ACC 211 MC

Expense accounts increase with a. Debits b. Credits c. Both debits and credits d. Neither debits nor credits

Debits

Which of the following can make Owner's Equity go down? a. Contributions from owners b. Dividends paid c. Profit generated from the company's operations D. none of the above

Dividends paid

The Cost principle states a. All entries in the accounting system must be put in terms of dollars b. All entries into the accounting system must match each other c. Expenses are recorded when the company receives a good/service of value, or due to the passage of time. d. Entries into the accounting system are recorded at the price paid by the firm

Entries into the accounting system are recorded at the price paid by the firm

All entries must affect both the Asset side and the Liabilities + Equity side of the accounting equation for the accounting system to stay in balance.

False

All expense accounts are shown on the Income Statement except the Cost of Goods Sold account A True B False

False

As a result of the closing process all General Ledger accounts will be reset to zero.

False

Assets (stuff) accounts track the dollar amount of a physical asset and who has a claim to that physical asset.

False

Some of the revenue and expense accounts are used to prepare the Income statement and some of the revenue and expense accounts appear on the Balance Sheet.

False

The Balance Sheet is produced from the account balances shown in the General Journal

False

The Debit side of an asset account is the left side and the Credit side of a liability account is the right side.

False

The Note Payable account is increased by a Debit entry.

False

The collection of cash from a customer will always result in an increase in the retained earnings account.

False

The common stock account is decreased by debit while the retained earnings account is increased by a debit.

False

The largest transaction occurring during the Accounting Period is always entered first in the General Journal.

False

The post closing trial balance should be prepared after the income statement is prepared but before the balance sheet is prepared.

False

The retained earnings account is an asset account similar to the Inventory account.

False

The retained earnings account is increased by a debit and decreased by a credit.

False

The retained earnings amount on the post-closing trial balance will always be greater than the retained earnings amount on the pre-closing trial balance.

False

Which of the following is not a liability? a. Notes Payable b. Retained Earnings c. Dividends Payable d. Accounts Payable

Retained Earnings

If a firm fails to record depreciation expense, what is the result on the financial statements? a. Total assets would be understated by the amount of depreciation for the current year b. Retained Earnings would be overstated by the amount of depreciation for the current year c. Total liabilities would be overstated by total accumulated depreciation d. There is no effect on the financial statements

Retained Earnings would be overstated by the amount of depreciation for the current year

Credit amounts entered into the Sales Revenue account increase the account balance and will ultimately increase retained earnings.

True

Debit amounts entered into an expense account increase the expense account and will ultimately decrease Retained Earnings.

True

In a traditional accounting system all entries must be first put in the General Journal.

True

The Balance Sheet is a point in time financial report.

True

The asset account balances liability account balances and the common stock account balance will always be the same on both the pre-closing trial balance and the post- closing trial balance.

True

The Balance Sheet: A. shows the ending balances in all the asset accounts B. is only used by the accountants in the accounting department C. shows the ending balances in all asset accounts, except the Cash account D. shows the financial results over a period of time E. none of the above

shows the ending balances in all the asset accounts

The sequence of steps a company's accounting system goes through each Accounting Period is called: A. the Accounting Cycle B. the Accounting Journal C. the Accounting Ledger D. the Accounting Trial Balance E. none of the above

the Accounting Cycle

After completing all 9 steps in the accounting cycle for the month of January, Frankfort Company's January 31 Ending Balance in the Accounts Receivable account was $100,000 debit. Frankfort's Net Income for February was $30,000. In February, Frankfort received a total of $65,000 cash from customers for sales made in January. The February beginning balance in Frankfort's Cash Account was $25,000 and the February ending balance in the Cash Account was $15,000. In February, Frankfort made $250,000 in sales; of those, $200,000 in cash was received during February and the remainder will be paid in March. The ending balance of Accounts Receivable that appears on the Balance Sheet on February 28th should be: A. $35,000 B. $130,000 C. $85,000 D. $150,000 E. none of the above

$85,000

The retained earnings account tracks the owners' claim to assets that result from the operation of the business.

True

The temporary accounts should always have a zero balance on the post-closing trial balance.

