Accounting

The closing process involves separate entries to close (1) expenses, (2) drawings, (3) revenues, and (4) income summary. The correct sequencing of the entries is: A. (4), (3), (2), (1) B. (1), (2), (3), (4) C. (3), (1), (4), (2) D. (3), (2), (1), (4)

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

The income statement: A. reports the amount of an organization's assets, liabilities, and owner's equity at the end of a period. B. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. C. reports the revenues and expenses for a period of time based on the matching concept. D. reports the changes in owner's equity for a period of time.

reports the revenues and expenses for a period of time based on the matching concept.

As of December 31, 2008 Stoneland Company has assets of $3,500 and owner's equity of $2,000. What are the liabilities for Stoneland Company as of December 31, 2008? A. $1,500. B. $1,000. C. $2,500. D. $2,000.

$1500

A revenue account: a. is increased by debits. b. is decreased by credits. c. has a normal balance of a debit. d. is increased by credits.

. is increased by credits.

Which of the following is true regarding business transactions? A. All business transactions can be stated in terms of changes in the elements of the accounting equation. B. Business transactions do not have to be recorded in the books of the organization. C. Business transactions are recorded in the books of an organization only when the transaction is over $1,000. D. Business transactions are not recorded in the books of an organization.

All business transactions can be stated in terms of changes in the elements of the accounting equation.

Which of the following statements 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, and owner's equity items. c. There are separate accounts for specific assets and liabilities but only one account for owner's equity items. d. The left side of an account is the credit or decrease side.

An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items.

If an adjusting journal entry to record supplies used was omitted then: A. Assets would be understated. B. Assets would be overstated. C. Expenses would be overstated. D. Net income would be understated

Assets would be overstated.

. Which if the following is NOT true about closing entries? A. Closing entries move the balances of temporary accounts to the owner's capital account. B. Closing entries are an optional step in the accounting cycle. C. Closing entries are made later in the accounting cycle than adjusting entries

Closing entries are an optional step in the accounting cycle

Within the United States, which of the following organizations has the primary responsibility for developing accounting standards? A. FASB B. SEC C. IASB D. None of these choices

FASB

Which statement about an adjusted trial balance is true? A. An adjusted trial balance is completed after completing the financial statements. B. If total debits equal total credits on an adjusted trial balance, it means that all account balances are up-to-date. C. If the adjusted trial balance does not balance, then an error has been made. D. If an adjusting entry is omitted, the adjusted trial balance will not balance

If the adjusted trial balance does not balance, then an error has been made

Performing services on account will have the following effects on the components of the basic accounting equation: A. increase assets and decrease owner's equity. B. increase assets and increase owner's equity. C. increase assets and increase liabilities. D. increase liabilities and increase owner's equity.

Increase assets and owners equity

Which of the following statements about a journal is false? a. It is the place where account balances are reported. b. It provides a chronological record of transactions. c. It helps to locate errors because the debit and credit amounts for each entry can be readily compared. d. It discloses in one place the complete effect of a transaction.

It is the place where account balances are reported.

The accounting equation can be expressed in all of the following ways EXCEPT: A. Assets = Liabilities + Owner's Equity. B. Liabilities = Assets + Owner's Equity. C. Liabilities = Assets - Owner's Equity. D. Owner's Equity = Assets - Liabilities.

Liabilities = Assets + Owner's Equity.

Which of the following statements is NOT true about adjusting entries? A. Adjusting entries are dated as of the last day of the period. B. Adjusting entries are normally supported by an explanation. C. Adjusting entries must be both journalized and posted. D. Omission of adjusting entries will have over- or understatement impacts on the income statement but not the balance sheet.

Omission of adjusting entries will have over- or understatement impacts on the income statement but not the balance sheet.

Which types of accounts will appear in the post-closing trial balance? A. Permanent (real) accounts. B. Temporary (nominal) accounts. C. Accounts shown in the income statement columns of a worksheet. D. None of the above.

Permanent (real) accounts.

Which of the following statements about users of accounting information is incorrect? A. Management is an internal user. B. Taxing authorities are external users. C. Present creditors are external users. D. Regulatory authorities are internal users.

