Financial Accounting Chapter 1-2 quiz practice
Ending amounts on the statement of changes in equity are the same as those on the
Balance sheet
Which of the following is not a form of business organization?
Charity
Which of the following is not an expense?
Dividends paid
A document that is used to chronologically record a business's debit and credit transactions is called a
General journal
Amounts are posted from the ________ to the ________
Journal, general ledger
This accumulates information regarding the increases and decreases in a specific asset, liability, or equity item
Ledger account
A company purchases supplies and records these as an asset. As they are used, they are expensed. This is an example of
Matching
An accounting policy requiring a corporation to capitalize any asset over $5,000 in value would be an example of:
Materiality
The statement of cash flows is divided into which sections?
Operating, investing, and financing
Which of the following best describes a trial balance?
Provides a mathematical check before the financial statements are prepared.
The primary qualitative characteristics of accounting information are:
Relevance and faithful representation
Statement of Owner's Equity
Report of changes in equity over a period; adjusted for increases (owner investment and net income) and for decreases (withdrawals and net loss).
A company purchased land in 1950 for $10,000. Although the land is now worth $300,000 the accounting records are not changed. This is an application of which accounting convention?
Stable monetary
Amounts on the income statement are transferred to the
Statement of changes in equity
Which of the following describes a corporation? 1. The owners have limited liability 2. It is a business that two or more owners own 3. It always sells its stock publicly 4. Its profits are taxed on the owner's personal tax return
1. The owners have limited liability Definition
Consider the following general ledger T-account: The ending balance is: 1. $8,400 debit 2. $3,500 credit 3. $4,900 debit 4. $4,900 credit
3. $4,900 debit
Customer payments received in advance of the product or service being provided is recorded in which general ledger account?
Unearned Revenue
Credits always decrease which accounts?
assets and expenses
An example of an asset is:
cash
Debits always decrease which accounts?
liabilities, revenue, common stock
revenue - expenses
net income
US GAAP is adopted by
sec
Debit means
the left side of an account
Credit means
the right side of an account
Which of the following is not a stockholders' equity account?
Investments
Which of the following does not describe a proprietorship?
It is a separate legal entity
Which of the following does not describe a partnership?
It is not a separate legal entity
Credits always increase which accounts?
Assets, Liabilities and Common Stock
Debits always increase which accounts?
Assets, dividends, and expenses
A business purchases a vehicle for $35,000. Since the vehicle was advertised for $40,000 the company decided to record the asset at $40,000. This is a violation of which accounting principle?
Historical cost
A business purchases a vehicle for $35,000. Since the vehicle was advertised for $40,000 the company decided to record the asset at $40,000. This is a violation of which accounting principle? Relevance Historical cost Materiality Recognition
Historical cost
A company purchased a building worth $500,000 by paying $50,000 in cash and acquiring a bank loan for the remainder. The effect on the accounting equation is:
Increase in assets and liabilities by $450,000
Which of the following is not a liability?
accounts receivable and prepaid expenses
Double‐entry accounting requires
debits equal credits
owner investment + net income + withdraws
end capital