Multiple-choice

Accounting provides data or information on

• Income and cost for the managers

• Financial conditions of the institutions

• Company’s tax liability for a particular year

• All the above

Also known as the historical cost principle, ________ states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition.

• revenue recognition principle

• full disclosure principle

• expense recognition (matching) principle

• cost principle

If equity equals $100,000, which of the following is true?

• Liabilities exceed equity by $100,000.

• None of the above is true.

• Assets + liabilities equal $100,000.

• Assets exceed liabilities by $100,000.

A company purchased a building twenty years ago for $150,000. The building currently has an appraised market value of $235,000. The company reports the building on its balance sheet at $235,000. What concept or principle has been violated?

• monetary measurement concept

• recognition principle

• cost principle

• separate entity concept

At November 1, 20XX, Johnson Inc. had an Accounts Receivable balance of $200,000. During the month, the company made sales on account of $300,000. In addition, Johnson Inc. collected $400,000 from customers that owed them money. At November 30, 20XX, the Accounts Receivable balance is

• $100,000 debit

• $500,000 debit 

• $100,000 credit 

• $300,000 credit

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.

Entered in the Purchases Journal are

• Discounts received

• Purchases invoices

• Trade discounts

• Payments to suppliers

The main Purpose of Financial Accounting is?

• To keep track of liabilities

• To Provide financial information to shareholders

• To minimize taxes

• To maintain balance sheet

The expanded accounting equation is used by which statement?

• Balance Sheet

• Cash Flow Statement

• Income Statement

• None of the above

Long term assets without any physical existence but, possessing a value are called

• Intangible assets

• Current assets

• Fixed assets

• Investments