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Accounting chapters 3-5 practice

Total questions: 100

Worksheet time: 59mins

Name
Class
Date
1.
Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as __________.
a)
Assets
b)
Liabilities
c)
Owner Equity
d)
Equity
2.
Obligations (amounts owed) are reported on the balance sheet and are referred to as __________.
a)
Assets
b)
Liabilities
c)
Debt
d)
Owner Equity
3.
Liabilities often have the word __________ in their account title.
a)
Assets
b)
Payable
c)
Paid
d)
Equity
4.
Accounting entries involve a minimum of how many accounts?
a)
One
b)
Two
c)
Three
d)
Four
5.
The listing of all of the accounts available for use in a company's accounting system is known as the __________.
a)
Chart of Accounts
b)
Journal
c)
Ledger
d)
Credit Ledger
6.
Which term is associated with "left" or "left-side"?
a)
Debit
b)
Credit
c)
Plus
d)
Minus
7.
Which term is associated with "right" or "right-side"?
a)
Debit
b)
Credit
c)
Plus
d)
Minus
8.
When cash is received, the account Cash will be
a)
Debited
b)
Credited
9.
When a company pays a bill, the account Cash will be
a)
Debited
b)
Credited
10.
What will usually cause an asset account to increase?
a)
Debit
b)
Credit
11.
What will usually cause the liability account Accounts Payable to increase?
a)
Debit
b)
Credit
12.
Entries to expenses such as Rent Expense are usually
a)
Debits
b)
Credits
13.
Entries to revenues accounts such as Service Revenues are usually
a)
Debits
b)
Credits
14.
Revenues minus expenses equals:
a)
Assets
b)
Liabilities
c)
Owner Equity
d)
Net Income
15.
An amount recorded on the right side of a T account is a debit.
a)
TRUE
b)
FALSE
16.
Each liability account has a normal debit balance.
a)
TRUE
b)
FALSE
17.
Asset accounts decrease on the credit side.
a)
TRUE
b)
FALSE
18.
Each transaction changes the balances in at least two accounts.
a)
TRUE
b)
FALSE
19.
When cash is paid for supplies, the Supplies account is increased by a credit.
a)
TRUE
b)
FALSE
20.

Accounts payable is increased by debits and decreased by credits.

a)
TRUE
b)
FALSE
21.
The normal balance side of an Accounts Receivable account is a debit.
a)
TRUE
b)
FALSE
22.
Utilities Expense is increased with a debit.
a)
TRUE
b)
FALSE
23.
Cash is increased with a debit.
a)
TRUE
b)
FALSE
24.
Decreases to liability accounts are recorded on the credit side.
a)
TRUE
b)
FALSE
25.
When an owner invests cash in a business, the owner’s capital account is
a)
a. increased by a debit.
b)
b. increased by a credit.
c)
c. decreased by a debit.
d)
d. decreased by a credit.
26.
When a business pays cash on account, a liability account is
a)
a. increased by a debit.
b)
b. increased by a credit.
c)
c. decreased by a debit.
d)
d. decreased by a credit.
27.
When cash is received from sales, the change in the owner’s equity is usually recorded
a)
a. on the debit side.
b)
b. directly in the owner’s capital account.
c)
c. as interest revenue.
d)
d. in a separate revenue account.
28.
Increases in a revenue account are shown on a T account’s
a)
a. debit side.
b)
b. left side.
c)
c. credit side.
d)
d. none of these.
29.
When $1,500 cash is received on account,
a)
a. Sales is increased with  credit and Cash is increased with a credit.
b)
b. Accounts Receivable is increased with a debit and Cash is increased with a credit.
c)
c. Accounts Receivable is decreased with a credit and Cash is increased with a debit.
d)
d. Accounts Receivable is decreased with a debit and Cash is increased with a debit.
30.

Debit means

a)

increase

b)

decrease

c)

left

d)

right

31.

