Principles of Accounting Practice Quiz

Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under the straight-line method, monthly depreciation will be A. $600. B. $720. C. $60. D. $12.

A. $600.

Which of the following accounts would not be involved in any of the closing entries? A. Accounts Payable B. Fred Sanford, Drawing C. Income from Services D. Advertising Expense

A. Accounts Payable

Which of the following accounts has a normal debit balance? A. Accounts Receivable B. Accounts Payable C. Fees Income D. T. Stark, Capital

A. Accounts Receivable

Which financial statement is reported as of a specific date? A. Balance Sheet B. Statement of Owner's Equity C. Income Statement D. Statement of Changes in Financial Position

A. Balance Sheet

Which of the following accounts is not closed? A. Cash B. Fees Income C. Rent Expense D. Joan Wilson, Drawing

A. Cash

Anna Conda Landscaping service received a bill for the utilities used during September. The bill will be paid in October. The journal entry to record the utility bill received is: A. Debit Utilities Expense; Credit Accounts Payable B. Debit Cash; Credit Utilities Expense C. Debit Utilities Expense; Credit Cash D. Debit Accounts Payable; Credit Cash

A. Debit Utilities Expense; Credit Accounts Payable

Which of the following accounts is a permanent account? A. Supplies B. Supplies Expense C. Owner's drawing D. Fees Income

A. Supplies

The adjusting entry to account for the expiration of prepaid insurance consists of A. a debit to Insurance Expense and a credit to Prepaid Insurance. B. a debit to Insurance Expense and a credit to Accumulated Depreciation. C. a debit to Prepaid Insurance and a credit to Accumulated Depreciation. D. a debit to Accumulated Depreciation and a credit to Prepaid Insurance.

A. a debit to Insurance Expense and a credit to Prepaid Insurance.

The journal entry to record the payment of salaries should include A. a debit to Salaries Expense and a credit to Cash. B. a debit to Capital and a credit to Cash. C. a debit to Cash and a credit to Salaries Expense. D. a debit to Salaries Expense and a credit to Accounts Payable.

A. a debit to Salaries Expense and a credit to Cash.

The adjusting entry to account for the use of supplies consists of A. a debit to Supplies Expense and a credit to Supplies. B. a debit to Supplies and a credit to Supplies Expense. C. a debit to Supplies and a credit to Accumulated Depreciation. D. a debit to Accumulated Depreciation and a credit to Supplies.

A. a debit to Supplies Expense and a credit to Supplies.

After the closing entries are posted to the ledger, each revenue account will have A. a zero balance. B. a debit balance. C. a credit balance. D. either a debit or a credit balance.

A. a zero balance.

The rent paid for future months is a(n) A. asset. B. liability. C. expense. D. revenue.

A. asset.

When equipment is purchased on credit, A. assets and liabilities increase. B. assets increase and liabilities decrease. C. assets and owner's equity increase. D. assets and expenses increase.

A. assets and liabilities increase.

A firm issues periodic reports called A. financial statements. B. summaries. C. tax returns. D. audits.

A. financial statements.

The asset, liability, and owner's capital accounts appear on all of the following except the A. income statement. B. balance sheet. C. post-closing trial balance. D. worksheet.

A. income statement.

The normal balance of an account is the A. increase side of the account. B. decrease side of the account. C. the left side of the account. D. the right side of the account.

A. increase side of the account.

Debits are used to record A. increases in assets. B. increases in revenue. C. increases in owner's equity. D. increases in liabilities.

A. increases in assets.

On a worksheet, the adjusted balance of the Depreciation Expense account is extended to: A. the Income Statement Debit column. B. the Income Statement Credit column. C. the Balance Sheet Debit column. D. the Balance Sheet Credit column.

A. the Income Statement Debit column.

On a worksheet, the adjusted balance of the Supplies Expense account is extended to: A. the Income Statement Debit column. B. the Income Statement Credit column. C. the Balance Sheet Debit column. D. the Balance Sheet Credit column.

