KETE201_Revision for Midterm test

Which of the following accounting principles would require that all goods and services purchased be recorded at cost? 

• Going-concern principle

• Continuing-concern principle

• Historical cost principle

• Business entity principle

Resources owned or controlled by a company that are expected to yield future benefits are:

• Assets

• Revenues

• Liabilities

• Owner's Equity

A trial balance:

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

• proves the journalized transactions are correct.

• will not balance if a correct journal entry is posted twice.

• proves that all transactions have been recorded

The purchase of supplies on account should result in:

• a debit to Supplies Expense and a credit to Cash.

• a debit to Supplies Expense and a credit to Accounts Payable.

• a debit to Supplies and a credit to Accounts Payable.

• a debit to Supplies and a credit to Accounts Receivable

Which of the following statements is true about assets? 

• They are economic resources owed by the business

• They are expected to provide long-term benefits to the business

• They appear on the statement of profit or loss

• Claims on them can be shared between creditors and owners

Before posting a payment of €5,000, the Accounts Payable of Green Grocers had a normal balance of €16,000.

The balance after posting this transaction was:

• €21,000

• €5,000.

• €11,000

• cannot be determined.

What is the primary purpose of a balance sheet?

• To show the profitability of a company over a period

• To provide a snapshot of a company's financial position at a specific point in time

• To report the changes in equity during a period

• To summarize cash inflows and outflows

Which of the following is considered a liability?

• Common stock

• Accounts payable

• Retained earnings

• Inventory

On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of owner's equity as of July 1 of the current year? 

• $8,300

• $13,050

• $20,500

• $31,100

• $40,400

Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation? 

• Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.

• Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect

• Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect

• Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.

• Assets, $30,000 decrease; liabilities, no effect; equity, $30,000 decrease.