The retained earnings statement shows all of the following except :

the time period following the one shown for the income statement.

the amounts of changes in retained earnings during the period.

the causes of changes in retained earnings during the period.

beginning retained earnings on the first line of the statement.

The best definition of assets is the

resources belonging to a company that have future benefit to the company.

collections of resources belonging to the company and the claims on these resources

owners’ investment in the business.

Generally accepted accounting principles

are accounting rules that are recognized as a general guide for financial reporting.

are accounting rules formulated by the Internal Revenue Service

are sound in theory but rarely used in real life.

have eliminated all errors in accounting

What is the order in which assets are generally listed on a classified balance sheet?

current assets; long-term investments; property, plant and equipment, intangibles

current assets; property, plant and equipment; long-term investments; intangibles

current assets; property, plant and equipment; intangibles; long-term investments

What organization issues U.S. accounting standards?

Financial Accounting Standards Board

Securities and Exchange Commission

International Accounting Standards Committee

International Auditing Standards Committee

The agency of the United States Government that oversees the U.S. financial markets is the

Financial Accounting Standards Board.

International Auditing Standards Committee.

The two fundamental qualities of useful information are

relevance and faithful representation

understandability and consistency

The operating cycle of a company is the average time that is required to go from cash to

inventory in producing revenues

accounts receivable in producing revenues.

A liquidity ratio measures the

short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.

percentage of total financing provided by creditors.

ability of a company to survive over a long period of time.

income or operating success of a company over a period of time

Which statement about an account is true?

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

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

There are separate account for specific assets and liabilities but only one account for stockholders’ equity items

In its simplest form, an account consists of two parts.

The payment of a liability:

decreases assets and liabilities.

decreases assets and increases liabilities.

increases assets and decreases liabilities.

decreases assets and stockholders' equity.

The normal balance of any account is the

side which increases that account.

side which decreases that account.

The usual sequence of steps in the transaction recording process is

analyze, journalize, post to the ledger.

journalize, analyze, post to the ledger.

journalize, post to the ledger, analyze.

post to the ledger, journalize, analyze.

Comstock Company provided consulting services and billed the client $2,500. As a result of this event,

Both assets (Accts Rec.) and equity (Revenue) increased by $2,500.

total assets remained unchanged.

For the basic accounting equation to stay in balance, each transaction recorded must

affect the same number of asset and liability accounts

always affect exactly two accounts.

increase assets and decrease liabilities

decrease both assets and liabilities.

increase both assets and liabilities.

decrease assets and increase liabilities.

In recording an accounting transaction in a double-entry system,

the amount of the debits must equal the amount of the credits.

there must always be entries made on both sides of the accounting equation.

the number of debit accounts must equal the number of credit accounts.

there must only be two accounts affected by any transaction.

The purpose of the ledger is to

keep in one place all information about changes in specific account balances.

make sure that all assets, liabilities, etc., have normal balances at all times.

record chronologically the day's transactions.

keep a record of documentation to support each transaction.

If a company buys a $700 machine on account, this transaction will affect the

income statement and retained earnings statement only.

income statement, retained earnings statement, and balance sheet.

Collection of a $600 Accounts Receivable

increases an asset $600; decreases an asset $600.

decreases a liability $600; increases stockholders’ equity $600.

increases an asset $600; decreases a liability $600.

decreases an asset $600; decreases a liability $600.

A trial balance would only help in detecting which one of the following errors?Hint: Limitations of Trial Balance

A transposition error when transferring the debit side of journal entry to the ledger

Offsetting errors made in recording the transaction

A journal entry that is posted twice

A transaction that is not journalized

An investment by the stockholders in a business increases

assets and stockholders’ equity.

liabilities and stockholders’ equity.

Courtney Company purchased equipment for $1,800 cash. As a result of this event,

total assets remained unchanged.

Both assets and equity decreased by $1,800

is a collection of the entire group of accounts (and the changes in their balances) maintained by a company.

contains only asset and liability accounts.

should show accounts in alphabetical order.

provides a chronological record of transactions.

Posting is performed by transferring information from the

source documents to the journal.

source documents to the ledger.

provides a chronological record of transactions.

should show accounts in alphabetical order.

contains only asset and liability accounts.

is a collection of the entire group of accounts maintained by a company.

The primary purpose of the trial balance is to

prove the equality of the debit and credit amounts after posting.

make sure a journal entry is not posted twice.

transfer journal entries to the ledger accounts.

disclose the complete effect of a transaction in one place.

All of the following are characteristics of every accounting information system except it is a system

of data storage hardware for the chart of accounts.

that processes transaction data.

that collects transaction data.

that communicates financial information to decision makers.

An adjusted trial balance:

proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made and is used in the preparation of financial statements.

is a required financial statement under generally accepted accounting principles.

is prepared after the financial statements are completed.

cannot be used to prepare financial statements.

The closing entry process consists of closing:

all asset and liability accounts.

out the Retained Earnings account.

The purpose of the post-closing trial balance is to:

prove the equality of the permanent account balances that are carried forward into the next accounting period.

list all the balance sheet accounts in alphabetical order for easy reference.

prove that no mistakes were made.

prove the equality of the temporary account balances that are carried forward into the next accounting period.

Accounting Final Review

Authored by Jun O

Business

University

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128 questions

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MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is the most appropriate definition of accounting?

The information system that identifies, records, and communicates the economic events of an organization to interested users.

A means of collecting information.

The interconnected network of subsystems necessary to operate a business.

Electronic collection, organization, and communication of vast amounts of information.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is the best definition of an internal user of accounting information

Investors who use accounting information to decide whether to buy or sell stock

Creditors, such as banks, that use accounting information to evaluate the risk of lending money

Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits

Managers who use accounting information to plan, organize, and run a business

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is not an advantage of the corporate form of business organization?

No personal liability

Easy to transfer ownership

Favorable tax treatment

Easy to raise funds

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is not a principal type of business activity?

Operating

Investing

Financing

Delivering

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Borrowing money is an example of a(n)

delivering activity.

financing activity

operating activity

investing activity

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which activities involve acquiring the resources to run the business?

Delivering

Financing

Investing

Operating

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

To show how successfully your business performed during a period of time, you would report its revenues and expenses in the

balance sheet.

income statement.

statement of cash flows.

retained earnings statement

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Accounting Final Review

Which of the following is the most appropriate definition of accounting?

Which of the following is the best definition of an internal user of accounting information

Which of the following is not an advantage of the corporate form of business organization?

Which of the following is not a principal type of business activity?

Borrowing money is an example of a(n)

Which activities involve acquiring the resources to run the business?

To show how successfully your business performed during a period of time, you would report its revenues and expenses in the

Which of the following financial statements is concerned with the company at a point in time?

The retained earnings statement shows all of the following except:

The right to receive money in the future is called a(n)

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