A. the Income Statement Debit column.

The entry to close the Depreciation Expense account would include a debit to A. the Income Summary account and a credit to the Depreciation Expense account. B. the Income Summary and a credit to Cash. C. Cash and a credit to the Income Summary account. D. the Depreciation Expense account and a credit to the Income Summary account.

A. the Income Summary account and a credit to the Depreciation Expense account.

Assets and liabilities are reported on A. the balance sheet. B. the income statement. C. the statement of owner's equity. D. both the balance sheet and the income statement.

A. the balance sheet.

The entry to transfer a net loss to the owner's capital account would include a debit to A. the owner's capital account and a credit to Cash. B. the owner's drawing account and a credit to the owner's capital account. C. Income Summary and a credit to the owner's capital account. D. the owner's capital account and a credit to Income Summary.

A. the owner's capital account and a credit to Cash. D. the owner's capital account and a credit to Income Summary.

The account used to record increases in owner's equity from the sale of goods or services is A. the revenue account. B. the Cash account. C. the capital account. D. the drawing account.

A. the revenue account.

One purpose of closing entries is to A. transfer the results of operations to owner's equity. B. reduce the owner's capital account balance to zero so that the account is ready for the next period. C. adjust the ledger account balances to provide complete and accurate figures for use on financial statements. D. close all accounts so that the ledger is ready for the next accounting period.

A. transfer the results of operations to owner's equity.

If the prepaid expenses are not adjusted, assets on the balance sheet A. will be overstated. B. will be understated. C. will not be affected. D. may be either overstated or understated.

A. will be overstated.

On a statement of owner's equity, beginning capital is $30,000, Net Income for the year is $11,000 and Drawing for the year is $6,000, the ending capital amount would be A. $30,000 B. $35,000 C. $47,000 D. $25,000

B. $35,000

MacGyver Company bought equipment on January 3, 2013, for $34,000. At the time of purchase, the equipment was estimated to have a useful life of six years and a salvage value of $880. Using the straight-line method, the amount of one year's depreciation is A. $880 B. $5,520 C. $460 D. $5,667

B. $5,520

If assets are numbered from 100-199, which of the following accounts would not be given a number in the 100 series? A. Supplies B. Accounts Payable C. Prepaid Rent D. Accounts Receivable

B. Accounts Payable

Which of the following has a normal credit balance? A. Accounts Receivable B. Accounts Payable C. Supplies Expense D. T. Stark, Drawing

B. Accounts Payable

Which of the following statements is not correct? A. After closing entries are posted, the revenue, expense, and drawing accounts will have zero balances. B. At the end of each accounting period, asset and liability account balances are reduced to zero. C. A postclosing trial balance will not contain revenue and expense account balances. D. Adjusting entries must be journalized and posted before the closing entries are journalized and posted.

B. At the end of each accounting period, asset and liability account balances are reduced to zero.

The revenue account Fees Income is closed by debiting A. Cash and crediting Fees Income. B. Fees Income and crediting Income Summary. C. the owner's capital account and crediting Fees Income. D. Income Summary and crediting Fees Income.

B. Fees Income and crediting Income Summary.

Which of the following is NOT an area in which accountants usually practice? A. Public Accounting B. Industrial Accounting C. Governmental Accounting D. Managerial (Private) Accounting

B. Industrial Accounting

Which of the following increase owner's equity? A. Expenses B. Revenue C. Withdrawals D. Receiving cash from customers

B. Revenue

Which of the following statements is correct? A. The cost of supplies used is reported on the statement of owner's equity. B. The cost of supplies used represents an operating expense of the business. C. Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet. D. At the time of their acquisition, prepaid expenses are recorded in expense accounts.

B. The cost of supplies used represents an operating expense of the business.

The Net Income amount from the Income Statement is used as a line item on which statement? A. The profit and loss statement B. The statement of owner's equity C. The balance sheet D. The trial balance

B. The statement of owner's equity

On a worksheet, the adjusting entry to account for depreciation of equipment consists of A. a debit to Depreciation Expense and a credit to Equipment. B. a debit to Depreciation Expense and a credit to Accumulated Depreciation. C. a debit to Equipment and a credit to Accumulated Depreciation. D. a debit to Accumulated Depreciation and a credit to Equipment.

