MULTIPLE CHOICE
IT IS LIKELY TO INFLUENCE THE DECISION OF A REASONABLY PRUDENT INVESTOR OR CREDITOR
AN ITEM IS CONSIDERED MATERIAL IF a. It costs a lot of money b. It is of a tangible nature c. It is likely to influence the decision of a reasonably prudent investor or creditor d. The cost of reporting the item is greater than its benefits
BOOK OF ORIGINAL ENTRY
ANOTHER NAME FOR A JOURNAL IS a. Listing b. Book of original entry c. Book of transactions d. Book of source documents
ADVERTISING BROCHURE
EVIDENCE THAT WOULD NOT HELP WITH DETERMINING THE EFFECTS OF A TRANSACTION ON THE ACCOUNTS WOULD BE A/AN a. Cash register sale tape b. Invoice c. advertising brochure d. cheque
MAY STILL HAVE A NET INCREASE IN CASH
IF AN ENTITY REPORTS A LOSS, IT a. May still have a net increase in cash b. Will not be able to pay a cash dividend c. Will not be able to get a loan d. Will not be able to make capital expenditures
DATE ORDER
THE POSTING OF JOURNAL ENTRIES TO THE LEDGER SHOULD BE DONE IN a. Account number order b. Alphabetical order c. Date order d. Dollar amount order
LOWER OF COST OR NET REALISABLE VALUE RULE TO VALUE INVENTORIES
A COMMON APPLICATION OF THE PRINCIPLE OF PRUDENCE (CONSERVATISM) IS THE USE OF THE a. Lower cost or net realisable value rule to value inventories b. Straight-line depreciation method for plant assets c. weighted average method of inventory valuation d. All of the above are common applications of the principle of prudence
HISTORICAL COST PRINCIPLE
ACCEPTANCE OF THE GOING CONCERN ASSUMPTION GIVES CREDIBILITY TO THE a. Historical cost principle b. Reliability principle c. Monetary unit assumption d. Full disclosure pinciple
LEDGER ACCOUNTS
AFTER A BUSINESS TRANSACTION HAS BEEN ANALYSED AND ENTERED IN THE BOOK OF ORIGINAL ENTRY, THE NEXT STEP IN THE RECORDING PROCESS IS TO TRANSFER THE INFORMATION TO THE a. Trial balance b. Journal c. Ledger accounts d. Financial statements
DEBIT AN OWNER'S EQUITY ACCOUNT FOR $500
AN ACCOUNTANT HAS DEBITED AN ASSET ACCOUNT FOR $1000 AND CREDITED A LIABILITY ACCOUNT FOR $500. WHICH OF THE FOLLOWING WOULD BE AN INCORRECT WAY TO COMPLETE THE RECORDING OF THE TRANSACTION? a. Credit an asset account for $500 b. Credit another liability account for $500 c. Credit an owner's equity account for $500 d. Debit an owner's equity account for $500
A CREDIT BALANCE IN AN EXPENSE ACCOUNT
AN AWARENESS OF THE NORMAL BALANCES OF ACCOUNTS WOULD HELP TO LOCATE WHICH OF THE FOLLOWING AS AN ERROR IN RECORDING? a. A debit balance in the drawings account b. A credit balance in an expense account c. A credit balance in a liability account d. A credit balance in a revenue account
CREDITS DECREASE ASSETS AND INCREASE LIABILITIES
THE STATEMENT THAT IS TRUE IS? a. Debits increase assets and increase liabilities b. Credits decrease assets and decrease liabilities c. Credits decrease assets and increase liabilities d. Debits decrease liabilities and decrease assets
HAVE SUBSTANTIAL AUTHORITATIVE SUPPORT
GENERALLY ACCEPTED" IN THE PHRASE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, MEANS THAT THE PRINCIPLES a. Are proven theories of accounting b. Have substantial authoritative support c. Have been approved by the Taxation Department d. Have been approved for use by management
HAVE PREDICTIVE OR FEEDBACK VALUE
IN ORDER FOR ACCOUNTING INFORMATION TO BE RELEVANT, IT MUST a. Have very little cost b. Have predictive or feedback value c. Be reported to the public d. Be used by a lot of different firms
THE TOTAL OF THE DEBITS ENTRIES MUST EQUAL THE TOTAL OF THE CREDITS ENTRIES
IN RECORDING AN ACCOUNTING TRANSACTION IN A DOUBLE-ENTRY SYSTEM a. The number of debit accounts used must equal the number of credits accounts used b. There must be always be entries made on both sides of the accounting equation c. The total of the debits entries must equal the total of the credits entries d. There must be two accounts affected by any transaction
MAKE A COMPOUND ENTRY
ON JUNE 1, 2009 DIANE LENO BUYS A COPIER/FAX MACHINE FOR HER BUSINESS AND FINANCES THIS PURCHASE PARTLY WITH CASH AND PARTLY ON CREDIT. WHEN JOURNALISING THIS TRANSACTION, SHE SHOULD a. Use three journal entries b. Make a compound entry c. Make a simple entry d. List the credit entry first, which is proper form for this type of transaction
CHART OF ACCOUNTS
THE ENTIRE GROUP OF ACCOUNTS MAINTAINED BY A COMPANY IS CALLED THE a. Chart of accounts b. General ledger c. General journal d. Trial balance
COMPARABILITY
