Accounting Mid-Term

The journal entry for a bank service charge is a. Debit bank service charge and credit cash b. Debit cash and credit accounts payable c. Debit cash and credit accounts receivable d. None of the above

a

The portion of an asset's cost transferred to an expense account in each fiscal period during the asset's useful life is ____________. a. Depreciation b. Contra assets c. Closing the asset d. Salvage cost

a

The right side of the accounting equation represents the business: a. Assets b. Liabilities c. Accounts Payable d. Equity

a

These accounts do not close at the end of the period. a. Permanent b. Temporary c. Closing d. Expenses

a

This account is an asset; it is the money due to you from customers: a. Accounts Receivable b. Accounts Payable

a

This accounting principle states that purchases must be recorded at their cost price. This is the: a. Cost Principle b. Time Period Principle c. Business Entity Principle d. Going Concern Principle

a

This type of check is one returned by the bank because there are not sufficient funds in the account. a. Non-Sufficient Fund (NSF) b. Blank Endorsement Check c. Special Check d. Deposit

a

What is a business's most liquid asset? a. Cash b. Land c. Equipment d. Rent Expense

a

Which financial statement(s) is a "snapshot in time" - (Heading shows the date only): a. Balance Sheet b. Income Statement and Statement of Retained Earnings c. Balance Sheet and Income Statement d. None

a

Classify "Accounts Payable" by identifying the proper account classification. a. Expense b. Asset c. Liability d. Capital

c

Classify "Sales" by identifying the proper account classification. a. Asset b. Liability c. Revenue d. Drawing

c

If an owner deposits $30,000 in a checking account in the name of his business, the two accounts affected are a. Cash and computer equipment b. Cash and accounts receivable c. Cash and capital account d. Cash and accounts payable

c

In which column and section on the worksheet will you find revenue listed? a. Credit column of the Balance Sheet section b. Debit column of the Income Statement section c. Credit column of the Income Statement section d. Debit column of the Balance Sheet section

c

Signing a check over to another person then signing your name is an example of a(n) _______ endorsement. a. Blank b. Restrictive c. Special` d. Open

c

The amount of an asset that the business expects to get back at the end of the asset's estimated useful life is called: a. Left b. Remainder c. Salvage or Residual d. Left Over

c

The assumption that a business will continue into the foreseeable future is the: a. business entity b. time period :c. going concern d. depreciation

c

The balance in these types of accounts are transferred to Income Summary at the Closing Process. They are called: a. Ongoing b. Permanent c. Temporary d. General Ledger

c

The analysis of all business transactions into their debit and credit parts is required for both manual and computerized accounting systems. True False

True

The chart of accounts should list Assets first and the first account is Cash. True False

True

The increases and decreases caused by business transactions are recorded in specific accounts. True False

True

Which of the following statements is false: a. Credits are entered on the left side; debits on the right b. An asset account appears on the left side of the accounting equation and is also increased on the left side c. Revenue increases Owner's Equity, and increases in Revenue are recorded as credits d. Temporary accounts start each accounting period with a zero balance.

a

Which of the following would not be considered a service business? a. General Motors b. Delta Air Lines c. Dollar Rent a Car d. New York Taxi Company

a

Every amount posted will either increase or decrease the balance on a ledger account. True False

True

Every business transaction will have a debit and a credit, and the two True False

True

The accounting cycle must be followed to ensure that proper records are kept. True False

True

Complete the table below based on the following business transaction. Use the Chart of Accounts: Cash Supplies Accounts Payable James Doe, Capital James Doe, Drawing Sales Rent Expense The business pays Rent Expense, $250.

Account affected (Chart of Accounts): Cash (Assets) Will this transaction increase or decrease the balance of this account? Decrease Will you Debit or Credit this account? Credit Account affected (Chart of Accounts): Rent Expense Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Debit

Complete the table below based on the following business transaction. Use the Chart of Accounts: Cash Supplies Accounts Payable James Doe, Capital James Doe, Drawing Sales Rent Expense The owner, James Doe, withdraws $100 from the business.

Account affected (Chart of Accounts): James Doe, Drawing Will this transaction increase or decrease the balance of this account? decrease Will you Debit or Credit this account? Debit Account affected (Chart of Accounts):Cash (Assets) Will this transaction increase or decrease the balance of this account? Decrease Will you Debit or Credit this account? Credit

Complete the table below based on the following business transaction. Use the Chart of Accounts: Cash Supplies Accounts Payable James Doe, Capital James Doe, Drawing Sales Rent Expense The business purchases Supplies and charges on their account - they will pay later.

