Question

1. The
rule that requires financial statements to reflect the assumption that the
business will continue operating instead of being closed or sold, unless
evidence shows that it will not continue, is the:
Going-concern
assumption.
Business
entity assumption.
Objectivity
principle.
Cost
Principle.
Monetary
unit assumption.
2. A
partnership:
Is
also called a sole proprietorship.
Has
unlimited liability for its partners.
Has
to have a written agreement in order to be legal.
Is
a legal organization separate from its owners.
Has
owners called shareholders.
3. The
difference between a company’s assets and its liabilities, or net assets is:
Net
income.
Expense.
Equity.
Revenue.
Net
loss.
4. Which
of the following accounting principles prescribes that a company record its
expenses incurred to generate the revenue reported?
Going-concern
assumption.
Matching
principle.
Cost
principle.
Business
entity assumption.
Consideration
assumption
5.The
primary objective of financial accounting is:
To
serve the decision-making needs of internal users.
To
provide financial statements to help external users analyze an organization’s
activities.
To
monitor and control company activities.
To
provide information on both the costs and benefits of looking after products
and services.
To
know what, when, and how much to produce.
6. All
of the following are true regarding ethics except:
Ethics
are beliefs that separate right from wrong.
Ethics
rules are often set for CPAs.
Ethics
do not affect the operations or outcome of a company.
Are
critical in accounting.
Ethics
can be hard to apply.
7. Social
responsibility:
Is
a concern for the impact of our actions on society.
Is
a code that helps in dealing with confidential information.
Is
required by the SEC.
Requires
that all businesses conduct social audits.
Is
limited to large companies.
8. The
accounting principle that requires accounting information to be based on actual
cost and requires assets and services to be recorded initially at the cash or
cash-equivalent amount given in exchange, is the:
Accounting
equation.
Cost
principle.
Going-concern
assumption.
Realization
principle.
Business
entity assumption
9. All
of the following regarding a Certified Public Accountant are true except:
Must
meet education and experience requirements.
Must
pass an examination.
Must
exhibit ethical character.
May
also be a Certified Management Accountant.
Cannot
hold any certificate other than a CPA.
10.
Decreases in equity that represent costs of assets or services used to earn
revenues are called:
Liabilities.
Equity.
Withdrawals.
Expenses.
Owner’s
Investment.
11.
The record in which transactions are first recorded is the:
Account
balance.
Ledger.
Journal.
Trial
balance.
Cash
account.
12.
A collection of all accounts and their balances used by a business is called a:
Journal.
Book
of original entry.
General
Journal.
Balance
column journal.
Ledger.
13.
A ledger is:
A
record containing increases and decreases in a specific asset, liability,
equity, revenue, or expense item.
A
journal in which transactions are first recorded.
A
collection of documents that describe transactions and events entering the
accounting process.
A
list of all accounts with their debit balances at a point in time.
A
record containing all accounts and their balances used by a company.
14.
The account used to record the transfers of assets from a business to its owner
is:
A
revenue account.
The
owner’s withdrawals account.
The
owner’s capital account.
An
expense account.
A
liability account.
15.
If the Debit and Credit column totals of a trial balance are equal, then:
All
transactions have been recorded correctly.
All
entries from the journal have been posted to the ledger correctly.
All
ledger account balances are correct.
The
total debit entries and total credit entries are equal.
The
balance sheet would be correct.
16.
Source documents:
Include
the ledger.
Are
the sources of accounting information.
Must
be in electronic form.
Are
based on accounting entries.
Include
the chart of accounts.
17.
A report that lists accounts and their balances, in which the total debit balances
should equal the total credit balances, is called a(n):
Account
balance.
Trial
balance.
Ledger.
Chart
of accounts.
General
Journal.
18.
An asset created by prepayment of an expense is:
Recorded
as a debit to an unearned revenue account.
Recorded
as a debit to a prepaid expense account.
Recorded
as a credit to an unearned revenue account.
Recorded
as a credit to a prepaid expense account.
Not
recorded in the accounting records until the earnings process is complete.
19.
A record in which the effects of transactions are first recorded and from which
transaction amounts are posted to the ledger is a(n):
Account.
Trial
balance.
Journal.
T-account.
Balance
column account.
20.
A balance column ledger account is:
An
account entered on the balance sheet.
An
account with debit and credit columns for posting entries and another column
for showing the balance of the account after each entry is posted.
Another
name for the withdrawals account.
An
account used to record the transfers of assets from a business to its owner.
A
simple form of account that is widely used in accounting to illustrate the
debits and credits required in recording a transaction
21.
