Accounting 131 (ch 1-3) Multiple choice practice

When the amount for a debit entry in a journal is transferred to a specific account in the general ledger, it must be posted as a: A. Debit to the account in the general ledger B. Credit to the account in the general ledger C. Total amount, without regard to debit or credit since the general ledger accounts do not have spaces for debit and credit entries D. Decrease to the account in the general ledger

A. Debit to the account in the general ledger

Which of the following best describes a company's operating activities? A. Operating activities are cash flows directly related to operating income B. Operating activities are necessary to provide the money to start a business C. Operating activities are needed to provide the valuable assets required to run a business D. Operating activities represent the right to receive a benefit in the future

A. Operating activities are cash flows directly related to operating income

Which one of the following is an example of an accrued liability? A. Rent that has been incurred but that has not been recorded at the end of the period B. Equipment that will benefit several periods has been purchased C. An insurance policy that expires in a future period has been acquired D. Supplies are purchased and then used over several months

A. Rent that has been incurred but that has not been recorded at the end of the period

Match Incorporated recorded salary expense of $120,000 in 2013. However, additional salaries of $9,000 have been earned by employees but not paid or recorded. After the adjustments are recorded and posted at December 31, 2013, the balances in the Salaries Expense and Salaries Payable Account will be: A. Salaries Expense = $129,000; Salaries Payable = $9,000 B. Salaries Expense = $120,000; Salaries Payable = $0 C. Salaries Expense = $120,000; Salaries Payable = $9,000 D. Salaries Expense = $109,000; Salaries Payable = $0

A. Salaries Expense = $129,000; Salaries Payable = $9,000

The principal of conservatism is concerned with: A. The avoidance of overstating assets or income in the preparation of the income statement B. The minimization of costs associated with providing financial information C. The company's ability to carry out its existing commitments D. The company's procedures for recording activities at their initial exchange price

A. The avoidance of overstating assets or income in the preparation of the income statement

Which of the following are Non-current Assets? A. machinery and equipment B. accounts receivable C. inventories D. unearned revenues

A. machinery and equipment

Carnegie Jewelers accepted a 9-month, 9% note for $100,000 from a customer on July 1, 2013. The note is due on March 31, 2014. Assuming the company's accounting period ends on December 31, 2013, how much interest revenue should be recognized during 2013 and 2014? A. 2013 = $2,250; 2014 = $4,500 B. 2013 = $4,500; 2014 = $2,250 C. 2013 = $9,000; 2014 = $0 D. 2013 = $4,500; 2014 = $4,500

B. 2013 = $4,500; 2014 = $2,250

A manufacturing company purchased equipment on January 1, 2004 for $450,000. As of January 1, 2013, depreciation of $202,500 had been recorded on this asset. Depreciation expense for 2013 is $22,500. After the adjustments are recorded and posted at December 31, 2013, what are the balances for the Equipment and Accumulated Depreciation? A. Equipment = $450,000; Acc Depreciation = $0 B. Equipment = $450,000; Acc Depr = $225,000 C. Equipment = $225,000; Acc Depr = $22,500 D. Equipment = $225,000; Acc Depr = $225,000

B. Equipment = $450,000; Acc Depr = $225,000

Hunsinger Enterprises purchases many small pieces of office furniture, such as trash cans, that cost less than $100 each. The company accounts for these items as expenses when acquired rather than reporting them as property, plant and equipment. Justification is based on the accounting constraint of: A. Conservatism B. Materiality C. Neutrality D. Materiality

B. Materiality

Balance sheet accounts are also known as which of the following? A. Nominal accounts B. Permanent accounts C. Temporary accounts D. Closing accounts

B. Permanent accounts

During December, Camp David Inc. purchased $5000 of supplies for business use. At the end of December, 20% of the supplies were still on hand, and only 70% of the supplies had been paid for. What amounts will appear on the balance sheet on December 31? A. Supplies on Hand = $5,000; Accounts Payable = $3,500 B. Supplies on Hand = $1,000; Accounts Payable = $1,500 C. Supplies on Hand = $4,000; Accounts Payable = $1,500 D. Supplies on Hand = $1,000; Accounts Payable = $5,000

B. Supplies on Hand = $1,000; Accounts Payable = $1,500

The two-column record used to accumulate monetary increases and decreases for individual assets, liabilities, stockholders' equity, revenue, expense and dividends items is a(n): A. Chart of accounts B. T-account C. Trial Balance D. Posting

B. T-account

Carithers Cleaning Service received advance payments from customers during 2013 of $24,000. At December 31, 2013, $5,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2013, the balances in the Unearned Service Revenue and Service Revenue accounts will be: A. Unearned Revenue = $0; Service Revenue = $24,000 B. Unearned Revenue = $5,000; Service Revenue = $19,000 C. Unearned Revenue = $5,000; Service Revenue = $24,000 D. Unearned Revenue = $24,000; Service Revenue = $5,000