Credit means

a)

increase

b)

decrease

c)

left

d)

right

32.
The normal balance of owner's withdrawal (drawings) is a
a)
debit
b)
credit
33.
The normal balance of service revenue is a
a)
debit
b)
credit
34.
The normal balance of accounts receivable is a 
a)
debit
b)
credit
35.
The total of all debits must equal the total of all credits
a)
True
b)
False
36.
Temporary accounts include assets, expenses, and the owner’s drawing account.
a)
True
b)
False
37.
 Permanent accounts are used to accumulate information until it is transferred to the owner’s capital account.
a)
True
b)
False
38.
 The balances of the liability accounts must be reduced to zero to prepare the accounts for he next period.
a)
True
b)
False
39.
The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period.
a)
True
b)
False
40.

The withdrawals (aka: drawings) account is a permanent account.

a)
True
b)
False
41.
Temporary accounts must start each fiscal period with a zero balance.
a)
True
b)
False
42.
At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account.
a)
True
b)
False
43.
Accounts used to accumulate information from one fiscal period to the next are
a)
a. revenue accounts.
b)
b. permanent accounts.
c)
c. temporary accounts.
d)
d. expense accounts.
44.

After closing entries are posted, the balance in the owner’s withdrawal account should be

a)
a. a debit.
b)
b. zero.
c)
c. a credit.
d)
d. none of these.
45.
Temporary accounts begin each new fiscal period with a
a)
a. debit balance.
b)
b. credit balance.
c)
c. zero balance.
d)
d. balance equal to the net income.
46.

The accounting equation is written to help with T account analysis and debit/credit recognition.

a)

true

b)

false

c)

truncate

d)

falsetto

47.

The normal balance side and increases are on the same side of all accounts

a)

true

b)

false

c)

maybe??

d)

Um...

48.

Paid Cash for supplies. What's the debit? What's the credit?

a)

Debit= cash. Credit= supplies

b)

Debit= accounts payable. Credit= Supplies

c)

debit= supplies. Credit= supplies expense

d)

debit= supplies. Credit= cash

49.

A listing of all accounts is called a

a)

account inventory

b)

accounting file

c)

chart of accounts

d)

accounting

50.

received cash from sales. What happens to cash?

a)

cash goes down on the credit side

b)

cash goes down on the debit side

c)

cash goes up on the credit side

d)

cash goes up on the debit side

51.

If you pay rent, what happens?

a)

Assets go down. Owner's Equity goes up

b)

Liabilities go up. Owner's Equity goes up

c)

Assets go down. Owner's Equity goes down

d)

Liabilities go down. Assets go up.

52.

Owner invested an additional $5,000 cash in the business.$

a)

Credit Cash $5000

b)

Debit Cash $5000

c)

Credit Capital $5000

d)

Debit Capital $5000

53.

What was the effect of paying the telephone bill, $600?

a)

Credit Cash

b)

Debit Cash

c)

Debit Utilities Expense which is Capital

d)

Credit Utilities Expense which is Capital

54.

Paid cash for rent, $500.00.

a)

Debit Rent Expens

b)

Credit Rent Expense

c)

Credit Cash

d)

Debit Cash

55.

What was the effect of buying supplies on account, $150?

a)

Debit Accounts Payable

b)

Credit Accounts Payable

c)

Debit Supplies

d)

Credit Supplies

56.

Received cash from sales, $850.00

a)

Debit Cash $850

b)

Credit Cash $850

c)

Credit Sales which is revenue

d)

Debit Sales which is revenue

57.

Paid cash for repairs, $75.00.

a)

Debit Cash $7,5

b)

Credit Cash $75

c)

Debit Repair Expense $75 which is capital

d)

Credit Repair Expense $75 which is capital

58.

Sold services on account to Alston Goff, $700.00

a)

Debit Accounts Receivable $700

b)

Credit Accounts Receivable $700

c)

Debit Sales $700 which is capital

d)

Credit Sales $700 which is capital

59.

Paid cash for electric bill (utilities expense), $55.00

a)

Debit Cash $55

b)

Credit Cash $55

c)

Debit Utilities Expense $55

d)

Credit Utilities $55

60.

Received cash on account from Alston Goff, $500.00.

a)

Debit Cash $500

b)

Credit Cash $500

c)

Debit Accounts Receivable $500

d)

Credit Accounts Receivable $500

61.

Paid cash to owner for personal use, $400.00.

a)

Debit the owner drawing account $400

b)

Credit the owner drawing account $400

c)

Debit Cash $400

d)

Credit Cash $400

62.