B. a debit to Depreciation Expense and a credit to Accumulated Depreciation.

The first two closing entries to the Income Summary account indicate a debit of $53,000 and a credit of $64,000. The third closing entry would be A. debit Capital $11,000; credit Income Summary $11,000 B. debit Income Summary $11,000; credit Capital $11,000 C. debit Revenue $64,000; credit Expenses $53,000 D. debit Income Summary $11,000; credit Drawing $11,000

B. debit Income Summary $11,000; credit Capital $11,000

When equipment is purchased for cash, A. assets decrease and expenses increase. B. one asset increases and another asset decreases. C. assets and owner's equity increase. D. assets increase and liabilities decrease.

B. one asset increases and another asset decreases.

The process of transferring the data from the journal into the ledgers is called: A. footing B. posting C. transponding D. journalizing

B. posting

Business papers, such as checks, invoices, receipts, letters, and memos, that furnish proof that a transaction has taken place are called A. ledgers B. source documents C. debit entries D. accounts

B. source documents

The financial statement that is prepared first is A. up to the accountant. B. the income statement. C. the balance sheet. D. the statement of owner's equity.

B. the income statement.

The owner of the business would like to see the debit and credit entry for a specific transaction, he would look in A. the chart of accounts B. the journal C. the source document D. the ledger

B. the journal

The owner's drawing account is closed by debiting A. the owner's drawing account and crediting the owner's capital account. B. the owner's capital account and crediting the owner's drawing account. C. Income Summary and crediting the owner's drawing account. D. the owner's drawing account and crediting Income Summary.

B. the owner's capital account and crediting the owner's drawing account.

If long-term assets are not adjusted, expenses on the income statement A. will be overstated. B. will be understated. C. will not be affected. D. may be either overstated or understated.

B. will be understated.

If liabilities are $4,000 and owner's equity is $15,000, assets are A. $9,000. B. $15,000. C. $19,000. D. $4,000.

C. $19,000.

When done properly, how many journal entries are involved in the closing process? A. 2 B. 3 C. 4 D. 5

C. 4

On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the: A. Income Statement Debit column. B. Income Statement Credit column. C. Balance Sheet Debit column. D. Balance Sheet Credit column.

C. Balance Sheet Debit column.

Which of the following entries records the depreciation on equipment for the fiscal year-end adjustment? A. Debit Accumulated Depreciation; credit Depreciation Expense B. Debit Depreciation Expense; credit Equipment C. Debit Depreciation Expense; credit Accumulated Depreciation D. Debit Depreciation; credit Depreciation Expense

C. Debit Depreciation Expense; credit Accumulated Depreciation

A purchase of office equipment for $380 cash is journalized as: A. Debit Office Equipment; Credit Accounts Payable B. Debit Office Equipment; Credit Cash C. Debit Equipment Expense; Credit Cash D. Debit Cash; Credit Office Equipment

C. Debit Equipment Expense; Credit Cash

The journal entry to record $2,450 of revenue earned and received in cash by Agatha Panthis Landscape Architect Company is: A. Debit Fees Income; Credit Accounts Receivable B. Debit Cash; Credit Fees Income C. Debit Fees Income; Credit Cash D. Debit Accounts Receivable; Credit Fees Income

C. Debit Fees Income; Credit Cash

The journal entry to record the payment of salaries for the month is: A. Debit Salaries; Credit Accounts Payable B. Debit Cash; Credit Salaries Expense C. Debit Salaries Expense; Credit Cash D. Debit Cash; Credit Salaries Payable

C. Debit Salaries Expense; Credit Cash

A business purchases supplies on account. The journal entry to record this transaction is: A. Debit to Cash; Credit Supplies B. Debit to Supplies; Credit Accounts Receivable C. Debit Supplies; Credit Accounts Payable D. Debit Supplies; Credit to Cash

C. Debit Supplies; Credit Accounts Payable

All of the following accounts will appear on the postclosing trial balance except A. Equipment. B. Accumulated Depreciation--Equipment. C. Depreciation Expense--Equipment. D. Accounts Payable.

