Financial Accounting Exam: Chapters 3&4

An account is a part of the financial information system and is described by each one of the following except: A) an account has a debit and credit side B) an account is a source document C) an account consists of three parts D) an account has a title

B) an account is a source document

Which statement about an account is true? A) in its simplest form, an account consists of two parts B) an account is an individual accounting record of increases and decreases in specific asset, liability, stockholders' equity items C) there are separate accounts for specific assets and liabilities but only one account for stockholders' equity items D) the left side of an account is the credit or decrease side

B) an account is an individual accounting record of increases and decreases in specific asset, liability, stockholders' equity items

On January 14, Decker industries purchased supplies of $500 on account. The entry to record the purchase will include A) a debit to Supplies and a credit to Accounts Payable B) a debit to Supplies Expense and a credit to Accounts Receivable C) a debit to Supplies and a credit to cash D) a debit to Accounts Receivable and a credit to Supplies

A) a debit to Supplies and a credit to Accounts payable

A T-account is A) a way of depicting the basic form of an account B) a special account used instead of a journal C) a special account used instead of a trial balance D) used for accounts that have both a debit and credit balance

A) a way of depicting the basic form of an account

An accounting record that includes a list of accounts and their balances at a given time is called a A) trial balance B) general journal C) general ledger D) chart of accounts

A) trial balance

During February 2014, its first month of operations, the owner of Schwenn Enterprises invested cash of $40,000. Schwenn had cash sales of $8,000 and paid expenses of $14,000. Assuming no other transactions impacted the cash account, what is the balance in cash at February 28? A) $6,000 credit B) $34,000 debit C) $48,000 debit D) $26,000 credit

B) $34,000 debit

Assets normally show A) credit balances B) debit balances C) debit and credit balances D) debit or credit balances

B) debit balances

A trial balance will not balance if A) a correcting journal entry is posted twice B) a $50 cash dividend is debited to dividends for $500 and credit to cash for $50 C) a $300 payment on accounts payable is debited to accounts payable for $30 and credited to cash for $30 D) a transaction is not posted at all

B) a $50 cash dividend is debited to dividends for $500 and credit to cash for $50

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording? A) a debit balance in the Dividends account B) a credit balance in an expense account C) a credit balance in a liabilities account D) a credit balance in a revenue account

B) a credit balance in an expense account

Posting A) should be performed in account number order B) accumulates the effects of journalized transactions in the individual accounts C) involves transferring all debits and credits on a journal page to the trial balance D) is accomplished by examining ledger accounts and seeing which ones need updating

B) accumulates the effects of journalized transactions in the individual accounts

If total liabilities decreased by $4,000 then A) stockholders' equity must have decreased by $4,000 B) assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000 C) assets and stockholders' equity each increase by $2,000 D) assets must have increased by $4,000

B) assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000

The purchase of an asset on credit A) increases assets and stockholders' equity B) increases assets and liabilities C) decreases assets and increases liabilities D) leaves total assets unchanged

B) increases assets and liabilities

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? A) asset, debiit B) liability, credit C) revenues, credit D) expense, debit

B) liability, credit

A revenue account A) is increased with a debit B) is decreased with a credit C) is increased with a credit D) has a normal balance of a debit

C) is increased with a credit

The sale of an asset on credit for what it cost A) increases assets and liabilities B) decreases assets and liabilities C) leaves total assets unchanged D) decreases assets and increases liabilities

C) leaves total assets unchanged

A trial balance would only help in detecting which one of the following errors? A) a transaction that is not journalized B) a journal entry that is posted twice C) offsetting errors made in recording the transaction D) a transposition error when trnasferring the debit side of a journal entry to the ledger

D) a transposition error when transferring the debit side of a journal entry to the ledger

If a company pays dividends of $10,000, A) stockholders' equity will be reduced by $10,000 B) net income will be reduced by $10,000 C) retained earnings will be reduced by $10,000 D) both retained earnings and stockholders' equity will be reduced by $10,000

D) both retained earnings and stockholders' equity will be reduced by $10,000

Which of the following journal entries is recorded correctly and in the basic format? A) salaries and wages expense 550 cash 1,500 advertising expense 950 B) salaries and wages expense 550 advertising expense 950 cash 1,500 C) cash 1,500 salaries and wages expense 550 advertising expense 950 D) salaries and wages expense 550 advertising expense 950 cash 1,500

D) salaries and wages expense 550 advertising expense 950 cash 1,500

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates A) no errors have been made B) no errors can be discovered C) that all accounts reflect correct balances D) the mathematical equality of the accounting equation

D) the mathematical equality of the accounting equation