Financial statements are typically prepared in the following order:
Balance
sheet, statement of owner’s equity, income statement.
Statement
of owner’s equity, balance sheet, income statement.
Income
statement, balance sheet, statement of owner’s equity.
Income
statement, statement of owner’s equity, balance sheet.
Balance
sheet, income statement, statement of owner’s equity.
22.
Assuming unearned revenues are originally recorded in balance sheet accounts,
the adjusting entry to record earning of unearned revenue is:
Increase
an expense; increase a liability.
Increase
an asset; increase revenue.
Decrease
a liability; increase revenue.
Increase
an expense; decrease an asset.
Increase
an expense; decrease a liability.
23.
Adjusting entries made at the end of an accounting period accomplish all of the
following except:
Updating
liability and asset accounts to their proper balances.
Assigning
revenues to the periods in which they are earned.
Assigning
expenses to the periods in which they are incurred.
Assuring
that financial statements reflect the revenues earned and the expenses
incurred.
Assuring
that external transaction amounts remain unchanged.
24.
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and
accrued revenues are all examples of:
Items
that require contra accounts.
Items
that require adjusting entries.
Asset
and equity.
Asset
accounts.
Income
statement accounts.
25.
The difference between the cost of an asset and the accumulated depreciation
for that asset is called
Depreciation
Expense.
Unearned
Depreciation.
Prepaid
Depreciation.
Depreciation
Value.
Book
Value.
26.
A balance sheet that places the liabilities and equity to the right of the
assets is a(n):
Account
form balance sheet.
Report
form balance sheet.
Interim
balance sheet.
Classified
balance sheet.
Unclassified
balance sheet.
27.
The length of time covered by a set of periodic financial statements is
referred to as the:
Fiscal
cycle.
Natural
business year.
Accounting
period.
Business
cycle.
Operating
cycle.
28.
The main purpose of adjusting entries is to:
Record
external transactions and events.
Record
internal transactions and events.
Recognize
assets purchased during the period.
Recognize
debts paid during the period.
Correct
errors.
29.
Adjusting entries:
Affect
only income statement accounts.
Affect
only balance sheet accounts.
Affect
both income statement and balance sheet accounts.
Affect
only cash flow statement accounts.
Affect
only equity accounts.
30.
A trial balance prepared before any adjustments have been recorded is:
An
adjusted trial balance.
Used
to prepare financial statements.
An unadjusted
trial balance.
Correct
with respect to proper balance sheet and income statement amounts.
Only
prepared once a year.
Question
1. The
rule that requires financial statements to reflect the assumption that the
business will continue operating instead of being closed or sold, unless
evidence shows that it will not continue, is the:Going-concern
assumption.Business
entity assumption.Objectivity
principle.Cost
Principle.Monetary
unit assumption.2. A
partnership:Is
also called a sole proprietorship.Has
unlimited liability for its partners.Has
to have a written agreement in order to be legal.Is
a legal organization separate from its owners.Has
owners called shareholders.3. The
difference between a company’s assets and its liabilities, or net assets is:Net
income.Expense.Equity.Revenue.Net
loss.4. Which
of the following accounting principles prescribes that a company record its
expenses incurred to generate the revenue reported?Going-concern
assumption.Matching
principle.Cost
principle.Business
entity assumption.Consideration
assumption5.The
primary objective of financial accounting is:To
serve the decision-making needs of internal users.To
provide financial statements to help external users analyze an organization’s
activities.To
monitor and control company activities.To
provide information on both the costs and benefits of looking after products
and services.To
know what, when, and how much to produce.6. All
of the following are true regarding ethics except:Ethics
are beliefs that separate right from wrong.Ethics
rules are often set for CPAs.Ethics
do not affect the operations or outcome of a company.Are
critical in accounting.Ethics
can be hard to apply.7. Social
responsibility:Is
a concern for the impact of our actions on society.Is
a code that helps in dealing with confidential information.Is
required by the SEC.Requires
that all businesses conduct social audits.Is
limited to large companies.8. The
accounting principle that requires accounting information to be based on actual
cost and requires assets and services to be recorded initially at the cash or
cash-equivalent amount given in exchange, is the:Accounting
equation.Cost
principle.Going-concern
assumption.Realization
principle.Business
entity assumption9. All
of the following regarding a Certified Public Accountant are true except:Must
meet education and experience requirements.Must
pass an examination.Must
exhibit ethical character.May
also be a Certified Management Accountant.Cannot
hold any certificate other than a CPA.10.
Decreases in equity that represent costs of assets or services used to earn
revenues are called:Liabilities.Equity.Withdrawals.Expenses.Owner’s
Investment.11.