C. Depreciation Expense--Equipment.

Which of the following types of accounts normally have debit balances? A. Assets and revenue B. Assets, liabilities, and owner's equity C. Expenses and assets D. Liabilities and owner's equity

C. Expenses and assets

A post-closing trial balance could include all of the following except the A. owner's capital account. B. Cash account. C. Fees Income account. D. Accounts Receivable account.

C. Fees Income account.

Which of the following groups contain only accounts that normally have credit balances? A. Accounts Receivable and Fees Income B. Salaries Expense and Accounts Payable C. Fees Income and John Smith, Capital D. Accounts Payable and Equipment

C. Fees Income and John Smith, Capital

Which of the following represents the proper sequence for preparing the financial statements. A. Balance sheet, statement of owner's equity, income statement. B. Income statement, balance sheet, statement of owner's equity. C. Income statement, statement of owner's equity, balance sheet. D. Statement of owner's equity, income statement, balance sheet.

C. Income statement, statement of owner's equity, balance sheet.

Which of the following accounts is not a permanent account? A. Cash B. Accounts Payable C. Salaries Expense D. Thomas Bernard, Capital

C. Salaries Expense

The ending capital balance appears on which of the following statement(s)? A. Statement of owner's equity B. Income Statement C. Statement of owner's equity and balance sheet D. Statement of owner's equity and income statement

C. Statement of owner's equity and balance sheet

Which of the following accounts would be closed? A. Accounts Receivable B. Accumulated Depreciation C. Supplies Expense D. Joan Wilson, Capital

C. Supplies Expense

Which of the following statements is not correct? A. If the postclosing trial balance does not balance, there are errors in the accounting records. B. The audit trial should be used to trace data through the accounting records to find and correct errors. C. The balance of the owner's capital account, as reflected on the postclosing trial balance, will match the amount reported on the income statement. D. The balance of the owner's capital account on the adjusted trial balance will usually be different than that reported on the postclosing trial balance.

C. The balance of the owner's capital account, as reflected on the postclosing trial balance, will match the amount reported on the income statement.

Which of the following statements is not correct? A. The description of a journal entry should include a reference to the source of the information contained in the entry. B. If goods are purchased on credit, the supplier's invoice number is used as the source document for the transaction. C. The credit portion of a general journal entry is always recorded first. D. A firm should be able to trace amounts through the accounting records and back to their source documents.

C. The credit portion of a general journal entry is always recorded first.

Which of the following accounts will not normally have a zero balance after the closing entries have been posted? A. Income Summary B. Fees Income C. The owner's capital account D. Rent Expense

C. The owner's capital account

If a business has a net loss for a fiscal period, the journal entry to close the Income Summary account is A. a debit to Income Summary and a credit to Fees Income. B. a debit to Income Summary and a credit to Capital. C. a debit to Capital and a credit to Income Summary. D. a debit to Capital and a credit to Drawing.

C. a debit to Capital and a credit to Income Summary.

The journal entry to record the receipt of cash from credit clients on account would include A. a debit to Cash and a credit to Fees Income. B. a debit to Fees Income and a credit to Cash. C. a debit to Cash and a credit to Accounts Receivable. D. a debit to Accounts Receivable and a credit to Cash.

C. a debit to Cash and a credit to Accounts Receivable.

The journal entry to record a payment made in January for rent for the months of February and March would include A. a debit to Sue Snow, Capital, and a credit to Cash. B. a debit to Rent Expense and a credit to Cash. C. a debit to Prepaid Rent and a credit to Cash. D. a debit to Sue Snow, Drawing and a credit to Rent Expense.

C. a debit to Prepaid Rent and a credit to Cash.

The journal entry to record the withdrawal of cash by Sue Snow, the owner, to pay a personal utility bill would include A. a debit to Sue Snow, Capital, and a credit to Cash. B. a debit to Utilities Expense and a credit to Cash. C. a debit to Sue Snow, Drawing and a credit to Cash. D. a debit to Sue Snow, Drawing and a credit to Utilities Expense.