Account affected (Chart of Accounts): Accounts Payable (Liabilities) Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Credit Account affected (Chart of Accounts): Supplies (Assets) Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Debit

Complete the table below based on the following business transaction. Use the Chart of Accounts: Cash Supplies Accounts Payable James Doe, Capital James Doe, Drawing Sales Rent Expense The business makes a Sale and receives $100 from the customer.

Account affected (Chart of Accounts): Sales (Revenue)- Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Credit Account affected (Chart of Accounts): Cash (Assets) Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Debit

Complete the table below based on the following business transaction. Use the Chart of Accounts: Cash Supplies Accounts Payable James Doe, Capital James Doe, Drawing Sales Rent Expense The owner, James Doe, invests $10,000 into the business.

Account affected (Chart of Accounts):Cash (Assets) Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Debit Account affected (Chart of Accounts): James Doe, Capital Will this transaction increase or decrease the balance of this account? Increase Will you Debit or Credit this account? Credit

A credit posting to the Office Equipment (asset) account will result in an increase to that account. True False

False

A debit will increase the balance in the Sales (revenue) account. True False

False

A business should have separate accounts for recording revenue and expenses. True False

True

After every transaction, the basic accounting equation should remain in balance. True False

True

A ___________ has all of the details about each business transaction; a ledger has details about each account a. Journal b. General Ledger

a

A check with a(n) _________ endorsement can be used in a similar manner to cash because it is not protected. a. Blank b. Restrictive c. Special d. Open

a

According to which principle are revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period. a. Matching Principle b. Business Entity Principle c. Going Concern Principle d. Cost Principle

a

All liability accounts are listed in which financial statement? a. Balance Sheet b. Income State c. Retained Earnings d. Assets

a

An accounting term for items that are owned is ___________. :a. Assets b. Liabilities c. Revenue d. Equity

a

Another term for "transferring" journal entries to the ledger accounts is: a. Posting b. Journal c. Source Document d. Accounting Cycle

a

Classify "Cash" by identifying the proper account classification. a. Asset b. Liability c. Drawing d. Revenue

a

Debit entries are used to a. Increase expenses, decrease liabilities b. Decrease owner's equity, increase liabilities c. Increase assets, increase revenue d. Decrease assets, increase expenses

a

For electronic sorting, the depositor's account number and check number are printed on the bottom of each check. There is one other item printed on the bottom and it is the bank's _______. a. Routing Transit NumberThis answer is correct. b. Address c. Phone d. Amount

a

For the account activity listed below, choose either debit OR credit to indicate if the increase to that account would require a debit or a credit. ( Hint: when analyzing transactions, it is helpful to first classify the account and then determine which side of the accounting equation that type/classification of account is located) - accounts receivable increase a. Debit b. Credit

a

For the account activity listed below, choose either debit OR credit to indicate if the increase to that account would require a debit or a credit. ( Hint: when analyzing transactions, it is helpful to first classify the account and then determine which side of the accounting equation that type/classification of account is located) - cash increase a. Debit b. Credit

a

How quickly and easily an account can be converted to cash is referred to as: a. Liquidity b. Good c. Cash d. Available

a

Identify the account that: is used only at the end of the fiscal year, does not have a normal balance, and does not appear on any financial statement. a. Income Summary b. Accumulated Depreciation c. Depreciation Expense d. Prepaid Insurance

a

If total revenue is $4,500 and total expenses are $3,000, then net income is: a. $1,500 b. $7,500 c. $1,000 d. None of the above

a

In which column and section on the worksheet will you find liabilities listed? a. Credit column of the Balance Sheet section b. Debit column of the Income Statement section c. Credit column of the Income Statement section d. Debit column of the Balance Sheet section

a

Journal entry to remove the balance of a revenue account and transfer the balance to the Income Summary is a type of: a. Closing b. Adjusting c. Initial d. Opening

a

Prepaid Insurance is what type of account? a. Asset b. Revenue c. Capital d. Liability

a

Select the best term for the following definition: The costs incurred in running a business, examples could be rent, salaries, electricity. :a. expenses b. assets c. liabilities d. revenue

a

The adjusting entry to record Prepaid Insurance has been used will be: a. Debit Insurance Expense - Credit Prepaid Insurance b. Debit Insurance Expense - Credit Cash c. Debit Insurance - Credit Cash d. Debit Expense - Credit Liability

a

The authorized person signing the check is called the ______. a. Endorser b. Creditor c. Drawer d. Payee

a

The basic accounting equation for a sole proprietorship is a. assets = liabilities + owner's equity b. assets = liabilities + stockholder's equity c. revenue = expenses d. assets = liabilities

a

The dollar balances of ______ account are carried forward from one accounting period to the next. a. Permanent b. Temporary c. Closing d. Revenue

a

Which three steps in the accounting cycle are performed on a daily basis: a. Analyze data on source documents, journalize transactions, and post to the ledger b. Prepare a trial balance, a pre-closing trial balance, and post-closing trial balance c. Journalize, prepare financial statements, and post d. Verify data on source documents, prepare financial statements, and journalize

a

Which type of accounts have normal debit balances: a. assets, expenses, and drawing b. liabilities, expenses, and capital c. liabilities and capital d. revenue and withdrawals

a

In accounting, a company will use to purchase assets: a. liabilities and owner's equity b. owner and mortgage company c. revenue and expenses d. profit and loss

a?