B. Unearned Revenue = $5,000; Service Revenue = $19,000

Under accrual accounting, when is revenue and expense recognized? A. When cash is received and expenses when cash is paid B. When cash is received and expenses when the costs are incurred C. When earned and expenses when incurred D. When earned and expenses when cash is paid

B. When cash is received and expenses when the costs are incurred

"Revenues" are best described as A. decreases in assets resulting from the sale of goods or services B. increases in assets resulting from the sale of products or services C. assets used or consumed in the sale of products or services D. an increase in the financing activities

B. increases in assets resulting from the sale of products or services

A company that sells merchandise to customers should normally recognize revenue and expenses? A. revenue only after the cash is collected B. revenue and the related expenses in the period the revenue is earned, whether payment is received or not C. both revenue and expenses in the period following the sale D. expenses in the period the merchandise is sold and revenue in the following period

B. revenue and the related expenses in the period the revenue is earned, whether payment is received or not

Which of the following accounts are normally reported as current liabilities on a classified balance sheet? A. Accounts Payable and Prepaid Insurance B. Interest Payable and Interest Receivable C. Income Taxes Payable and Salaries Payable D. Capital Stock and Accounts Payable

C. Income Taxes Payable and Salaries Payable

Which of the following accounts is decreased by a debit entry? A. Cash B. Prepaid insurance C. Accounts payable D. Insurance expense

C. Accounts payable

The purchase of office equipment on credit has what effect on the accounting equation A. assets and stockholders' equity decrease B. Liabilities increase and stockholders' equity decreases C. Assets and liabilities increase D. Assets and liabilities decrease

C. Assets and liabilities increase

Which of the following best describes the effects of recognized revenue earned by a business entity? A. Assets increase only when cash sales are collected B. Stockholder's equity increases only when credit sales are made C. Assets and stockholder's equity increases when either cash or credit sales are made D. Assets increase and stockholder's equity decreases when either cash or credit sales are made

C. Assets and stockholder's equity increases when either cash or credit sales are made

Which of the following statements is true concerning assets? A. Assets are measured using a time-period approach B. Assets are initially recorded at market value and then adjusted for inflation C. Assets are initially recorded using the historical cost principle D. Assets are initially recorded at market value because historical cost tends to be too arbitrary

C. Assets are initially recorded using the historical cost principle

Which of the following best describes the term "Current Assets"? A. The amount of total profits earned by a business since it began operations plus all other resources B. The amount of claim that the owners have in the business in the current year. C. Assets expected to be converted into cash within one year or the operating cycle, whichever is longer D. The cumulative profits earned by a business less any dividends paid in the current year

C. Assets expected to be converted into cash within one year or the operating cycle, whichever is longer

A list of all asset, liability, stockholders' equity, revenue, expense, and dividend accounts which are used by a company is called a(n): A. General Ledger B. General Journal C. Chart of Accounts D. Trial Balance

C. Chart of Accounts

Which of the following is not a form of a business entity? A. Sole proprietorship B. Partnership C. Cooperative D. Corporation

C. Cooperative

Expenses should be matched against revenue A. Before the earnings process is complete B. Only after cash is collected from the customer C. In the same period as the revenue that they helped generate D. After payment has been made for any costs related to the revenue

C. In the same period as the revenue that they helped generate

Which of the following is the correct date format for the financial statement heading? A. Balance Sheet for the Year Ended June 30, 2013 B. Income Statement at December 31, 2013 C. Income Statement for the Year Ended December 31, 2013 D. Statement of Retained Earnings At December 31, 2013

C. Income Statement for the Year Ended December 31, 2013

Which of the following is an example of a deferred revenue? A. Sales are made to customers on credit B. Revenue has been earned and recorded C. Payments are received prior to providing the services to customers D. Cash sales are made to customers

C. Payments are received prior to providing the services to customers

On January 1, 2013, a company's balance in retained earnings was $275,000. During 2013, the company had net income of $23,500 and paid $11,200 in dividends. Calculate the retained earnings balance at December 31, 2013? A. $263,800 B. $298,500 C. $262,700 D. $287,300

D. $287,300

On January 1, 2013, a company reported assets of $1,000,000 and liabilities of $600,000. During 2013, assets decreased by $100,000 and Stockholders Equity decreased $200,000. What is the amount of liabilities at December 31, 2013 A. $200,000 B. $500,000 C. $600,000 D. $700,000

D. $700,000

Payment is made for the phone bill which was recorded previously. What effect does this transaction have on the accounting equation? A. Assets and liabilities increase B. Assets and retained earnings increase C. Liabilities increase and contributed capital decreases D. Assets and liabilities decrease

D. Assets and liabilities decrease

Which set of items below are current assets? A. Accounts Receivable, Net Income, Inventory and Dividends B. Cash, Accounts Receivable, Capital Stock and Sales C. Net Income, Cash, Office Supplies and Inventory D. Cash, Accounts Receivable, Inventory and Office Supplies

D. Cash, Accounts Receivable, Inventory and Office Supplies

Which one of the following is not one of the three business activities? A. financing B. operating C. investing D. measuring

D. measuring