Regulatory authorities are internal users

One of the following statements about the accrual basis of accounting is false. That statement is: A. Events that change a company's financial statements are recorded in the periods in which the events occur. B. Revenue is recognized in the period in which it is earned. C. This basis is in accord with generally accepted accounting principles. D. Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

Kathy Siska earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Kathy's employer at September 30 is: A. No entry is required. B. Salaries Expense 400 Salaries Payable 400 C. Salaries Expense 400 Cash 400 D. Salaries Payable 400 Cash 400

Salaries Expense 400 Salaries Payable 400

. On December 31, Frank Voris Company correctly made an adjusting entry to recognize $2,000 of accrued salaries payable. On January 8 of the next year, total salaries of $3,400 were paid. Assuming the correct reversing entry was made on January 1, the entry on January 8 will result in a credit to Cash $3,400 and the following debit(s): A. Salaries Payable $1,400, and Salaries Expense $2,000. B. Salaries Payable $2,000 and Salaries Expense $1,400. C. Salaries Expense $3,400. D. Salaries Payable $3,400.

Salaries Payable $2,000 and Salaries Expense $1,400.

The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is: A. Supplies 600 Supplies Expense 600 B. Supplies 750 Supplies Expense 750 C. Supplies Expense 750 Supplies 750 D. Supplies Expense 600 Supplies 600

Supplies Expense 750 Supplies 750

Which of the following statements is incorrect concerning the adjusted trial balance? A. An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. B. The adjusted trial balance provides the primary basis for the preparation of financial statements. C. The adjusted trial balance lists the account balances segregated by assets and liabilities. D. The adjusted trial balance is prepared after the adjusting entries have been journalized and posted

The adjusted trial balance lists the account balances segregated by assets and liabilities.

Which of the following is true regarding the flow of data from the Adjusted Trial Balance columns of the end-of-period spreadsheet to the financial statements? A. The balance of the owner's capital account will flow into the balance sheet. B. The balance of the accumulated depreciation account will flow into the income statement. C. The balance of the owner's drawing account will flow into the statement of owner's equity. D. The balance of the revenue account will flow into the statement of owner's equity.

The balance of the owner's drawing account will flow into the statement of owner's equity.

Which of the following statements about basic assumptions is correct? A. Basic assumptions are the same as accounting principles. B. The business entity concept states that there should be a particular unit of accountability. C. The monetary unit assumption enables accounting to measure employee morale. D. Partnerships are not economic entities.

The business entity concept states that there should be a particular unit of accountability.

Which of the following statements is incorrect concerning the worksheet? A. The worksheet is essentially a working tool of the accountant. B. The worksheet is necessary to prepare the adjusted trial balance. C. The worksheet cannot be used as a basis for posting to ledger accounts. D. Financial statements can be prepared directly from the worksheet before journalizing and posting the adjusting entries.

The worksheet is necessary to prepare the adjusted trial balance.

Which of the following is not a step in the accounting process? A. identification. B. verification. C. recording. D. communication.

Verification

A trial balance will not balance if: a. a correct journal entry is posted twice. b. the purchase of supplies on account is debited to Supplies and credited to Cash. c. a $100 cash drawing by the owner is debited to Owner's Drawing for $1,000 and credited to Cash for $100. d. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

a $100 cash drawing by the owner is debited to Owner's Drawing for $1,000 and credited to Cash for $100.

An account, in its simplest form, is made up of which three parts? a. a title, a debit side, and a credit side b. a title, an entry side, and a balance side c. a title, a debit side, and a balance side d. a title, a credit side, and an entry side

a title, a debit side, and a credit side

The process that begins with analyzing and journalizing transactions is called the: A. accounting cycle. B. ledger cycle. C. balance cycle. D. operating cycle.

accounting cycle

Expense items that have been incurred but not yet recorded in the accounts are: A. unearned revenues. B. accrued expenses. C. accrued revenues. D. prepaid expenses.

accrued expenses

. Unrecorded revenues that have been earned but for which cash has not yet been received are: A. accrued expenses. B. unearned revenues. C. accrued revenues. D. prepaid expenses.

accrued revenues

Adjusting entries are made to ensure that: A. expenses are recognized in the period in which they are incurred. B. revenues are recorded in the period in which they are earned. C. balance sheet and income statement accounts have correct balances at the end of an accounting period. D. all of the above.

all of the above

A prepaid expense, such as the purchase of insurance for an upcoming period, is initially recorded in the accounting system as: a. an asset. b. a liability. c. an expense. d. a revenue.

an asset.

