Accounting I Mid-Term Review

The standards, conventions, and

rules that accountants follow to prepare financial reports are known as:

• generally accepted accounting principles.

• accounting and audit procedures.

• management accounting.

• executive accounting.

Which term refers to the owner having full responsibility for company debts and obligations?

• limited liability

• stock obligation

• unlimited liability

• taxation obligation

Which type of business buys raw materials and transforms them into finished products?

• entrepreneurial

• manufacturing

• merchandising

• service

Harley's Hog BBQ owns and operates several barbecue restaurants. In 20XX, Harley, the owner, took out a loan for his business in the amount of $100,000. The loan will be completely paid off within 6 months. When preparing the financial statements of the business, Harley opted not to list the loan because it was so close to maturity. Which principle did Harley's Hog BBQ violate?

• cost principle

• full disclosure principle

• revenue recognition principle

• matching principle

Mary is preparing a Balance Sheet. When she completes the Owner's Equity Section, what should the end result represent?

• The Total Assets are less than the Owner's Equity.

• The Total Assets plus Total Liabilities Owner's Equity.

• The Total Assets should equal Total Liabilities plus Owner's Equity.

• The Total Assets should equal Total Liabilities minus Owner's Equity

What is an example of an account that has a normal debit balance?

• Accounts Payable/Ray's Office Equipment

• Insurance Expense

• Ray Smith, Capital

• Sales

In the transaction RECEIVED CASH FROM OWNER AS AN INVESTMENT, the source document is a/an:

• calculator tape.

• check stub.

• invoice.

• receipt.

The correct journal entry for the transaction PAID CASH ON ACCOUNT TO AVIS SUPPLY COMPANY is:

• debit Cash and credit Owner's Capital.

• debit Cash and credit Owner's Drawing.

• debit Accounts Payable/Avis Supply Company and credit Cash.

• debit Accounts Receivable/Avis Supply Company and credit Cash.

The correct journal entry for the transaction RECEIVED CASH ON ACCOUNT FROM BILL'S LIMOS is:

• debit Accounts Receivable/Bill's Limos and credit Cash.

• debit Accounts Receivable/Bill's Limos and credit Jane Smith, Capital.

• debit Cash and credit Accounts Receivable/Bill's Limos.

• debit Cash and credit Jane Smith, Capital.

The transaction RECEIVED A CHECK FOR LEGAL FEES would result in the journal entry:

• debit Cash and credit Legal Fees-Expense.

• debit Cash and credit Legal Fees-Revenue.

• debit Legal Fees-Expense and credit Cash.

• debit Miscellaneous Expense and credit Legal Fees-Revenue.