8. Performing services on account will have the following effects on the components of the basic accounting equation:

(b) increase assets and increase owner’s equity.

(a) increase assets and decrease owner’s equity.

(c) increase assets and increase liabilities.

(d) increase liabilities and increase owner’s equity.

9. Which of the following events is not recorded in the accounting records?

(a) Equipment is purchased on account.

(c) A cash investment is made into the business.

(d) The owner withdraws cash for personal use.

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

(d) Decreases assets and decreases liabilities.

(a) Decreases owner’s equity and decreases liabilities.

(b) Increases assets and decreases liabilities.

(c) Decreases assets and increases owner’s equity.

12. Which of the following statements is false?

(c) An income statement presents the revenues, expenses, changes in owner’s equity, and resulting net income or net loss for a specifi c period of time.

(a) A statement of cash fl ows summarizes information about the cash infl ows (receipts) and outfl ows (payments) for a specifi c period of time.

(b) A balance sheet reports the assets, liabilities, and owner’s equity at a specifi c date.

(d) An owner’s equity statement summarizes the changes in owner’s equity for a specifi c period of time.

13. On the last day of the period, Alan Cesska Company buys a $900 machine on credit. This transaction will affect the:

(c) income statement and owner’s equity statement only.

(d) income statement, owner’s equity statement, and balance sheet.

14. The fi nancial statement that reports assets, liabilities, and owner’s equity is the:

(b) owner’s equity statement.

15. Services performed by a public accountant include:

(a) auditing, taxation, and management consulting.

. (b) auditing, budgeting, and management consulting.

(c) auditing, budgeting, and cost accounting.

(d) auditing, budgeting, and management consulting

1.Which of the following statements about an account is true?

(b) An account is an individual accounting record of increases and decreases in specifi c asset, liability, and owner’s equity items.

(a) The right side of an account is the debit or increase side.

(c) There are separate accounts for specifi c assets and liabilities but only one account for owner’s equity items.

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

(c) increase assets and decrease liabilities.

(a) increase both assets and liabilities.

(b) decrease both assets and liabilities.

. (d) decrease assets and increase liabilities.

. (c) has a normal balance of a debit.

4. Accounts that normally have debit balances are:

. (d) assets, owner’s drawings, and expenses.

(a) assets, expenses, and revenues.

. (b) assets, expenses, and owner’s capital.

(c) assets, liabilities, and owner’s drawings.

5.The expanded accounting equation is:

(d) Assets 5 Liabilities 1 Owner’s Capital 2 Owner’s Drawings 1 Revenues 2 Expenses.

(a) Assets 1 Liabilities 5 Owner’s Capital 1 Owner’s Drawings 1 Revenues 1 Expenses.

(b) Assets 5 Liabilities 1 Owner’s Capital 1 Owner’s Drawings 1 Revenues 2 Expenses.

(c) Assets 5 Liabilities 2 Owner’s Capital 2 Owner’s Drawings 2 Revenues 2 Expenses.

6. Which of the following is not part of the recording process?

(c) Entering transactions in a journal.

7. 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.

8. The purchase of supplies on account should result in:

(c) a debit to Supplies and a credit to Accounts Payable.

(a) a debit to Supplies Expense and a credit to Cash.

(b ) a debit to Supplies Expense and a credit to Accounts Payable

(d) a debit to Supplies and a credit to Accounts Receivable.

9. The order of the accounts in the ledger is:

(b) assets, liabilities, owner’s capital, owner’s drawings, revenues, expenses.

(a) assets, revenues, expenses, liabilities, owner’s capital, owner’s drawings

(c) owner’s capital, assets, revenues, expenses, liabilities, owner’s drawings.

(d) revenues, assets, expenses, liabilities, owner’s capital, owner’s drawings.

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

(a) contains only asset and liability accounts.

(b) should show accounts in alphabetical order.

(d) is a book of original entry.

(d) transfers journal entries to ledger accounts.

(a) normally occurs before journalizing.

(b) transfers ledger transaction data to the journal.

(c) is an optional step in the recording process.

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

(b) proves the journalized transactions are correct.

(c) will not balance if a correct journal entry is posted twice.

(d) proves that all transactions have been recorded.

14. A trial balance will not balance if:

(c) a $100 cash drawing by the owner is debited to Owner’s Drawings for $1,000 and credited to Cash for $100.

(a) a correct journal entry is posted twice.

(b) the purchase of supplies on account is debited to Supplies and credited to Cash. .

. (d) a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

1.The revenue recognition principle states that:

(c) the economic life of a business can be divided into artifi cial time periods.

(a) revenue should be recognized in the accounting period in which a performance obligation is satisfi ed.

(b) expenses should be matched with revenues.

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

3. Which of the following statements about the accrual basis of accounting is false?

(d) Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

(a) Events that change a company’s fi nancial statements are recorded in the periods in which the events occur.

(b) Revenue is recognized in the period in which services are performed.

(c) This basis is in accord with generally accepted accounting principles

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

(a) expense recognition principle.

(d) revenue recognition principle

5. Adjusting entries are made to ensure that:

(d) All the responses above are correct

(a) expenses are recognized in the period in which they are incurred. .