USING THE SAME ACCOUNTING PRINCIPLES AND METHODS FROM YEAR TO YEAR WITHIN A COMPANY IS UPHOLDING THE QUALITATIVE CHARACTERISTIC OF a. Reliability b. Timeliness c. Relevance d. Comparability
THEY CAN BE INTERPRETED TO MEAN INCREASE AND DECREASE
WHICH OF THE FOLLOWING IS NOT TRUE OF THE TERMS DEBIT AND CREDIT? a. They can be abbreviated as Dr. and Cr. b. They can be interpreted to mean increase and decrease c. They can be used to describe the balance of an account d. They can be interpreted to mean left and right
ALL ARE PART OF AN ACCOUNT
WHICH OF THE FOLLOWING IS PART OF AN ACCOUNT? a. Credit side b. Debit side c. Title d. All are part of an account
DEBITS INCREASE THE CAPITAL ACCOUNTS
WHICH OF THESE RULES IS INCORRECT? a. Credits decrease the drawing account b. Debits increase the capital accounts c. Credits increase revenue accounts d. Debits decrease liability accounts
ANALYSING, JOURNALISING, POSTING
WHICH OF THESE SHOWS THE CORRECT SEQUENCE OF STEPS IN THE RECORDING PROCESS? a. Posting, journalising, analysing b. Journalising, analysing, posting c. Analysing, posting, journalising d. Analysing, journalising, posting
THREE OR MORE ACCOUNTS
A COMPOUND JOURNAL ENTRY INVOLVES a. Two accounts b. Three accounts c. Three or more accounts d. Four or more accounts
DRAWING ACCOUNT
A CREDIT IS NOT THE NORMAL BALANCE FOR WHICH ACCOUNT LISTED BELOW? a. Capital account b. Revenue account c. Liability account d. Drawing account
A RECORD OF TRANSACTIONS IN DATE ORDER
A JOURNAL PROVIDES a. The balances for each account b. Information about a transaction in several different places c. A list of all accounts used in the business d. A record of transactions in date order
GENERAL LEDGER ACCOUNTS AND THEIR BALANCES
A TRIAL BALANCE IS A LISTING OF a. General ledger accounts and their balances b. The chart of accounts c. Transactions in a journal d. All transactions
DEBT TO EQUIPMENT 1200 AND A DEBIT TO SUPPLIES 400 FOR NOLAND
NOLAND COMPANY PURCHASES EQUIPMENT FOR 1200 AND SUPPLIES FOR 40 FROM SANDERS CO FOR 1600 CASH a. Debit to equipment 1200 and a debit to supplies expense 400 for Sanders b. Credit to cash for Sanders c. Credit to Accounts Payable for Noland d. Debit to equipment 1200 and a debit to supplies 400 for Noland
ACCUMULATES THE EFFECTS OF JOURNALISED TRANSACTIONS IN THE INDIVIDUAL LEDGER ACCOUNTS
POSTING a. Should be performed in account number order b. Accumulates the effects of journalised transactions in the individual ledger 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
TO CHOOSE THE METHOD THAT WILL BE LEAST LIKELY TO OVERSTATE ASSETS AND PROFIT
PRUDENCE IN ACCOUNTING MEANS a. To understate assets b. To understate liabilities c. Old fashioned d. To choose the method that will be least likely to overstate assets and profit
THE ECONOMIC LIFE OF A BUSINESS CAN BE ARTIFICIALLY DIVIDED INTO TIME PERIODS FOR THE PURPOSE OF REPORTING
THE ACCOUNTING PERIOD ASSUMPTIONS STATES THAT a. The economic life of a business can be artificially divided into time periods for the purpose of reporting b. Activities of an entity are separate from the activities of the owner c. The accounting period should not exceed one year d. It is assumed that the business will operate indefinitely
LIQUIDATION IS IMMINENT
THE GOING CONCERN PRINCIPLE IS INAPPLICABLE WHEN a. The business is just starting-up b. Liquidation is imminent c. Fair market values are higher than costs d. Net realisable values cannot be obtained
OBJECTIVELY MEASURABLE
THE HISTORIC COST PRINCIPLE STATES THAT ASSETS ARE RECORDED AT THEIR COST BECAUSE COST IS a. Confirmable b. Reliable c. Objectively measurable d. All of these
FULL DISCLOSURE PRINCIPLE
THE INFORMATION PROVIDED IN THE NOTES THAT ACCOMPANY FINANCIAL STATEMENTS IS REQUIRED BECAUSE OF THE a. Historical cost principle b. Full disclosure principle c. Matching principle d. Going concern principle
REPEATEDLY DURING THE ACCOUNTING PERIOD
THE RECORDING PROCESS OCCURS a. Once a year b. Once a month c. Repeatedly during the accounting period d. Infrequently in a manual accounting system
DEBIT ACCOUNT ENTERED FIRST AT THE EXTREME LEFT MARGIN
THE STANDARD FORM OF A JOURNAL ENTRY HAS THE a. Debit account entered first and indented b. Credit account entered first and indented c. Debit account entered first at the extreme left margin d. Credit account entered first at the extreme left margin
EXPENSES INCREASE OWNER'S EQUITY
WHICH STATEMENT IS NOT TRUE? a. Expenses increase owner's equity b. Expenses have normal debit balances c. Expenses decrease owner's equity d. Expenses are a negative factor in the computation of profit