The most frequent causes for differences between the bank statement balance and the checkbook balance are a. Outstanding checks and voided checks b. Outstanding checks and service charges c. Cleared checks and service charges d. Outstanding deposits and voided checks

a?

There are two parts of financial claims, or equity, . a. liabilities and owner's equity b. assets and liabilities c. revenue and expenses d. equity and expenses

a?

"For Deposit Only" is an example of a __________endorsement. a. Blank b. Restrictive c. Special d. None of the above

b

A ________ is a person who has passed a national test and met specified experience and educational standards to become "certified" to practice accounting. a. AICPA :b. CPA c. GAAP d. Executive Branch

b

A ___________ has details about each account. a. Journal b. General Ledger

b

A certain amount of cash kept on hand for making small cash payments is known as _____. a. Embezzlement b. Petty c. Forgery d. Service Charge

b

A fee the bank charges for maintaining bank records and processing checks and deposits for the depositor. a. Forgery b. Service Charge c. Embezzlement d. Petty

b

ABC Appliance Company received cash from a customer on account. Indicate the type of source document that is likely to contain the details of this transaction for ABC Appliance Company: a. Invoice b. Receipt c. Check stub d. Memorandum

b

ABC Company paid Rent Expense, the two accounts affected are: a. Cash and Accounts Payable b. Cash and Rent Expense c. Rent Expense and Accounts Payable d. Sales and Rent Expense

b

Debits should equal Credits a. Only at the end of the process b. Always c. It doesn't matter if they equal d. Never

b

For the account activity listed below, choose either debit OR credit to indicate if the increase to that account would require a debit or a credit. ( Hint: when analyzing transactions, it is helpful to first classify the account and then determine which side of the accounting equation that type/classification of account is located) - sales increase a. Debit b. Credit

b

I Scream Ice Cream Shop has just completed its first month of business. The owner is anxious to see if his new business venture has made a profit. He totals all money received for the month and all expenses paid during the month. Using a specific time frame follows the _________ assumption. a. business entity :b. time period c. going concern d. depreciation

b

If total revenue is $2,500 and total expenses are $500, then net income is: a. $1,500 b. $2,000. c.$500 d. None of the above

b

Insuring employees who handle money is called: a. Protect b. Bonding c. Management d. Cash Management

b

Refers to planning, controlling, and accounting for cash transactions and cash balances: a. Control b. Cash Management c. Bank Statement d. Omissions

b

Select the best term for the following definition: Cash, land equipment, building and other items of value owned by a business. a. expenses b. assets c. owner's equity d. liabilities

b

Select the best term for the following definition: Owner's claims to the assets of the business. a. expenses b. owner's equity c. revenue d. liabilities

b

The Home Depot would be considered a ___________________ business. a. service b. merchandising c. manufacturing d. sole proprietorship

b

The adjusting entry to record the depreciation for the vehicle will be: a. Debit Vehicle - Credit Depreciation b. Debit Depreciation Expense - Credit Accumulated Depreciation/Vehicle c. Debit Vehicle - Credit Cash d. Debit Expense - Credit Liability

b

The heading for all financial statements should be: a. Date, Financial Statement Title, Company Location b. Company Name, Financial Statement Type, Date c. Company Name, Date, Financial Statement Type d. Financial Statement Type, Date, Company Name

b

The journal entry for a non-sufficient check returned by the bank is a. Debit cash and credit accounts payable b. Debit accounts receivable and credit cash c. Debit cash and credit accounts receivable d. None of the above

b

The owner's investment in the business is represented by the _____ account. a. Drawing b. Capital c. Assets d. Liabilities

b

These types of accounts continue from period to period. They are called: a. Ongoing b. Permanent c. Temporary d. General Ledger

b

This accounting principle assumes all transactions reported occurred within the time period listed. This is the: a. Cost Principle b. Time Period Principle c. Business Entity Principle d. Going Concern Principle

b

This shows the signatures of all persons allowed to write checks on the account: a. List of People b. Signature Card c. Identification d. Picture ID

b

Which of the following statements is true: a. A credit to an Asset account will increase the account balance b. A debit to an Asset account will increase the account balance c. A debit to a Liability account will increase the account balance d. A credit to an Expense account will increase the account balance