C. a debit to Sue Snow, Drawing and a credit to Cash.

On the worksheet, the Balance Sheet columns should balance A. before the net income amount is added to the Balance Sheet Debit column. B. after the net income amount is added to the Balance Sheet Debit column. C. after the net income amount is added to the Balance Sheet Credit column. D. before the net income amount is added to the Balance Sheet Credit column.

C. after the net income amount is added to the Balance Sheet Credit column.

All financial statements submitted to the SEC by publicly owned corporations must include an auditor's report prepared by A. an internal auditor. B. the firm's managerial accountant. C. an independent certified public accountant. D. anyone in the accounting department

C. an independent certified public accountant.

When the owner withdraws cash for personal use, A. assets decrease and expenses increase. B. assets decrease and owner's equity increases. C. assets decrease and owner's equity decreases. D. owner's equity decreases and revenue decreases.

C. assets decrease and owner's equity decreases.

If a trial balance is not in balance (the Debit and Credit columns are not equal), a logical first step is to A. check each account balance calculation. B. check each account balance in the general ledger to the trial balance number. C. check the addition of each column. D. divide the difference by either 9 or 2.

C. check the addition of each column.

The first place a transaction is recorded is in the: A. source document B. general ledger C. journal D. trial balance

C. journal

When charge customers pay cash to apply against their accounts, the amount is recorded A. on the left side of the Cash account and the right side of the Fees Income account. B. on the left side of the Accounts Payable account and the right side of the Cash account. C. on the left side of the Cash account and the right side of the Accounts Receivable account. D. on the left side of the Cash account and the left side of the Accounts Receivable account.

C. on the left side of the Cash account and the right side of the Accounts Receivable account.

The entry to close the owner's drawing account would include a debit to the A. Income Summary account and a credit to the owner's drawing account. B. owner's drawing account and a credit to Cash. C. owner's capital account and a credit to the owner's drawing account. D. owner's drawing account and a credit to the Income Summary account.

C. owner's capital account and a credit to the owner's drawing account.

One purpose of closing entries is to give zero balances to A. asset and liability accounts. B. liability and capital accounts. C. revenue and expense accounts. D. expense and capital accounts.

C. revenue and expense accounts.

The "Net Income" or "Net Loss" is transferred from the income statement to the A. balance sheet. B. chart of accounts. C. statement of owner's equity. D. trial balance.

C. statement of owner's equity.

On a worksheet, the adjusted balance of the Supplies account is extended to: A. the Income Statement Debit column. B. the Income Statement Credit column. C. the Balance Sheet Debit column. D. the Balance Sheet Credit column.

C. the Balance Sheet Debit column.

When a trial balance is in balance, A. adjusting entries are not required. B. the general ledger is free of errors. C. the debit account balances equal the credit account balances. D. the company has earned a net income.

C. the debit account balances equal the credit account balances.

The first step in the closing process is to close A. the drawing account B. the capital account C. the revenue accounts D. the expense accounts

C. the revenue accounts

Accountants use the term _______ when referring to the right side of an account.

Credit

Information in the financial statements provides answers to many questions, including: A. How much do customers owe the business? B. What are the business' current and long term plans for expansion? C. Has the business achieved its net income goal for the year? D. All of the above.

D. All of the above.

Which of the following statements is correct? A. All transactions require compound entries. B. Compound entries include only debits. C. Accounts being debited should always follow the accounts being credited in a compound entry. D. Compound entries affect more than one debit and/or more than one credit.

D. Compound entries affect more than one debit and/or more than one credit.

Which of the following entries records the closing of Penny Pincher, Drawing at the end of the accounting period? A. Debit Penny Pincer, Drawing; credit Penny Pincher, Capital B. Debit Penny Pincher, Capital; credit Income Summary C. Debit Income Summary; credit Penny Pincher, Drawing D. Debit Penny Pincher, Capital; credit Penny Pincher, Drawing

D. Debit Penny Pincher, Capital; credit Penny Pincher, Drawing

Which of the following entries records the withdrawal of cash for personal use by Ty Knott, the owner of a business? A. Debit Cash and credit Ty Knott, Capital B. Debit Cash and credit Salary Expense C. Debit Salary Expense and credit Cash D. Debit Ty Knott, Drawing, and credit Cash

D. Debit Ty Knott, Drawing, and credit Cash

Which of the following statements is correct? A. The Balance Sheet section of the worksheet contains the data that is used to make closing entries. B. The balance of the owner's drawing account will appear on the postclosing trial balance. C. Closing entries are entered directly on the worksheet. D. Preparation of the postclosing trial balance is the last step in the end-of-period routine.

