corporation include
A. stockholders having unlimited liability.
B. direct management by the stockholders.
C. stockholders having limited liability.
D. stockholders choosing a board of directors.
7. An account that would be increased by a debit is
A. cash.
B. fees earned.
C. capital.
D. accounts payable.
8. A company can deem an employee as salaried
A. if it doesn't want to pay overtime wages.
B. if the employee meets the salaried laws under the Fair Labor Standards Act.
C. to make the payroll process easier.
D. if the employee has been employed at the company for one year or longer.
9. Lumber used in construction of a building is part of
A. raw material costs.
B. labor costs.
C. manufacturing overhead.
D. None of the above
10. When services are rendered but payment isn't made, which account would be increased?
A. Accounts receivable
B. Accounts payable
C. Cash
D. Withdrawal
11. A F.O.B. shipping point means
A. the buyer pays for the freight.
B. the seller pays for the freight.
C. the title passes at time of shipment.
D. Both A and C
12. Debt management ratios measure
A. how effectively a company is using its cash.
B. how well a company is using debt versus equity position.
C. a company's ability to earn profit.
D. a company's ability to meet payable obligations.
13. When a bond issued at face value is retired, what is the journal entry?
A. Debit Bond Interest Expense; credit Cash
B. Debit Bonds Payable; credit Cash
C. Debit Cash; credit Bonds Payable
D. Debit Cash; credit Bond Interest Expense
14. Which of the following is prepared first?
A. Balance sheet
B. Income statement
C. Statement of owner's equity
D. Trial balance
15. Which of the following is a non-depreciable asset?
A. Desk chairs
B. Land
C. Computer
D. Building
16. The drawee is the
A. person who writes the check.
B. bank with which the drawer has an account.
C. person to whom the check is payable.
D. person who reconciles the account.
17. Mary and Jeff entered into a partnership agreement. However, the agreement didn't state how income and losses would be divided. The law states that income will be divided
A. equally.
B. according to investments.
C. according to abilities.
D. None of the above
18. The depreciation of equipment will require an adjustment that results in
A. total assets increasing and total expenses increasing.
B. total assets increasing and total expenses decreasing.
C. total assets and expenses decreasing.
D. total assets decreasing and total expenses increasing.
19. R&R Lumber reports gross sales of $70,000. If sales returns and allowances are $10,000 and sales discounts are $3,000, what are the net sales?
A. $83,000
B. $63,000
C. $57,000
D. $70,000
20. In the dividend process, the liability Dividend Payable is recognized on the date of
A. declaration.
B. record.
C. payment.
D. stock issue.