Pre-test (Business Finance)

Purchase of office tables by issuing an interest-bearing promissory note will result in ____.

• an increase in asset and liability

• an increase in asset and a decrease in another asset

• an increase in liability and expense

• an increase in asset and expense

Accounting cycle is a series of recurring steps that usually starts with __________.

• journalizing the business transactions

• analyzing business transactions from source documents

• preparing chart of accounts

• preparing trial balance

What is used in adjusting journal entries?

• Journal

• Ledger

• Trial Balance

• Worksheet

Which of the following statements is correct?

• All accounts in the ledger are presented in the trial balance.

• A balanced trial balance does not prove accuracy of the recording process,

• Asset accounts are always presented in the trial balance under the debit column.

• Transposition errors always result in an unbalanced trial balance.

Adjusting entries are prepared ___________.

• anytime during the accounting period

• always at the end of the accounting period

• at the beginning of the accounting period

• and recorded directly in the ledger

In a service-type of business, revenue is considered earned ______.

• at the end of the month.

• at the end of the year.

• when the service is performed.

• when the cash is received.

What is the result of failure to prepare an adjusting entry at the end of a period to record accrues revenue?

• income to be overstated

• an understatement of assets and an understatement of revenue

• an understatement of revenue and an understatement of liabilities

• an understatement of revenue and an overstatement of liabilities

Which of the following journal entries is not applicable to real accounts?

• Closing entries

• Adjusting entries

• Reversing entries

• None of the above

What is the type of account of Accounts Payable?

• Assets

• Liabilities

• Equity

• Expenses

What is the type of account of Common Stock?

• Assets

• Liabilities

• Equity

• Revenue