D. Preparation of the postclosing trial balance is the last step in the end-of-period routine.

Which of the following statements is not correct? A. Generally accepted accounting principles require that the original cost of a long-term asset continue to appear in the asset account until the disposition of the asset. B. The book value of a long-term asset is reduced each year as depreciation is recorded. C. Buildings and trucks are examples of long-term assets. D. Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.

D. Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.

Which of the following statements is not correct? A. Before the Income Summary account is closed, its balance represents the net income or net loss for the accounting period. B. The Income Summary account is a temporary owner's equity account. C. The Income Summary account is used only at the end of an accounting period to help with the closing procedure. D. The owner's drawing account is closed to the Income Summary Statement.

D. The owner's drawing account is closed to the Income Summary Statement.

On November 25, 2013, the company paid $24,000 rent in advance for a six-month period (December 2013 through May 2014). On December 31, 2013, the adjustment for expired rent would include A. a $4,000 debit to Prepaid Rent. B. a $4,000 credit to Rent Expense. C. a $24,000 debit to Rent Expense. D. a $4,000 credit to Prepaid Rent.

D. a $4,000 credit to Prepaid Rent.

The adjusting entry to account for the expiration of prepaid advertising consists of A. a debit to Prepaid Advertising and a credit to Advertising Expense. B. a debit to Advertising Expense and a credit to Accumulated Depreciation. C. a debit to Prepaid Advertising and a credit to Accumulated Depreciation. D. a debit to Advertising Expense and a credit to Prepaid Advertising.

D. a debit to Advertising Expense and a credit to Prepaid Advertising.

After the closing entries are posted to the ledger, each expense account will have A. a debit balance. B. a credit balance. C. either a debit or a credit balance. D. a zero balance.

D. a zero balance.

On July 3, the ABC Company received $865 in cash on account from customers. The correct journal entry is A. debit Cash, $865; credit Income from Services, $865 B. debit Cash, $865; credit Accounts Payable, $865 C. debit Accounts Receivable, $865; credit Cash, $865 D. debit Cash, $865; credit Accounts Receivable, $865

D. debit Cash, $865; credit Accounts Receivable, $865

On October 1, 2013, Jay Walker Company purchased a one-year insurance policy for $660. The correct adjusting entry on December 31, 2013, is A. debit Insurance Expense $660; credit Prepaid Insurance $660 B. debit Insurance Expense $495; credit Prepaid Insurance $495 C. debit Prepaid Insurance $55; credit Insurance Expense $55 D. debit Insurance Expense $165; credit Prepaid Insurance $165

D. debit Insurance Expense $165; credit Prepaid Insurance $165

A total of $3,200 in supplies was purchased during the year. At the end of the year $700 of the supplies were left. The adjusting entry needed at the end of the year is: A. debit Supplies $2,500; credit Supplies Expense $2,500 B. debit Supplies Expense $3,200; credit Supplies $3,200 C. debit Supplies Expense $700; credit Supplies $700 D. debit Supplies Expense $2,500; credit Supplies $2,500

D. debit Supplies Expense $2,500; credit Supplies $2,500

When the owner writes a company check to pay the firm's electric bill, A. assets and owner's equity increase. B. assets decrease and expenses increase. C. assets and liabilities decrease. D. expenses increase and owner's equity increases.

D. expenses increase and owner's equity increases.

When there are several entries to one or both sides of an account, the total of those entries is entered in pencil. This is called A. balancing. B. verifying. C. totaling. D. footing.