The record in which transactions are first recorded is the:Account
balance.Ledger.Journal.Trial
balance.Cash
account.12.
A collection of all accounts and their balances used by a business is called a:Journal.Book
of original entry.General
Journal.Balance
column journal.Ledger.13.
A ledger is:A
record containing increases and decreases in a specific asset, liability,
equity, revenue, or expense item.A
journal in which transactions are first recorded.A
collection of documents that describe transactions and events entering the
accounting process.A
list of all accounts with their debit balances at a point in time.A
record containing all accounts and their balances used by a company.14.
The account used to record the transfers of assets from a business to its owner
is:A
revenue account.The
owner’s withdrawals account.The
owner’s capital account.An
expense account.A
liability account.15.
If the Debit and Credit column totals of a trial balance are equal, then:All
transactions have been recorded correctly.All
entries from the journal have been posted to the ledger correctly.All
ledger account balances are correct.The
total debit entries and total credit entries are equal.The
balance sheet would be correct.16.
Source documents:Include
the ledger.Are
the sources of accounting information.Must
be in electronic form.Are
based on accounting entries.Include
the chart of accounts.17.
A report that lists accounts and their balances, in which the total debit balances
should equal the total credit balances, is called a(n):Account
balance.Trial
balance.Ledger.Chart
of accounts.General
Journal.18.
An asset created by prepayment of an expense is:Recorded
as a debit to an unearned revenue account.Recorded
as a debit to a prepaid expense account.Recorded
as a credit to an unearned revenue account.Recorded
as a credit to a prepaid expense account.Not
recorded in the accounting records until the earnings process is complete.19.
A record in which the effects of transactions are first recorded and from which
transaction amounts are posted to the ledger is a(n):Account.Trial
balance.Journal.T-account.Balance
column account.20.
A balance column ledger account is:An
account entered on the balance sheet.An
account with debit and credit columns for posting entries and another column
for showing the balance of the account after each entry is posted.Another
name for the withdrawals account.An
account used to record the transfers of assets from a business to its owner.A
simple form of account that is widely used in accounting to illustrate the
debits and credits required in recording a transaction21.
Financial statements are typically prepared in the following order:Balance
sheet, statement of owner’s equity, income statement.Statement
of owner’s equity, balance sheet, income statement.Income
statement, balance sheet, statement of owner’s equity.Income
statement, statement of owner’s equity, balance sheet.Balance
sheet, income statement, statement of owner’s equity.22.
Assuming unearned revenues are originally recorded in balance sheet accounts,
the adjusting entry to record earning of unearned revenue is:Increase
an expense; increase a liability.Increase
an asset; increase revenue.Decrease
a liability; increase revenue.Increase
an expense; decrease an asset.Increase
an expense; decrease a liability.23.
Adjusting entries made at the end of an accounting period accomplish all of the
following except:Updating
liability and asset accounts to their proper balances.Assigning
revenues to the periods in which they are earned.Assigning
expenses to the periods in which they are incurred.Assuring
that financial statements reflect the revenues earned and the expenses
incurred.Assuring
that external transaction amounts remain unchanged.24.
Prepaid expenses, depreciation, accrued expenses, unearned revenues, and
accrued revenues are all examples of:Items
that require contra accounts.Items
that require adjusting entries.Asset
and equity.Asset
accounts.Income
statement accounts.25.
The difference between the cost of an asset and the accumulated depreciation
for that asset is calledDepreciation
Expense.Unearned
Depreciation.Prepaid
Depreciation.Depreciation
Value.Book
Value.26.
A balance sheet that places the liabilities and equity to the right of the
assets is a(n):Account
form balance sheet.Report
form balance sheet.Interim
balance sheet.Classified
balance sheet.Unclassified
balance sheet.27.
The length of time covered by a set of periodic financial statements is
referred to as the:Fiscal
cycle.Natural
business year.Accounting
period.Business
cycle.Operating
cycle.28.
The main purpose of adjusting entries is to:Record
external transactions and events.Record
internal transactions and events.Recognize
assets purchased during the period.Recognize
debts paid during the period.Correct
errors.29.
Adjusting entries:Affect
only income statement accounts.Affect
only balance sheet accounts.Affect
both income statement and balance sheet accounts.Affect
only cash flow statement accounts.Affect
only equity accounts.30.
A trial balance prepared before any adjustments have been recorded is:An
adjusted trial balance.Used
to prepare financial statements.An unadjusted
trial balance.Correct
with respect to proper balance sheet and income statement amounts.Only
prepared once a year.