Accounting Quiz

Unincorporated profit making business that is owned by two or more than two persons is called partnership.

The role of Accounting in the business is to provide quantitative information to the users.

Prepaid expenses are initially treated as revenue and gradually converted to expenses.

The business principles that states one business must be separate from the others as well as from the owners is called cost principle.

If total assets increased $20,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of the change in owner's equity for that period is a(n):

• $32,000 increase.

• $32,000 decrease.

• $8,000 increase.

• $8,000 decrease.

If revenue was $45,000, expenses were $37,500, and the owner's withdrawals were $10,000, the amount of net income or net loss would be:

• $45,000 net income.

• $7,500 net income.

• $37,500 net loss.

• $2,500 net loss.

Debits:

• increase both assets and liabilities.

• decrease both assets and liabilities.

• increase assets and decrease liabilities.

• decrease assets and increase liabilities.

A revenue account:

• is increased by debits.

• is decreased by credits.

• has a normal balance of a debit.

• is increased by credits.

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.

Posting:

• normally occurs before journalizing.

• transfers ledger transaction data to the journal.

• is an optional step in the recording process.

• transfers journal entries to ledger accounts.