True

Which of the following would not be shown on the Income statement? A. Sales Revenue B. Depreciation Expense C. Cost of Goods Sold D. interest payable E. All would be shown on the Income Statement

interest payable

The common stock account tracks the owner's claim to assets that result from the operation of the business.

False

The trial balance lists all of the individual transactions that were entered into the asset, liability and Equity accounts.

False

Transactions are entered into the General Journal with the largest transaction occurring during the Accounting Period always entered first. A. True B. False

False

Revenue accounts will always start each new accounting period with a beginning balance of zero.

True

The Balance Sheet is produced from the account balances shown in the General Ledger.

True

The Cost of Goods Sold account is an expense account similar to the Rent Expense account. A. True B. False

True

The Inventory account is decreased by Credit entry.

True

The after close balance for both revenue and expense accounts should always be a zero balance.

True

The credit side of all accounts is the right side.

True

The equipment account is increased by a Debit entry

True

The payment of wages to employees for work they performed during the current accounting period will result in a credit to the cash account.

True

The primary reason the accountant prepares a Trial Balance is to determine if the accounting system is in balance.

True

The retained earnings account is similar to the common stock account in that they are both owners' claim-to-assets accounts.

True

The retained earnings amount needed for the Balance Sheet can be calculated as follows the current balance in the retained earnings account plus the sum of the revenue account balances less the sum of the expense account balances.

True

The sequence of steps a company's accounting system goes through each Accounting Period is called the Accounting cycle.

True

Entries are posted from the General Journal to the Trial Balance.

False

The cost of goods sold account is an asset account similar to the Inventory account.

False

When a sale is made to a customer on credit there is no entry made to the Sales Revenue account because no cash has been received.

False

When a transaction increases a company's Accounts Receivable account the Retained Earnings account must be decreased to keep the accounting system in balance.

False

The following is a correct summary of the increase/ decrease rules for accounts: - In all Asset accounts if the amount is placed on the left (debit) side of the account the balance in the account is increased. - In all Liability accounts and all in Equity accounts if the amount is placed on the right (credit) side of the account the balance in the account is increased. - In all Asset accounts if the amount is placed on the right (credit) side of the account the balance in the account is decreased. - In all liability accounts an all in equity accounts if the amount is placed o the left (debit) side of the account the balance in the account is decreased.

True

The main purpose of Equity accounts is to keep track of owners' claims to an organization's assets.

True

The main purpose of lability accounts is to keep track of non-owners' claim to an organization's assets.

True

A business purchased a new machine on January 1, 2013 for $100,000. Assuming the machine has a useful life of 4 years and no salvage value, what is the depreciation on the machine for the year of 2013 using straight line? a. 20,000 b. 25,000 c. 27,500 d. 10,000

25,000

What is depreciation? a. A company's method for updating the property, plant, and equipment account to the fair market value (the current market value) b. A method to increase the value in the property, plant, and equipment account when the value increases c. A cost allocation method to allow firms to expense property, plant, and equipment over its useful life d. A cost allocation method to allow firms to expense their use of inventory

A cost allocation method to allow firms to expense property, plant, and equipment over its useful life

A company's Accounting Period must always be one month long.

False

A transaction which decreases the retained earnings account must always decrease an asset account to keep the accounting system in balance.

False

Adjusting entries should be entered into the general journal and posted to the general ledger accounts after preparing a pre-closing trial balance.

False

After certain types of transactions it is ok for the accounting system to have more Total Assets (stuff) that Total Liabilities + Owners' Equity (claims-to-stuff)

False

All entries made in an accounting system - must affect both the Asset side and the Liabilities + Equity side of the accounting equation for the accounting system to stay in balance. A. True B. False

False

Expense accounts will always start each new accounting period with a beginning balance equal to all of the debit entries that were made into the expense account during the previous accounting period.

False

For each entry in the General Journal the number of accounts being debited - must equal the number of accounts being credited. A. True B. False

False

If there is a line item on the Balance Sheet titled "Total Assets" then there must be a Total Asset account in the General Ledger. A. True B. False

False

In an accounting system if Total Assets are not equal to Total Claims to Assets, then the Balance Sheet report will simply be relabeled as the UnBalance Sheet report.