D. footing.

Ginger Yale Ice Company receives money from a customer on account. Recording this transaction will A. increase Accounts Receivable B. increase G. Yale, Capital C. decrease Accounts Payable D. increase Cash

D. increase Cash

The total of the figures on the left side of a Cash account is $25,800. The total of the figures on the right side is $14,100. The balance of this account A. is $11,700 and would be recorded on the right side of the account. B. is $39,900 and would be recorded on the left side of the account. C. is $39,900 and would be recorded on the right side of the account. D. is $11,700 and would be recorded on the left side of the account.

D. is $11,700 and would be recorded on the left side of the account.

The entry to close the Accumulated Depreciation account may include a debit to A. the Income Summary account and a credit to the Accumulated Depreciation account. B. the Depreciation Expense account and a credit to the Accumulated Depreciation account. C. the Accumulated Depreciation account and a credit to the Income Summary account. D. none of the above.

D. none of the above.

During the closing process, Accumulated Depreciation--Equipment will A. be closed to the income summary account B. be closed to the capital account C. be closed to the drawing account D. not be used

D. not be used

On a worksheet, the adjusted balance of the Accumulated Depreciation account is extended to: A. the Income Statement Debit column. B. the Income Statement Credit column. C. the Balance Sheet Debit column. D. the Balance Sheet Credit column.

D. the Balance Sheet Credit column.

On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to: A. the Income Statement Debit column. B. the Balance Sheet Credit column. C. the Balance Sheet Debit column. D. the Income Statement Credit column.

D. the Income Statement Credit column.

10. The balance sheet shows A. the results of business operations. B. all revenues and expenses. C. the amount of net income or loss. D. the financial position of a business at a given time.

D. the financial position of a business at a given time.

If a transaction is properly analyzed and recorded, A. only two accounts will be used to record the transaction. B. one account balance will increase and another will decrease. C. one asset account will be debited and one liability account will be credited. D. the total amount debited will equal the total amount credited.

D. the total amount debited will equal the total amount credited.

A decrease in a liability is recorded on the ____________.

Debit or Left

A company has assets of $56,320 and liabilities of $29,500. The owner's equity is $85,820. True False

False

Al Dunn Bakery bought a new oven for $1,380. Al paid $300 as a cash down payment and will pay the balance in 30 days. Total assets increased by $1,080. True False

False

An amount debited to Cash in a journal entry should be posted as a credit to the Cash account in the ledger. True False

False

Currently, generally accepted accounting principles are developed by the American Institute of Certified Public Accountants (AICPA) True False

False

If an adjustment for expired rent is not recorded, the firm's expenses will be overstated. True False

False

Preparation of a worksheet eliminates the necessity of preparing an income statement and a balance sheet. True False

False

The entry to transfer net income to the owner's capital account would include a debit to the owner's capital account. True False

False

The owner's capital account is closed at the end of each accounting period. True False

False

The postclosing trial balance contains balance sheet accounts only. True False

False

Transactions are recorded in either a journal or a ledger, but not in both. True False

False

When transactions are entered in a general journal, the asset accounts are listed first, followed by the liability and owner's equity accounts. True False

False

The process of recording transactions in a journal is referred to as _________

Journalize

The process of transferring data from a journal to a ledger is known as ______

Posting

A(n) _______ account is used to record increases in owner's equity from the sale of goods or services.

Revenue

A compound entry in the general journal is made to close expense accounts. True False

True

Debit entries increase asset, drawing, expense and liability accounts. True False

True

If an adjustment is not recorded for supplies used, the firm's assets will be overstated. True False

True

If the total of the amounts on the debit side of an account is greater than the total on the credit side, the balance is recorded on the debit side. True False

True

In a sole proprietorship, the owner is responsible for the debts of the business if the firm is unable to pay. True False

True

Interpreting the financial statements is the last step in the accounting cycle. True False

True

One of the purposes of closing entries is to transfer net income or net loss for the period to the owner's capital account. True False

True

Revenue is a subdivision of owner's equity. True False

True

The death or withdrawal of one partner ends the partnership. True False

True

The entire process of analyzing, recording, and reporting business transactions is based on the fundamental accounting equation. True False

True

The revenue accounts come before the expense accounts in the general ledger. True False

True

Transactions are entered in the journal in chronological order. True False

True