Which is NOT a step in the Accounting Process?

A. Identification

B. Verification

C. Recording

D. Communication

Which statement about users of accounting information is INCORRECT?

a. Management is an internal user

b.Taxing authorities are external users

c. Present creditors are external users

d. Regulatory authorities are internal users

The cost principle states that:

a. assets should be initially recorded at cost and adjusted when market value changes.

b. activities of an entity are to be kept separate and distinct from its owner.

c. assets should be recorded at cost.

d. only transaction data capable of being expressed in terms of money be included in the accounting records.

Which of the following statements about basic assumptions is CORRECT?

a. basic assumptions are the same as accounting principles.

b. the economic entity assumption states there should be a particular unit of accountability.

c.The monetary unit assumption enables accounting to measure employee morale.

d. Partnerships are not economic entities.

The 3 types of business entities are:

a. proprietorships, small businesses, & partnerships

b. proprietorships, partnerships, & corporations

c. proprietorships, partnerships, &large businesses

d. financial, maunfacturing, & service companies

Net income will result during a time period when:

a. assets exceed liabilities

b.assets exceed revenues

c.expenses exceed revenues

d. revenues exceed expenses

Performing services on account will have the following effect on the components of the basic accounting equation:

a. increase assets and decrease owner's equity

b. increase assets and increase owner's equity

c.increase assets and increase liabilities

d. increase liabilities and increase owner's equity

As of Dec 31,2010 Stoneland Co. has assets of $3,500 and owners equity of $2,000.  Wthat are the liabilities for stoneland Co. as of Dec 31,2010?

a. $1,500

b. $1,000

c. $2,500

d. $2,000

Which event is NOT recorded in the accounting records?

a. Equiptment purchased on account

b. An employee is terminated

c. a cash investment is made into the business

d. The owner draws money for personal use.

During 2010, Gibson Co.'s assets decreased $50,000 & liabilities decreased $90,000. Its owners equity therefore:

a. increased $40,000

b. decreased $140,000

c. decreased $40,000

d. increased $140,000

Payment of an account payable affects the components of the accounting equation in the following way:

a. decreases owners equity & decreases liabilities

b. Increases assets & decreases liabilities

c.Decreases assets & increases owner's equity

d. decreases assets & decreases liabilities

Which statement is FALSE?

a. A statement of cash flows summarizes info about cash inflows (receipts) and outflows (payments) for a specific time period.

b. A balance sheet reports the assets, liabilities, and owner's equity, and resulting net income or loss for a specific time period.

c. An income statement presents the revenues, expenses, changes in owners equity, and resulting net income or loss for a specific period of time.

d. An owners equity statement summarizes the changes in owners equity for a specific period of time.

c. An income statement presents the revenues, expenses, changes in owners equity, and resulting net income or loss for a specific period of time.

On the last day of the period, J. Otto Co. buys a $900 machine on credit. This will affect the:

a. income statement only

b. balance sheet only

c. income statement & owners equity statement only

d. income statement, owners equity statement, & balance sheet.

The financial statement that reports assets, liabilities and owners equity is:

a. income statement

b. owners equity statement

c. balance sheet

d. statement of cash flow

Services provided by a public accountant include:

a. auditing, taxation, & management consulting

b. auditing, budgeting, and management consulting

c. auditing, budgeting and cost accounting

d. internal auditing, budgeting, and management consulting

Which of the following about an account is TRUE?

a. in its simplest form, an account consists of 2 parts

b. An account is an individual accounting record of increases and decreases in specific asset, liability and owners equity items

c. there are separate accounts for specific assets & liabilities but only one account for owners equity items

d. The left side of an account is the credit or decrease side.

Debits:

a. increase both assets and liabilities

b. decrease both assets and liabilities

c. increase assets and decrease liabilities

d. decrease assets and increase liabilities

A revenue account:

a. is increased by debits

b. is decreased by credits

c. has a normal balance of a debit

d. is increased by credits

Accounts that normally have debit balances are:

a. assets, expenses, & revenues

b. assets, expenses, & owners capital

c. assets, liabilities, and owners drawings

d. assets, owners drawings, & expenses

The expanded accounting equation is:

a. Assets + Liabilites = Owners Capital + Owners Drawing + Revenue + Expenses

b. Assets = Liabilites + Owners Capital + Owners Drawing + Revenue - Expenses

c. Assets = Liabilites - Owners Capital - Owners Drawing - Revenue - Expenses

d. Assets = Liabilites + Owners Capital - Owners Drawing + Revenue - Expenses

Which of the following is NOT part of the recording process?

a. Analyzing transaction

b. Preparing a trial balance

c. Entering transactions in a journal

d. posting transactions

Which of the following statements about a journal is FALSE?

a. it is not a book of original entry

b. It provides a chronological record of transactions

c. It helps to locate errors because the debit and credit amounts for each entry can be readily compared

d. it discloses in one place the complete effect of a transaction.