The major types of accounts are: a. asset, liability, drawing, revenue, and expense. b. asset, liability, capital, drawing, revenue, and expense. c. asset, liability, capital, revenue, and expense. d. drawing, liability, capital, revenue, and expense.

asset, liability, capital, drawing, revenue, and expense.

The cost principle states that: A. assets should be initially recorded at cost and adjusted when the market value changes. B. activities of an entity are to be kept separate and distinct from its owner. C. assets should be recorded at their cost. D. only transaction data capable of being expressed in terms of money be included in the accounting records.

assets should be recorded at their cost.

Accounts that normally have debit balances are: a. assets, expenses, and revenues. b. assets, expenses, and owner's capital. c. assets, liabilities, and owner's drawings. d. assets, owner's drawings, and expenses.

assets, owner's drawings, and expenses.

. An adjusting entry always affects: A. at least one asset account and one liability account. B. two different balance sheet accounts. C. two different income statement accounts. D. at least one income statement account and one balance sheet account

at least one income statement account and one balance sheet account.

The financial statement that reports assets, liabilities, and owner's equity is the: A. income statement. B. owner's equity statement. C. balance sheet. D. statement of cash flow.

balance sheet

On the last day of the period, Jim Otto Company buys a $900 machine on credit. This transaction will affect the: A. income statement only. B. balance sheet only. C. income statement and owner's equity statement only. D. income statement, owner's equity statement, and balance sheet.

balance sheet only

Current assets are listed: A. by liquidity. B. by importance. C. by longevity. D. alphabetically.

by liquidity

Which of the following best describes accounting? A. can be thought of as the "language of business" B. is of limited or little use to individuals outside of the business C. records economic data but does not communicate the data to users D. relies upon concepts and principles that are independent of specific user needs

can be thought of as the "language of business"

Which of the following types of accounts is not a temporary account? A. capital B. drawing C. expense D. revenue

capital

When a net loss has occurred, Income Summary is: A. debited and Owner's Capital is credited. B. credited and Owner's Capital is debited. C. debited and Owner's Drawing is credited. D. credited and Owner's Drawing is debited.

credited and Owner's Capital is debited.

Two common classifications of assets are: A. current assets and current liabilities. B. current assets and property, plant, and equipment. C. current liabilities and long-term liabilities. D. property, plant, and equipment and long-term liabilities.

current assets and property, plant, and equipment.

In a classified balance sheet, assets are usually classified using the following categories: A. current assets; long-term assets; property, plant, and equipment; and intangible assets. B. current assets; long-term investments; property, plant, and equipment; and other assets. C. current assets; long-term investments; tangible assets; and intangible assets. D. current assets; long-term investments; property, plant, and equipment; and intangible assets.

current assets; long-term investments; property, plant, and equipment; and intangible assets.

Two common classifications of liabilities are: A. current assets and current liabilities. B. current assets and property, plant, and equipment. C. current liabilities and long-term liabilities. D. property, plant, and equipment and long-term liabilities.

current liabilities and long-term liabilities.

Cash of $100 received at the time the service was provided was journalized and posted as a debit to Cash $100 and a credit to Accounts Receivable $100. Assuming the incorrect entry is not reversed, the correcting entry is: A. debit Service Revenue $100 and credit Accounts Receivable $100. B. debit Accounts Receivable $100 and credit Service Revenue $100. C. debit Cash $100 and credit Service Revenue $100. D. debit Accounts Receivable $100 and credit Cash $100.

debit Accounts Receivable $100 and credit Service Revenue $100.

. Every transaction affects at least two accounts. The purchase of land in exchange for cash is recorded with which of the following entries? a. debit to Cash and credit to Land b. debit to Owner's Equity and credit to Cash c. debit to Land and credit to Cash d. debit to Land and credit to Accounts Payable

debit to Land and credit to Cash

Cheng Company has one year in unearned rent on the books in the amount of $3,000. The money was received on December 1 in payment for a warehouse Cheng owns. What adjusting entry related to unearned rent should Cheng record on the books at year-end? A. debit to Unearned Rent, $2,750; credit to Rent Revenue, $2,750 B. debit to Unearned Rent, $250; credit to Rent Revenue, $250 C. debit to Rent Revenue, $250; credit to Unearned Rent, $250 D. no entry required

