Accounting Principles 1

An account titled Prepaid Rent would be classified as which of the following? A) Asset account B) Liability account C) Revenue account D) Expense account E) None of the above

A. Asset account

1 The recording of financial transactions and events manually or electronically is called which of the following? A) Bookkeeping B) Budgeting C) Auditing D) Reporting E) A and B

A. Bookkeeping

If during the accounting period the assets increased by $14,000, and equity increased by $4,000, then how did liabilities change? A) Increased by $10,000 B) Increased by $4,000 C) Decreased by $4,000 D) Decreased by $10,000 E) Decreased by $18,000

A. Increased by $10,000

Which of the following statements is true? A) Journalizing precedes posting B) Revenue accounts are increased by debit entries C) An account shows increase and decreases, but does not show the balance D) Debit entries are entries involving the right-hand side on an account E) Journalizing errors should be erased and a correct entry made

A. Journalizing precedes posting

An accountant has the responsibility to coordinate the annual budget processes of the business corporation she works for. In which of the following areas of accounting is she most likely to be employed? A) Managerial accounting. B) Public accounting. C) Financial accounting. D) Not-for-Profit accounting. E) Auditing.

A. Managerial Accounting

Total revenues were $105,000, total expenses, except for wage expense were $50,000, and net income was $35,000. What was the amount of wage expense? A) $15,000 B) $20,000 C) $55,000 D) $70,000 E) Cannot be determined from information provided

B. $20,000

The investment of cash in the business will result in which of the following? A) An increase in cash and a decrease in equity B) An increase in cash and an increase in equity C) A decrease in cash and an decrease in liabilities D) An increase in fees earned and an increase in equity E) A increase in cash and a increase in liabilities

B. An increase in cash and an increase in equity

The total assets and total liabilities of a firm are reported on which of the following? A) Income statement B) Balance sheet C) Statement of cash flows D) Statement of owner's equity E) None of the above

B. Balance Sheet

Withdrawals increase equity. A) True B) False

B. False

When cash is received from a customer in payment for an account receivable, how are the elements of the accounting equation affected? A) Decrease assets (cash and increase assets (accounts receivable) B) Increase assets (cash) and decrease assets (accounts receivable) C) Increase assets and increase liabilities D) Increase assets and increase equity E) None of the above

B. Increase assets (cash and increase assets (accounts receivable))

Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation? A) Increase in accounts receivable and a decrease in equity B) Increase in accounts receivable and an increase in equity C) Decrease in accounts receivable and an increase in equity D) Increase in fees earned and a decrease in equity E) Decrease in accounts receivable and a decrease in equity

B. Increase in accounts receivable and an increase in equity

If during the accounting period the assets decreased by $10,000, and equity increased by $2,000, then how did liabilities change? A) Increased by $12,000 B) Increased by $8,000 C) Decreased by $12,000 D) Decreased by $8,000 E) Decreased by $6,000

C. Decreased by $12,000

Purchasing equipment on account will have what effect on the components of the accounting equation? A) Increase in equipment and a decrease in equity B) Increase in equipment and an increase in equity C) Increase in equipment and an increase in liabilities D) Increase in equipment and a decrease in liabilities E) None of the above

C. Increase in equipment and an increase in liabilities

If at the end of the accounting period the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets? A) $14,000 B) $18,000 C) $32,000 D) $50,000 E) None of the above

D. $50,000

Assets total $100,000 and liabilities total $20,000. What is the equity of the business? A) $80 B) $800 C) $8,000 D) $80,000 E) None of the above

D. $80,000

A provider of health insurance received payment of $24,000 cash from a customer for insurance coverage for the next two years. Recording the receipt of this cash will require which of the following? A) Withdrawals to be debited, an asset to be credited B) A liability to be debited, an asset to be credited C) An asset to be debited, capital to be credited D) An asset to be debited, a liability to be credited E) One asset to be debited, another asset to be credited

D. An asset to be debited, a liability to be credited

Phillip Atwood received $5,000 after he completed excavation work for a local home builder. Recording the transaction requires which of the following? A) An asset to be debited, a liability to be credited B) A liability to be debited, an asset to be credited C) Withdrawal to be debited, an asset to be credited D) An asset to be debited, revenue to be credited E) An option other than these provided

D. An asset to be debited, revenue to be credited

Keith Farfalle withdrew $5,000 from his pet store, KM's Pets. Recording the withdrawal will result in which of the following changes to the components of the accounting equation? A) Increase in an asset and increase a liability B) Decrease in an asset and decrease a liability C) Increase in an asset and increase in equity D) Decrease in an asset and decrease in equity E) Increase in one asset and decrease in another asset

D. Decrease in an asset and decrease in equity

Beginning capital was $10,000. Withdrawals were $24,000. The owner made additional investments during year of $60,000. The ending capital balance was $90,000. What was the net income or net loss for the period? A) Net income, $56,000 B) Net loss, $44,000 C) Net income, $44,000 D) Net income, $30,000 E) None of the above

D. Net income, $30,000

Which form of ownership burdens owners with the greatest risk of loss of their personal assets? A) Limited partnership (LP) B) Limited liability partnership (LLP) C) Corporation D) Sole proprietorship E) None of the above

D. Sole proprietorship

Which of the following is not an equity account? A) Owner's Capital B) Owner's Withdrawals C) Revenue D) Unearned Revenue E) Expenses

D. Unearned Revenue

Which of the following organizations is responsible for setting accounting rules and regulations? A) H&R Block B) SEC C) IRS D) AICPA E) FASB

E. FASB