The purchase of supplies on account should result in:

a. debt to Supplies Expense & credit to Cash

b. Debit to Supplies Expense & credit to Accounts payable

c. debit to supples & credit to accounts payable

d. debit to supplies & credit to accounts receivable

The order of accounts in the ledger is:

a. assets, revenues, expenses, liabilities, owners capital, owners drawings

b. assets, liabilities,  owners capital, owners drawings, revenues, expenses

c. owners capital, assets, revenues, expenses, liabilities,  owners drawings

d.  revenues, assets, expenses, liabilities, owners capital, owners drawings

A ledger:

a. contains only asset and liability accounts

b. should show accounts in alphabetical order

c. is a collection of the entire group of acounts maintained by a company

d. a book of original entry

Posting:

a. normally occurs before journalizing

b. transfers legder transaction data to journal

c. is an optional step in the recording process

d. transfers journal entries to ledger accounts

Before posting a payment of $5,000 the Accounts Payable of Senator Co. had a normal balance of $16,000. The balance after posting was:

a. $21,000

b. $5,000

c. $11,000

d. cannot be determined

A trial balance:

a. is a list of accounts with their balances at a given time

b. proves the mathematical accuracy of journalized entries

c. will not balance correcctly if a journal entry is posted twice

d. proves all transactions have been recorded

a. is a list of accounts with their balances at a given time

A trial balance will not balance if:

a. a correct journal entry is posted twice

b. the purchase of supplies on account is debited to supplies and credited to cash

c. a $100 cash drawing by owner is debited to Owners drawings for $1,000 and credited to cash $100

d. a $50 payment on account is debited to accounts payable for $45 and credited to cash for $45.

The trial balance of Clooney Co. had accounts with the following normal balances: Cash $5,000, Revenue $85,000, Salaries Payable $4,000, Salaries Expense $40,000, Rent Expense $10,000, Clooney Capital $42,000, Clooney Drawings $15,000, Equiptment $61,000.  In preparing a trial balance the total in the debit column is:

a. $131,000

b. $216, 000

c. $91,000

d. $116,000

The time period assumption states that:

a. revenue should be recognized in the accounting period it is earned

b. expenses should be matched with revenues

c. the economic life of a business can be divided into artificial time periods

d. the fiscal year should correspond with the calendar year

The time period assumption states that:

a. companies must wait until the calendar year is complete to prepare financial statements

b. companies use the fiscal year to report financial information

c. the economic life of a business can be divided into artificial time periods

d. companies record information in the time period in which the events occur

One of the following statements about the accrual basis of accounting is FALSE:

a. events that change a company's financial statements are recorded in the periods in which the events occur

b. revenue is recognized in the period in which its earned

c. This basis is in accord with GAAP's

d. revenue is recorded only when cash is received and expense is recorded only when cash is paid.

The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is:

a. matching principle

b. cost assumption

c. periodicity principle

d. revenue recognition principle

Adjusting entries are made to ensure that:

a. expenses are recognized in the period in which they are earned

b. revenues are recorded in the period in which they are earned

c. balance sheet and income statement accounts have correct balances at the end of an accounting period

d. all of the above

Each of the following is a major type (or category) of adjusting entries EXCEPT:

a. prepaid expenses

b. accrued revenues

c. accrused expenses

d. earned revenues

The trial balance show Supplies $1,350 & SuppliesExpense $0.  If $600 of supplies are on hand at the end of the period, the adjusting entry is:

a. Supplies cr. 600, supplies expense 600

b. Supplies cr. 750, supplies expense 750

c. Supplies expense cr. 750, supplies  750

d. Supplies expense cr. 600, supplies  600

Adjustments for prepaid expenses:

a. decrease assets & increase revenues

b. decrease revenues & increase assets

c. decrease assets & increase expenses

d. decrease revenues & increase assets

Accumulated Depreciation is:

a. a contra asset account

b. an expense account

c. an owners equity account

d. a liability account

Queenan Co. computes depreciation on delivery equiptment at $1,000 for the month of June. The adjusting entry to record this depreciation as follows:

a. Depreciation expense cr. 1,000; accumulated depreciation- Queenan Co dbt. 1,000

b. Depreciation expense cr. 1,000; delivery equiptment dbt. 1,000

c. Depreciation expense cr. 1,000; accumulated depreciation- Delivery Equipt. dbt. 1,000

d.  Delivery Equipt. expense cr. 1,000; accumulated depreciation- Delivery Equipt. dbt. 1,000

Adjustments for unearned revenues:

a. decrease liabilities & increase reenues

b. have an assets & revenues account relationships

c. increase assets & increase revenues

d. decrease revenues & decrease assets

a. decrease liabilities & increase reenues

Adjustments for accrued revenues:

a. have a liabilities & revenues account relationship

b. have an assets & revenues account relationship

c. decreases assets & v revenues

d.decreases liabilities & increases revenues

Kthy Siska earned $400 salary the last week of Sept. She will be paid Oct 1st.  The adjusting entry for Kathy's employer at Sept 30 is:

a. none required

b.Salaries Expense cr. 400; Salaries payable debit 400

c. Salaries Expense cr. 400; Cash 400

d. Salaries Payable cr. 400; Cash 400

Which is INCORRECT concerning the adjusted trial balance:

a. An adjusted trial balance proves the equality of the total debit balances & total credit balances in the ledger after all adjustments are made

b. The adjusted trial balance provides the primary basis for the preparation of financial statements

c. The adjusted trial balance lists the account balances segregated by assets and liabilities

d. the adjusted trial balance is prepared after adjusting entries have been journalized and posted