(b) revenues are recorded in the period in which services are performed.

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

7. The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is:

(c) Supplies Expense 750 Supplies 750

(a) Supplies 600 Supplies Expense 600

(b) Supplies 750 Supplies Expense 750

(d) Supplies Expense 600 Supplies 600

8. Adjustments for prepaid expenses:

(c) decrease assets and increase expenses.

(a) decrease assets and increase revenues.

(b) decrease expenses and increase assets.

(d) decrease revenues and increase assets.

9. Accumulated Depreciation is:

(c) an owner’s equity account.

10. Rivera Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows.

(c) Depreciation Expense 1,000 Accumulated Depreciation— Equipment 1,000

(d) Equipment Expense 1,000 Accumulated Depreciation— Equipment 1,000

(b) Depreciation Expense 1,000 Equipment 1,000

(a) Depreciation Expense 1,000 Accumulated Depreciation— Rivera Company 1,000

11. Adjustments for unearned revenues:

(a) decrease liabilities and increase revenues.

(b) have an assets-and-revenues-account relationship.

(c) increase assets and increase revenues.

(d) decrease revenues and decrease assets.

12. Adjustments for accrued revenues:

(b) have an assets-and-revenues-account relationship.

(a) have a liabilities-and-revenues-account relationship.

(c) decrease assets and revenues.

(d) decrease liabilities and increase revenues.

13. Anika Wilson earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Anika’s employer at September 30 is:

(b) Salaries and Wages Expense 400 Salaries and Wages Payable 400

(c) Salaries and Wages Expense 400 Cash 400

(d) Salaries and Wages Payable 400 Cash 400

14. Which of the following statements is incorrect concerning the adjusted trial balance?

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

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

(b) The adjusted trial balance provides the primary basis for the preparation of fi nancial statements

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

15. The trial balance shows Supplies $0 and 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 and credit Supplies Expense $800

(b) debit Supplies Expense $800 and credit Supplies $800.

(c) debit Supplies $700 and credit Supplies Expense $700.

(d) debit Supplies Expense $700 and credit Supplies $700.

1.Which of the following statements is incorrect concerning the worksheet?

(b) The worksheet is distributed to management and other interested parties.

(a) The worksheet is essentially a working tool of the accountant.

(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 and posting the adjusting entries.

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

(c) income statement (Dr) and b.alance sheet (Cr)

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

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

d) income statement (Cr) and balance sheet (Cr)

3. In the unadjusted trial balance of its worksheet for the year ended December 31, 2017, Knox Company reported Equipment of $120,000. The year-end adjusting entries require an adjustment of $15,000 for depreciation expense for the equipment. After the adjusted trial balance is completed, what amount should be shown in the fi nancial statement columns?

(c) A debit of $120,000 for Equipment in the balance sheet column.

(a) A debit of $105,000 for Equipment in the balance sheet column.

(b) A credit of $15,000 for Depreciation Expense— Equipment in the income statement column.

(d) A debit of $15,000 for Accumulated Depreciation— Equipment in the balance sheet column.

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

(d) Accumulated Depreciation—Equipment.

5. When a net loss has occurred, Income Summary is: (a) debited and Owner’s Capital is credited. (b) credited and Owner’s Capital is debited. (d) credited and Owner’s Drawings is debited.

(b) credited and Owner’s Capital is debited.

(a) debited and Owner’s Capital is credited.

(c) debited and Owner’s Drawings is credited.

(d) credited and Owner’s Drawings is debited.

accounting midterm1

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

1.Which of the following is not a step in the accounting process?

(a) Identifi cation.

(c) Recording

(b) Economic entity.

(d) Communication.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

2.Which of the following statements 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.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

3.The historical cost principle states that:

(a) assets should be initially recorded at cost and adjusted when the fair value changes.

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

(c) assets should be recorded at their cost.

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

4. 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 that 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.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

5.The three types of business entities are:

(a) proprietorships, small businesses, and partnerships.

(b) proprietorships, partnerships, and corporations.

(c) proprietorships, partnerships, and large businesses.

(d) fi nancial, manufacturing, and service companies

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

6.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.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

7.As of December 31, 2017, Kent Company has assets of $3,500 and owner’s equity of $2,000. What are the liabilities for Kent Company as of December 31, 2017?

(a) $1,500.

(c) $2,500.

(b) $1,000.

(d) $2,000.

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accounting midterm1

1.Which of the following is not a step in the accounting process?

2.Which of the following statements about users of accounting information is incorrect?

3.The historical cost principle states that:

4. Which of the following statements about basic assumptions is correct?

5.The three types of business entities are:

6.Net income will result during a time period when:

7.As of December 31, 2017, Kent Company has assets of $3,500 and owner’s equity of $2,000. What are the liabilities for Kent Company as of December 31, 2017?

8. Performing services on account will have the following effects on the components of the basic accounting equation:

9. Which of the following events is not recorded in the accounting records?

10. During 2017, Bruske Company’s assets decreased $50,000 and its liabilities decreased $50,000. Its owner’s equity therefore:

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