The Accounting Equation

​ (a)   = ​ (b)   + ​ (c)  

Choose from the below words
Assets
Liabilities
Equity
Money
63.

The stuff the business ​ (a)   is equal to the stuff the business ​ (b)  

Choose from the below words
Owns
Owes
Buys
Sells
64.

Loans, Taxes, Wages owed, etc are a ​ (a)  

Choose from the below words
Liability
Asset
Equity
65.

Which accounts are considered credit accounts in accounting?

a)

Dividends, Expenses, Assets

b)

Liabilities, Equity, Revenue

c)

Dividends, Expenses, Revenue

d)

Assets, Liabilities, Equity

66.

Which account is debited when the owner of a car wash provides their company with a $1,000 initial investment?

a)

Cash

b)

Owner's Equity

c)

Accounts Payable

d)

Revenue

67.

Resources owned by a company that can be measured and expressed in dollars

a)

Debit

b)

Liabilities

c)

Asset

d)

Revenue

68.

Any account with the word "Payable" at the end is called a(n)__________

a)

Asset

b)

Revenue

c)

Liability

d)

Equity

69.

Explain the concept of double-entry accounting and how it is used in recording transactions.

a)

Double-entry accounting is a system where every transaction is recorded in at least two accounts, with one debit and two credit entries.

b)

Double-entry accounting is a system where every transaction is recorded in only one account.

c)

Double-entry accounting is a system where every transaction is recorded in at least two accounts, with one debit and one credit entry. This system helps ensure accuracy and maintain the balance of the accounting equation.

d)

Double-entry accounting is a system where every transaction is recorded in at least three accounts.

70.

Describe the process of journalizing transactions in the accounting cycle.

a)

Posting transactions to the ledger by adding and subtracting amounts

b)

Recording transactions in the general journal by debiting and crediting the appropriate accounts.

c)

Sending invoices to customers for payment

d)

Creating financial statements for the accounting period

71.

What is the purpose of posting transactions to the general ledger?

a)

To make the ledger look busy

b)

To confuse the accountants

c)

To hide financial transactions

d)

To summarize and organize all financial transactions in one place.

72.

Explain the trial balance and its significance in the accounting cycle.

a)

The trial balance is a list of all the employees in a business, used to calculate their salaries.

b)

The trial balance is a list of all the general ledger accounts contained in the ledger of a business. It is used to ensure that the total of all debit balances equals the total of all credit balances, which is a key step in the accounting cycle to ensure accuracy in the financial records.

c)

The trial balance is a document that outlines the marketing strategy for a business.

d)

The trial balance is a report that shows the total revenue and expenses of a business.

73.

"For Month Ended" is used on a heading when...

a)

Always

b)

Never

c)

The statement is a summary report

d)

The statement is temporary

74.

A = L + OE is proven on the...

a)

Income Statement

b)

Balance Sheet

c)

Cash Flow Statement

d)

Sales Journal

75.

Revenues - Expenses = ?

a)

Net Income or Net Loss

b)

Owner's Equity

c)

Total Revenue

d)

Gross Profit

76.

Beginning Capital - Drawing + Net Income = ?

a)

Net Income

b)

New Capital

c)

Net Earnings

d)

Total Assets

77.

The date of this financial statement DOES NOT include
"For Month Ended"

a)

Income Statement

b)

Balance Sheet

c)

Cash Flow Statement

d)

Worksheet

78.

All Revenues are included on the ____________.

a)

Income Statement

b)

Balance Sheet

79.

Liabilities are included on the ____________.

a)

Income Statement

b)

Balance Sheet

80.

ALL Expenses are included on the ____________.

a)

Income Statement

b)

Balance Sheet

81.

Supplies, Cash, Payables, and Receivables are included on the ____________.

a)

Income Statement

b)

Balance Sheet

82.

An accounting report that is used to show revenue and expenses is the

a)

Loss and Profit Statement

b)

Revenue and Expenses Statement

c)

The Profit or Loss Statement

d)

The Income Statement

83.

.A financial statement that reports assets, liabilities, and owner’s equity on a specific date.

a)

profit and loss statement

b)

cash flow

c)

balance sheet

d)

income statement

84.