The trial balance shows Supplies $0 & Supplies Expense $1,500. If $800 of supplies are on hand at the end of the period the adjusting entry is:

a. debit supplies $800, credit Supplies Expense $800

b. debit supplies Expense $800, credit Supplies $800

c. debit supplies $700, credit Supplies Expense $700

d. debit supplies Expense $700, credit Supplies $700

Which of the following statements is INCORRECT concerning the worksheet?

a. The worksheet is essentially a working tool for the accountant

b. The worksheet is distributed to management & other interested parties

c. The worksheet cannot be used as a basis for posting to ledger accounts

d. Financial statements can be prepared directly from the worksheet before journalizing & posting adjusting entries

In a worksheet, net income is entered in the following columns:

a. income statement (Dr) & balance sheet (Dr)

b. income statement (Cr) & balance sheet (Dr)

c. income statement (Dr) & balance sheet (Cr)

d. income statement (Cr) & balance sheet (Cr)

In the unadjusted trial balance of its worksheet for the year end Dec 31, 2010 Taitum Co. reported office equiptment of $120,000. The year end adjusting entries require an adjustment of $15,000 for office equiptment depreciation expense. After the adjustment what should be recorded?

a. Debit $105,000 for Office Equiptment in the balance sheet column

b. Credit $15,000 for Depreciation Expense-Office Equiptment in the income statement column

c. Debit of $120,000 for Office Equiptment in the balance sheet column

d. Debit $15,000 for Accumulated Depreciation- Office Equiptment in the balance sheet column

An account that will have a zero balance after closing entries have been journalized and posted is:

a. service revenue

b. Advertising Supplies

c. Prepaid Insurance

d. Accumulated depreciation

When Net Loss has occurred, Income Summary is:

a. debited & owners capital is credited

b. credited and owners capital is debited

c. debited & owners drawings is credited

d. credited and owners drawings is debited

The closing process involves separate entries to close (1) expenses, (2) drawings, (3) revenues, (4) income summary. The correct sequencing of the entries is:

a. 4, 3, 2, 1

b. 1, 2, 3, 4

c. 3, 1, 4, 2

d. 3, 2, 1, 4

Which types of accounts will appear in the post-closing trial balance?

a. permanent (real) accounts

b. temporary (nominal) accounts

c. accounts shown in the income statements column of a work sheet

d. none of the above

All of the following are required steps in the accounting process except:

a. journalizing & posting closing entries

b. preparing financial statements

c. journalizing transactions

d. preparing a worksheet

The proper order of the following steps in the accounting cycle is:

a. prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries

b. journalize transactions, prepare unadjusted trial balance,  post to ledger accounts, journalize and post adjusting entries 

c. journalize transactions,  post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries

d. prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts,

When Alexander Co. purchased supplies worth $500, it incorrectly recorded a credit to Supplies for $5,000 and a debit to cash for $5,000. Before correcting this error:

a. Cash is overstated and Supplies are understated

b. Cash is understated and Supplies are understated

c. Cash is understated and Supplies are overstated

d. Cash is overstated and Supplies are overstated

Cash of $100 was received at the time of service and was journalized & posted as a debit to Cash $100 credit to Accounts Receivable $100. Assuming the incorrect entry is not reversed:

a. debit service revenue & credit Accounts Receivable $100

b. debit Accounts Receivable & credit Service Revenue $100

c. debit Cash & credit Service Revenue $100

d. debit Accounts Receivable & credit Cash $100

The correct order of presentation in a classified balance cheet for the following current assets is:

a. accounts receivable, cash, prepaid insurance, inventories

b. cash, inventories, accounts receivable, prepaid insurance

c. cash, accounts receivable, inventories, prepaid insurance

d. inventories, cash, accounts receivable, prepaid insurance

A company has a tract of land. It expectsto build a production plant on the land in about 5 years. During the 5 years before construction the land will be idle. The land should be reported as:

a. property, plant, & equiptment

b. land expense

c. long term investment

d. intangible asset

In a classified balance sheet, assets are usually classified using the following categories:

a. current assets; long-term assets; property, plant & equiptment; intangible assets

b. current assets; long-term investments; property, plant & equiptment; tangible assets

c. current assets; long-term assets; tangible assets; intangible assets

d. current assets; long-term investments; property, plant & equiptment; intangible assets

Current assets are listed:

a. by expected conversion to cash

b. by importance

c. by longevity

d. alphabetically

Dec 31, Frank Voris Co. correctly made an adjusting entry to recognize $2,000 of accrued salaries payable. On Jan 8th, total salaries of $3,400 were paid. Assuming the correct reversing entry was made on Jan 1, the Jan 8th entry credits Cash $3,400 and debit(s):

a. Salaries Payable $1,400, Salaries Expense $2,000

b. Salaries Payable $2,000, Salaries Expense 1,400

c. Salaries expense $3,400

d. Salaries Payable $3,400