Accounting Questions -

Part A -

Q1. An income statement

a. Summarizes the changes in owner's equity for a specific period of time

b. Presents the revenues and expenses for a specific period of time

c. Reports the assets, liabilities, and owner's equity at a specific date

d. Reports the changes in assets, liabilities, and owner's equity over a period of time

Q2. Liabilities of a company would not include

a. Notes payable

b. Accounts payable

c. Wages payable

d. Cash

Q3. Owner's equity is often referred to as

a. Residual equity

b. None of the above

c. Spoils

d. Second equity

Q4. Druganaut Company buys a $21,000 van on credit. The transaction will affect the

a. Income statement, owner's equity statement, and balance sheet

b. Income statement only

c. Balance sheet only

d. Income statement and owner's equity statement only

Q5. Generally accepted accounting principles are

a. Principles that have been proven correct by academic researchers

b. Standards that indicate how to report economic events

c. Theories that are based on physical laws of the universe

d. Income tax regulations of the Internal Revenue Service

Q6. At October 1, Arcade Fire Enterprises reported owner's equity of $35,000. During October, no additional investments were made and the company earned net income of 59,000. If owner's equity at October 31 totals $39,000, what amount of owner drawings were made during the month?

a. $4,000

b. $13,000

c. $5,000

d. $0

Q7. Radio Moscow Industries purchased supplies for $1,000. They paid $400 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $600.

Q8. After transaction information has been recorded in the journal, it is transferred to the

a. Book of original entry

b. Income statement

c. Ledger

d. Trial balance

Q9. The left side of an account is

a. A description of the account

b. Blank

c. The balance of the account

d. The debit side

Q10. After journal entries are posted, the reference column

a. Of the general journal will be blank

b. Of the general ledger will show journal page numbers

c. Of the general ledger will show account numbers since account number also show in the journal

Q11. The name given to entering transaction data in the journal is

a. Listing

b. Posting

c. Journalizing

d. Chronicling

Q12. Nance Realty company received a check for $15,000 on July 1 which represents a 5- month advance payment of rent on a building it rents to a client. Unearned rent was credited for the full $15,000. Financial statement will be prepared on July 31. Nance Realty should make the following adjusting entry on July 31:

a. Debit unearned rent, $2,500; credit rental revenue, $2,500.

b. Debit rental revenue, $2,500; credit unearned rent, $2,500.

c. Debit unearned rent, $2,500; credit rental revenue, $2,500.

d. Debit cash $15,000; credit rental revenue, $15,000.

Part B -

1. lf total liabilities increased by S 17,000 during a period of time and owner's equity decreased by S6,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

a. $23,000 increase

b. $23,000 decrease

c. $11,000 decrease

d. $11,000 increase

Q2. A balance sheet shows

a. Expenses, drawings, and owner's equity

b. Revenues, expenses, and drawings

c. Revenues, liabilities, and owne/s equity

d. Assets, liabilities, and owner's equity

Q3. Fat Possum's Service Shop started the year with total assets of $110,000 and total liabilities of $80,000. During the year, the business recorded $210,000 in revenues, $140,000 in expenses, and owner drawings of $20,000.

Owner's equity at the end of the year was:

a. $120,000

b. $100,000

c. $30,000

d. $80,000

Q4. Owner's equity is best depicted by the following:

a. Liabilities + assets

b. Assets = liabilities

c. Residual equity + assets

d. Assets - liabilities

Q5. All of the financial statements are for a period of time except the:

a. Statement of cash flows

b. Balance sheet

c. Income statement

d. Owner's equity statement

Q6. Revenues are:

a. The cost of services used during the period

b. The cost of assets consumed during the period

c. Increases in owner's equity resulting from profit seeking activities

d. Cash outflows

Q7. lf expenses are paid in cash, then

a. Assets will decrease

b. Assets will increase

c. Owner's equity will increase

d. Liabilities will decrease

Q8. A credit is not the normal balance for which account listed below?

a. Capital account

b. Drawings account of owner

c. Liability account

d. Revenue account

Q9. Which one of the following represents the expanded basic accounting equation?

a. Assets = Revenues + Expenses - Liabilities

b. Assets = Liabilities + Owner's Capital + Owner's Drawings - Revenue - Expenses

c. Assets = Liabilities + Owner's Capital + Revenues - Owner's Drawings - Expenses

d. Assets - Liabilities - Owner's Drawings = Owner's Capital + Revenues - Expenses

Q10. A debit to an asset account indicates

a. A decrease in the asset

b. An increase in the asset

c. A credit was made to a liability account

d. An error

Q11. The standard form of a journal entry has the

a. Credit account entered first and indented

b. Credit account entered first at the extreme left margin

c. Debit account entered first at the extreme left margin

d. Debit account entered first and indented

Q12. At December 1,20xx, Cursive Company's accounts receivable balance was $1,200. During December, Cursive had credit revenues of $4,800 and collected accounts receivable of $4,000. At December 31, 20xx, the accounts receivable balance is:

a. $400 debit

b. $400 credit

c. $2,000 credit

d. $2,000 debit

Q13. Which of the following journal entries is recorded correctly and in the standard format?

a. Salaries and Wages Expense 500

Cash 1500

Advertising Expense 1,000

b. Cash 1,500

Salaries and Wages Expense 500

Advertising Expense 1,000

c. Salaries and Wages Expense 500

Advertising Expense 1,000

Cash 1500

d. Cash 500

Advertising Expense 1,000

Cash 1,500

Q14. Which of the following is incorrect regarding a trial balance?

a. It proves that the company has recorded all transactions

b. A trial balance is useful in the preparation of financial statements

c. A trial balance uncovers errors in journalizing and posting

d. It proves that the debits equal the credits after posting