Kathy wants to know whether her boutique made or lost money this month. The financial document she should view is her:

a)

balance sheet

b)

income statement

c)

cash flow statement

d)

statement of owner’s equity

85.

Identify three main types of financial statements?

a)

expense statement, liability statement, and investment statement

b)

income statement, balance sheet, and cash flow statement

c)

profit statement, equity statement, and revenue statement

d)

revenue statement, asset statement, and liability statement

86.

What is the purpose of the income statement?

a)

To determine the company's market share.

b)

To calculate the company's total assets and liabilities.

c)

To provide a summary of a company's financial performance over a specific period of time.

d)

To forecast future sales and revenue.

87.

Which financial statement shows a company's assets, liabilities, and shareholders' equity at a specific point in time?

a)

balance sheet

b)

statement of retained earnings

c)

cash flow statement

d)

income statement

88.

What is the primary purpose of a balance sheet?

a)

To determine a company's employee satisfaction

b)

To provide a snapshot of a company's financial position

c)

To analyze a company's marketing strategies

d)

To track a company's sales and revenue

89.

Which financial statement shows the changes in a company's cash and cash equivalents over a period of time?

a)

Statement of Retained Earnings

b)

Balance Sheet

c)

Income Statement

d)

Statement of Cash Flows

90.

Ethan, Michael, and James are running a lemonade stand. Help them figure out the correct formula to calculate their income.

a)

Total revenue + Total expenses

b)

Total revenue - Total expenses

c)

Total revenue x Total expenses

d)

Total revenue / Total expenses

91.

The main components of an income statement are: ______________________.

a)

gross profit, operating profit, and net profit

b)

assets, liabilities, and equity

c)

cash flow, balance sheet, and statement of retained earnings

d)

revenue, expenses, and net income

92.

Aiden, Liam, and Ava are running a lemonade stand. How should they calculate their gross profit?

a)

Gross Profit = Revenue + Cost of Lemonade.

b)

Gross Profit = Revenue / Cost of Lemonade.

c)

Gross Profit = Revenue * Cost of Lemonade.

d)

Gross Profit = Revenue - Cost of Lemonade

93.

What is the purpose of a statement of retained earnings?

a)

To track a company's expenses

b)

To show the changes in a company's retained earnings over a specific period of time.

c)

To calculate a company's net income

d)

To determine a company's cash flow

94.

How are ending retained earnings calculated on a statement of retained earnings?

a)

By subtracting net income or loss from beginning retained earnings and adding dividends or distributions to shareholders.

b)

By multiplying net income or loss with beginning retained earnings and dividing by dividends or distributions to shareholders.

c)

By adding net income or loss to beginning retained earnings and subtracting dividends or distributions to shareholders.

d)

By subtracting net income or loss from beginning retained earnings and subtracting dividends or distributions to shareholders.

95.

Which formula below could be used for calculating the ending retained earnings on a statement of retained earnings?

a)

Beginning Retained Earnings + Net Income + Dividends

b)

Beginning Retained Earnings + Net Income - Dividends

c)

Beginning Retained Earnings - Net Income - Dividends

d)

Beginning Retained Earnings - Net Income + Dividends

96.

Explain the relationship between the net income on the income statement and the ending retained earnings on the statement of retained earnings.

a)

The net income on the income statement is multiplied by the ending retained earnings.

b)

The net income on the income statement is not related to the ending retained earnings.

c)

The net income on the income statement is added to the beginning retained earnings.

d)

The net income on the income statement is subtracted from the beginning retained earnings.

97.

Identify the main components of a cash flow statement.

a)

Income statement, balance sheet, and statement of retained earnings

b)

Sales activities, marketing activities, and production activities

c)

Cash inflows, cash outflows, and cash reserves

d)

Operating activities, investing activities, and financing activities

98.

The financial rights to the assets of a business.

a)

Equity

b)

Assets

c)

Cash

d)

Liquidity

99.

What is one disadvantage of the Accrual Basis of Accounting?

a)

It is more complicated than the Cash Method

b)

It explicitly tracks cash flow

c)

It requires fewer estimates and assumptions

d)

It is suitable for small businesses

100.

What needs to be calculated separately when using the Accrual Basis of Accounting?

a)

Profitability

b)

Expenses

c)

Cash flow

d)

Accounts Receivable and Payable

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