False

On which statement would you find the revenues and expenses of a company clearly stated? a. Balance Sheet b. Cash Flow Statement c. Income Statement d. None of the above—you wouldn't find revenues and expenses on any of the above statements

Income Statement

If an adjusting entry to record depreciation is not recorded at month-end, which of the following effects on the financial statements for the month will NOT occur? a. Total expenses will be understated on the income statement. b. Net income will be overstated. c. Assets on the balance sheet will be overstated. d. Liabilities will be understated e. Retained Earnings will be overstated.

Liabilities will be understated

When do we recognize revenue and expense in accrual accounting? a. Recognize revenue only when we receive cash and recognize expenses only when we pay cash b. Recognize revenue only when we receive cash and recognize expense when we receive a good or service of value. c. Recognize revenue when the sale transaction takes place and recognize expense only when we pay cash. d. Recognize revenue when the sale transaction takes place and recognize expense when we receive a good or service of value. e. None of the above are correct

Recognize revenue when the sale transaction takes place and recognize expense when we receive a good or service of value.

Which of the following is not an asset? a. Inventory b. Revenue c. Cash d. Equipment e. None of the above—all the above listed are assets

Revenue

A company will have a Net Loss when the sum of all the expense accounts is grater than the sum of all the revenue accounts.

True

During the closing process for expense accounts the retained earnings account is debited which decreases retained earnings.

True

During the closing process for revenue accounts the retained earnings account is credited which increases retained earnings.

True

Expense accounts will always start each new accounting period with a zero balance. A. True B. False

True

For each entry in the General Journal the total dollar amount of the debits and the total dollar amount of the credits must always be equal.

True

If the sum of the ending balances in the revenue account is greater than the sum of the ending balance in the expense accounts then retained earnings will increase as a result of the closing entries.

True

If there was no need to prepare the income statement then there would be no need to have revenue and expense accounts.

True

In an accounting system that uses debits and credits only positive numbers will be put into the accounts.

True

Which of the following statements is True? a. The normal balance for the Rent expense account is a Credit. b. The Notes payable account will always start an accounting period with a zero balance. c. When you credit a revenue account you can say that you increased the revenue account and increased owners' equity. d. The normal balance for the accounts payable account is a Debit. e. Owner's capital is the amount of Cash available to pay a dividend.

When you credit a revenue account you can say that you increased the revenue account and increased owners' equity.

The Inventory account is decreased by: A. an entry to the left side of the account B. a Debit entry C. a Credit entry D. a Debit entry or a Credit entry depending on the type of transaction E. none of the above

a Credit entry

The Accounts Payable account is decreased by: A. an entry to the right side of the account B. a Debit entry C. a Credit entry D. a Debit entry or a Credit entry depending on the type of transaction E. none of the above

a Debit entry

The Accounts Receivable account is increased by: A. the Inventory account can only be decreased B. a Debit entry C. a Credit entry D. a Debit entry or a Credit entry depending on the type of transaction E. none of the above

a Debit entry

Credit entries into the Sales Revenue account: A. decrease the account balance and will ultimately increase Retained Earnings B. increase the account balance and will ultimately increase Retained Earnings C. decrease the account balance and will ultimately decrease Retained Earnings D. entries are not made to the Sales Revenue account since it is a temporary account E. none of the above

increase the account balance and will ultimately increase Retained Earnings

Debit entries into an expense account: A. decrease the account balance and will ultimately increase Retained Earnings B. increase the account balance and will ultimately increase Retained Earnings C. decrease the account balance and will ultimately decrease Retained Earnings D. entries are not made to expense accounts since they are temporary accounts E. none of the above

none of the above

Revenue accounts will always start each new accounting period: A. with a credit balance equal to last month's ending balance B. with a debit balance equal to last month's ending balance C. with last month's ending credit balance, if last month's ending balance was a credit - or with last month's ending debit balance, if last month's ending balance was a debit D. none of the above

none of the above

In a traditional accounting system all entries must be first put in: a. the General Ledger B. the Trial Balance C. the General Journal D. the Balance Sheet E. none of the above

the General Journal