accounting test 1

Using horizontal analysis, compute the amount and percent change for sales. Round to one decimal place.

$(15,500), (9.4%)

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

$212,000

Print Item Question Content Area If total liabilities decreased by $24,085 during a period of time and owner's equity increased by $32,014 during the same period, the amount and direction (increase or decrease) of the period's change in total assets would be a

$7,929 increase

The Posting Reference columns are used to trace transactions from the ledger to the journal. What will be entered in the Posting Reference column of (1) the journal and (2) the ledger?

(1) the account number and (2) the journal page number

Randomly listed steps for preparing a trial balance are as follows: (1)Verify that the total of the Debit column equals the total of the Credit column.(2)List the accounts from the ledger and enter their debit or credit balance in the Debit or Credit column of the trial balance.(3)List the name of the company, the title of the trial balance, and the date the trial balance is prepared.(4)Total the Debit and Credit columns of the trial balance. What is the proper order of these steps?

(3), (2), (4), (1)

financial accounting

*external users-creditors, investors, government, customers, vendors *must be done in accordance with gaap- generally accepted accounting principles *CPA- certified public accountant

Assume that you are creating a chart of accounts for a company. Each account number will have two digits. The first digit indicates the major account group to which the account belongs. Which of the following correctly identifies the major account groups typically represented by the numbers 1 through 5?

1-Assets, 2-Liabilities, 3-Owner's Equity, 4-Revenues, 5-Expenses

Which of the following is not a characteristic of a corporation?

A corporation's resources are limited to its individual owners' resources.

Question Content Area Which of the following errors would cause the trial balance totals to be unequal?

A payment of $4,450 to a creditor was posted as a debit of $4,500 to Accounts Payable and a credit of $450 to Cash.

Which of the following is the best description of accounting's role in business?

Accounting provides information to managers to operate the business and to other users to make decisions regarding the economic condition of the company.

Question Content Area Office supplies purchased by Janer's Cleaning Service on account were returned. Which of the following entries for Janer's Cleaning Service records this transaction?

Accounts Payable, debit; Office Supplies, credit

Which of the following is not considered to be a liability?

Accounts Receivable

accouting equation

Assets = Liabilities + Owner's Equity

Which of the following asset accounts is increased when a receivable is collected?

Cash

Question Content Area Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service.

Cash, debit; Unearned Rent, credit

Question Content Area Which of the following abbreviations is correct?

Debit, "Dr"; Credit, "Cr"

Question Content Area The trial balance is out of balance and the accountant suspects that a transposition or slide error has occurred. What will the accountant do to confirm this suspicion?

Determine the amount of the error and divide by 9. If the result is evenly divided, then this type of error is likely.

Question Content Area Which of the following is not a useful step in finding errors on the trial balance?

Determine the difference between debits and credits and change any account to make the trial balance correct.

Which of the following is not true with a double-entry accounting system?

Each business transaction will have two debits.

Which of the following is the authoritative body in the United States that has the primary responsibility for developing accounting principles?

FASB

Print Item Question Content Area Which of the following is a service business?

Facebook, Inc.

Within the United States, the dominant body in the primary development of accounting principles is the

Financial Accounting Standards Board (FASB)

Which of the following is a manufacturing business?

General Motors

Print Item Question Content Area Four financial statements are usually prepared for a business. The statement of cash flows is usually prepared last. The statement of owner's equity (OE), the balance sheet (B), and the income statement (I) are prepared in a certain order to obtain information needed for the next statement. In what order are these three statements prepared?

I,OE, B

Print Item Question Content Area Most businesses in the United States are

Print Item Question Content Area proprietorships

Question Content Area Which of the following entries records the acquisition of office supplies on account?

Question Content Area Office Supplies, debit; Accounts Payable, credit

Question Content Area Expenses can result from

Question Content Area consuming services

Which of the following accounts is an owner's equity account?

Ross Morris, Capital

Which of the following is true about T accounts?

The left side of a T account is called the debit side.

Question Content Area Which of the following is not a correct rule of debits and credits?

The normal balance for revenues and expenses is a credit.

A cash payment is recorded in the cash account as

a credit

ledger

account information * in order of financial statements

The debt created by a business when it makes a purchase on account is referred to as an

accounts payable

Question Content Area Accounts

are records of increases and decreases in individual financial statement items

In which of the following types of accounts are decreases recorded by credits?

assets

Print Item Question Content Area Land originally purchased for $28,575 is sold for $77,235 in cash. What is the effect of the sale on the accounting equation?

assets increase by $48,660; owner's equity increases by $48,660

Question Content Area Which of the following groups of accounts is increased with a debit?

assets, drawing, expenses

Question Content Area In which order are the accounts listed in the chart of accounts?

assets, liabilities, owner's equity, revenues, expenses

Print Item Question Content Area Liabilities are reported on the

balance sheet

Question Content Area Which side of the account increases the cash account?

debit

Question Content Area Which of the following entries records the investment of cash by Taylor Thomas, owner of a proprietorship?

debit Cash; credit Taylor Thomas, Capital

Question Content Area The payment for the monthly rent will require which of the following entries?

debit Rent Expense and credit Cash

The payment for the monthly rent will require which of the following entries?

debit Rent Expense and credit Cash

Print Item Question Content Area Owner's withdrawals

decrease owner's equity

Managerial accountants would be responsible for providing information regarding

expansion of a product line report to management

Print Item Question Content Area Assets are

financed by the owner and/or creditors

Question Content Area Accounts are classified in the ledger

in accordance with their appearance in the financial statements

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

income statement

managerial accounting

internal users- management, employees

Question Content Area Which of the following groups of accounts is increased with a credit?

liabilities, capital, revenues

Which of the following is not a business transaction?

make a sales offer

Two common areas of accounting that respectively provide information to internal and external users are

managerial accounting and financial accounting

Question Content Area The chart of accounts is designed to

meet the information needs of a company's managers and other users of its financial statements

The classification and normal balance of the drawing account are

owner's equity, debit balance

Which of the following owner's equity accounts follows the same debit and credit rules as liabilities?

revenue accounts only

Question Content Area In which of the following types of accounts are increases recorded by credits?

revenues and liabilities

types of business

sole proprietorship, partnership, corporation, LLC

Print Item Question Content Area Profit is the difference between

the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods or services

Question Content Area Expenses follow the same debit and credit rules as

the drawing account

Question Content Area Which of the following statements is not a purpose for the journal?

to help locate errors

Which of the following statements is not a purpose for the journal?

to help locate errors

Print Item Question Content Area Which of the following is not a role of accounting in business?

to personally guarantee loans of the business

Question Content Area Which of the following is an internal report that will determine if debit balances equal credit balances in the ledger?

trial balance

journal

where transactions are first made