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Worksheetsaccounting ch 2
Total questions: 40
Worksheet time: 21mins
Which of the following transactions would result in a decrease to the company’s liabilities?
A payment was made on account to a vendor
An amount was borrowed from a bank and a note payable was signed
Salaries were paid to employees
Services were performed for cash
Services were performed on account
Which of the following statements about general ledger accounts is true?
Asset accounts are permanent accounts that are increased with credits.
Liability accounts are temporary accounts that are increased with credits.
Revenue accounts are temporary accounts that are increased with credits.
Expense accounts are permanent accounts that are increased with debits.
Which of the following is not a source document?
Sales invoices
Customer checks
Newspaper advertisements
Bills from suppliers
The payment of utilities for the period would have what effect on the accounting equation?
Assets increase; liabilities increase
Assets decrease; owners’ equity decreases
Liabilities increase; owners’ equity decreases
Liabilities decrease; ownership equity increases
The purchase of supplies on account would be recorded in a journal entry with a:
Debit to Supplies
Credit to Cash
Debit to Accounts Payable
Credit to Supplies
A trial balance can best be explained as a list of:
The balance sheet accounts used to show the equality of the accounting equation.
All accounts and their balances at a particular date.
Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings.
The income statement accounts used to calculate net income.
Which of the following is true?
Revenues increase Retained Earnings and decrease Equity.
Expenses increase Retained Earnings and increase Equity.
Dividends decrease Retained Earnings and decrease Equity.
Expenses decrease Retained Earnings and increase Equity.
Revenues decrease Retained Earnings and decrease Equity.
Which of the four financial statements contain the accounting equation (Assets = Liabilities + Equity)?
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows
Which of the following financial statements shows Revenues minus Expenses?
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flow
We can state the accounting equation as:
A + L= OE.
A = L − OE.
−A + L − OE = 0.
A − L − OE = 0.
A list of the general ledger accounts and their balances at a particular date is a:
Journal.
Ledger.
Financial statement.
Trial balance.
Danielle Corporation received $2,000,000 from investors and issued them shares of its stock. Danielle's journal entry to record this transaction would include a:
Debit to investments.
Credit to retained earnings.
Credit to common stock.
Credit to revenue.
The accounting processing cycle:
Is a three-wheeled vehicle used to deliver audit papers to clients.
Is the process of transferring revenue and expense balances to retained earnings.
Is the process of bringing the company's financial information up to date before preparing the financial statements.
Is the process used to identify, analyze, record, and summarize transactions and prepare financial statements.
A chronological record of all economic events affecting a firm is provided by a:
a journal.
a ledger.
a financial statement.
the closing process.
In the double-entry system, debit means:
increase.
decrease
left.
right.
Incurring an expense on account would be recorded by:
Debiting liabilities.
Crediting assets.
Debiting an expense.
Debiting assets.
A sale of merchandise on account would be recorded by:
Debiting a revenue.
Crediting an asset.
Crediting a liability.
Debiting an asset.
The reason we post journal entries is to
provide a chronological record of all economic events affecting the firm.
ensure that all accounts are up to date prior to preparing financial statements.
ensure that debits equal credits in the trial balance.
reflect the information in journal entries in ledger accounts.
The journal entry to record the borrowing of cash and the signing of a note payable involves:
A debit to note payable and a credit to cash.
Debits to cash and interest expense and a credit to note payable.
A debit to cash and a credit to note payable.
All of these answer choices are incorrect.
Which of the following accounts are closed at the end of the year?
Accounts receivable
Retained earnings
Salaries expense
Service revenue
Which of the following statements regarding adjusting entries is correct?
Adjusting entries are recorded for all external transactions.
Adjusting entries are recorded to make sure all cash inflows and outflows are recorded in the current period.
After adjusting entries, all temporary accounts should have a balance of zero.
Adjusting entries are needed because we use accrual-basis accounting.
A characteristic of an accrued expense is:
Cash is paid, but an expense is never recorded.
An expense is recognized, but the cash payment is never paid.
Cash payment occurs before expense recognition.
The expense is recognized before the payment of cash.
Adjusting entries do not need to be posted to the general ledger.
TRUE
FALSE
An adjusted trial balance is a:
Trial balance adjusted for cash-basis accounting.
List of all accounts and their balances after closing entries.
List of all accounts and their balances before adjusting entries.
List of all accounts and their balances after adjusting entries.
Which statement does not report financial data over a period of time?
Income Statement
Statement of Stockholders’ Equity
Balance Sheet
Statement of Cash Flows
Which of the following equations is correctly stated?
Comprehensive income +/− Other comprehensive income or loss items = Net income
Net income +/− Other comprehensive income or loss items = Comprehensive income
Sales − Operating expenses = Gross profit
Sales + Gross profit − Operating expenses = Net income
Which of the following would ordinarily be classified as current assets on the balance sheet?
Accounts receivable
Accounts payable
Cash
Equipment
Which of the following describes the purpose of the statement of shareholders’ equity?
Disclose investments by owners, distributions to owners, net income, and other comprehensive income.
Disclose the impact of investments by owners, distributions to owners, net income, and other comprehensive income on the company’s cash.
Disclose the events that caused cash to change during the period.
Disclose the changes in the company’s assets, liabilities, and equity during the period.
The purpose of closing entries is to transfer:
Cash to the owners of the company
Assets and liabilities when operations are discontinued
Balances in temporary accounts to a permanent account
Inventory to customers
Check all that are reversed (if reversing entries are used).
All Accruals
All Deferrals
Depreciation Adjusting Entry
Bad Debt Adjusting Entry
The accumulated depreciation account is a contra (valuation) account to:
Owner's equity account.
Expense account.
Asset account.
Liability account.
A prepaid expense is an expense:
Incurred before the cash is paid.
Incurred and paid.
Paid but not yet incurred.
All of these answer choices are incorrect.
The correct amount of prepaid insurance shown on a company's December 31, 2018, balance sheet was $900. On July 1, 2019, the company paid an additional insurance premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2019 income statement is:
$1,500
$1,400
$1,000
$600
Which of the following adjusting entries causes a decrease in assets?
Recognizing the portion of revenue collected in advance.
Recording depreciation expense.
Accruing unrecorded salaries expense.
Accruing unrecorded interest revenue.
Which of the following adjusting entries causes an increase in liabilities?
Accruing unrecorded interest expense.
Recording the amount of expired prepaid insurance
Accruing unrecorded interest revenue.
Recording depreciation expense.
Which of the following is most likely an accrued liability?
Depreciation.
Interest.
Cost of goods sold.
Office supplies.
If the required adjusting entry for depreciation expense is omitted:
Assets will be overstated and income understated.
Assets will be overstated and income overstated.
Assets will be understated and income overstated.
Assets will be understated and income understated.
On December 31, 2021, the end of Adie, Miles, & Auer Used Cars' first year of operations, the accounts receivable was $107,200. The company estimates that $2,400 of the year-end receivables will not be collected. Accounts receivable in the 2021 balance sheet will be valued at:
$107,200
$109,600
$104,800
$2,400
In a statement of cash flows, cash received from the issuance of common stock would be classified as a:
Financing activity.
Investing activity.
Operating activity.
Non-cash activity.
In a classified balance sheet, supplies would be classified among:
Noncurrent assets.
Current liabilities.
Current assets.
Noncurrent liabilities.