b

A ____________ is a business organization where stockholders own the business and the owners can only lose the amount of their investment. a. sole proprietorship b. partnership :c. corporation d. co-operative

c

A formal way to prove that debits equal credits is to prepare a _____. a. Balance sheet b. Income statement c. Trial balance d. Ledger form

c

A signature on the back of a check transferring ownership is a(n) __________. a. Petty b. Service Charge c. Endorsement d. Forgery

c

Checks that have been written, recorded, and journalized by the issuing business but have not, as yet, cleared the bank and deposits that do not as yet appear on the bank statement are _______. a. Endorsed b. Forged c. Outstanding d. Petty

c

This account is used during the closing process. It is used to accumulate revenues and expenses and to summarize the Net Income/Net Loss for this business. This account only exists for the closing process: a. Capital b. Drawing c. Income Summary d. Revenue

c

This is an itemized record of all the transactions that have occurred in the depositor's account over a time period (usually a month): a. Report b. Documentation c. Bank Statement d. Omissions

c

This provides evidence that a business transaction has occurred. a. Posting b. Journal c. Source Document d. Chart of Accounts

c

To close the Rent Expense account you will Credit the Rent Expense account and Debit: a. Drawing b. Cash c. Income Summary d. Liability

c

To close the Sales account you will Debit the Sales account and Credit: a. Asset b. Cash c. Income Summary d. Liability

c

What accounts are temporary? These accounts are closed at the end of the fiscal period. a. Assets, Capital b. Assets, Liabilities and Capital c. Revenues, Expenses and Drawing d. Capital and Drawing

c

Which type of accounts have normal credit balances: a. assets and liabilities b. liabilities, expenses, and capital c. liabilities, revenue, and capital d. expenses and withdrawals

c

________ is a standardized way to communicate financial information in a form understood by those interested in the operations and financial condition of the business - it is also the set of rules businesses follow. a. AICPA b. CPA :c. GAAP d. Executive Branch

c

ABC Company issued a check to pay the monthly rent. The two accounts affected are: a. Cash and Revenue b. Accounts Payable and Accounts Receivable c. Cash and Rent Expense d. Accounts Receivable and Rent Expense

c?

Anytime a check is written for whatever reason, which account will always be credited for the amount of the check. a. Sales b. Accounts c. Expense d. Cash

d

Check should be written in __________. a. Marker b. Pencil c. Anything d. Ink - preferably blue or black ink

d

Determine the missing dollar amount in this equation and identify what the missing amount represents:$20,000 = ? + $15,000 a. $5,000 in assets b. $10,000 in equity c. $10,000 in liabilities d. $5,000 in liabilities

d

In which column and section on the worksheet will you find assets listed? a. Credit column of the Balance Sheet section b. Debit column of the Income Statement section c. Credit column of the Income Statement section d. Debit column of the Balance Sheet section

d

Income earned from the sale of goods and services is called _____. a. Drawing b. Capital c. Expenses d. Revenue

d

Publicly traded companies a. must comply with Securities and Exchange (SEC) requirements b. must comply with Generally Accepted Accounting Principles (GAAP) requirements c. can create their own accounting rules :d. both a and b above

d

Select the best term for the following definition: Money earned by delivering goods or services to customers, examples could be sales, fees earned. a. expenses b. owner's equity c. liabilities d. revenue

d

The fraudulent conversion of another's funds or property by a person who is in a position of trust, such as an employee is ________. a. Endorsement b. Petty c. Service Charge d. Embezzlement

d

The person to whom the check is written is the _________. a. Endorser b. Creditor c. Drawer d. Payee

d

This is the list of all the accounts used by a business and is in the order of: Assets, Liabilities, Capital, Drawing, Revenue and Expenses: a. Posting b. Journal c. Source Document d. Chart of Accounts

d

What is the first account in the General Ledger? a. Capital b. Sales c. Rent Expense d. Cash

d

Which of the following is (are) true about the double-entry accounting system—it: a. follows GAAP b. ensures that total debits equals total credits c. means that every transaction has two entries, once as a debit and once as a credit d. all of the above are true

d

Which of the following is (are) true concerning liabilities: a. they are amounts owed to creditors b. represents claims of creditors to the assets of a business c. they are one part of total equity :d. all of the above

d

Writing Void across a check does what? a. Makes the check ready to cash b. Nothing c. Tells the bank to cash it quickly d. Makes the check not usable

d

Select the best term for the following definition: Amount owed to creditors, also the claims of the creditors to the assets of the business and many times these are accounts include the word "payable". a. expenses b. assets c. owner's equity d. liabilities

d?