debit to Unearned Rent, $250; credit to Rent Revenue, $250

Websavvy paid the electric and gas bill for the month in the amount of $325. What is the entry to record this transaction? a. debit to Cash, $325; credit to Utilities Expense, $325 b. debit to Utilities Expense, $325; credit to Cash, $325 c. debit to Accounts Receivable, $325; credit to Utilities Expense, $325 d. debit to Utilities Expense, $325; debit to Accounts Receivable, $325

debit to Utilities Expense, $325; credit to Cash, $325

Websavvy has a 5-day work week and pays weekly wages in the amount of $1,750. If December 31 falls on a Tuesday, what would be the adjusting entry to record the accrual of wages at yearend? A. debit to Wages Expense, $350; credit to Wages Payable, $350 B. debit to Wages Payable, $350; credit to Wages Expense, $350 C. debit to Wages Expense, $700; credit to Wages Payable, $700 D. no entry required

debit to Wages Expense, $700; credit to Wages Payable, $700

Adjustments for unearned revenues: A. decrease liabilities and increase revenues. B. have an assets and revenues account relationship. C. increase assets and increase revenues. D. decrease revenues and decrease assets.

decrease liabilities and increase revenues

Each of the following is a major type (or category) of adjusting entries except: A. prepaid expenses. B. accrued revenues. C. accrued expenses. D. earned revenues.

earned revenue

Decreases in owner's equity from using up assets or consuming services attributable to business activities are called: a. drawings. b. revenues. c. expenses. d. liabilities.

expenses.

Adjustments for accrued revenues: A. have a liabilities and revenues account relationship. B. have an assets and revenues account relationship. C. decrease assets and revenues. D. decrease liabilities and increase revenues.

have an assets and revenues account relationship

The financial statements, in the order in which they are prepared, are: A. income statement, balance sheet, statement of owner's equity, and statement of cash flows. B. balance sheet, statement of owner's equity, income statement, and statement of cash flows. C. statement of cash flows, income statement, balance sheet, and statement of owner's equity. D. income statement, statement of owner's equity, balance sheet, and statement of cash flows.

income statement, statement of owner's equity, balance sheet, and statement of cash flows.

Debits: a. increase both assets and liabilities. b. decrease both assets and liabilities. c. increase assets and decrease liabilities. d. decrease assets and increase liabilities.

increase assets and decrease liabilities

A credit may represent a(n): a. increase in an asset account. b. increase in a liability account. c. decrease in the capital account. d. increase in an expense account

increase in a liability account

. A ledger: a. contains only asset and liability accounts. b. should show accounts in alphabetical order. c. is a collection of the entire group of accounts maintained by a company. d. is a book of original entry.

is a collection of the entire group of accounts maintained by a company

A trial balance: a. is a list of accounts with their balances at a given time. b. proves the mathematical accuracy of journalized transactions. c. will not balance if a correct journal entry is posted twice. d. proves that all transactions have been recorded.

is a list of accounts with their balances at a given time

The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is the: A. matching principle. B. cost assumption. C. periodicity principle. D. revenue recognition principle.

matching principle

Posting: a. normally occurs before journalizing. b. transfers ledger transaction data to the journal. c. is an optional step in the recording process. d. normally occurs after journalizing.

normally occurs after journalizing

The process of transferring the debits and credits from the journal to the ledger accounts is called: a. two-column journal b. posting c. analysis d. double-entry accounting

posting

Which of the following errors will cause the trial balance totals to be unequal? a. failing to record a transaction or post a transaction b. recording the same erroneous amount for both the debit and the credit parts of a transaction c. posting a part of a transaction correctly as a debit or credit but to the wrong account d. posting the debit amount of the transaction correctly and posting the credit amount of the transaction incorrectly

posting the debit amount of the transaction correctly and posting the credit amount of the transaction incorrectly

All of the following are required steps in the accounting cycle except: A. journalizing and posting closing entries. B. preparing financial statements. C. journalizing the transactions. D. preparing a worksheet.

preparing a worksheet.

The objective of financial accounting is to: A. provide relevant and timely information to employees and managers of the firm. B. provide relevant and timely information for the decision-making needs of users outside the business. C. identify possible users of accounting information. D. show the largest amount of net income possible.

provide relevant and timely information for the decision-making needs of users outside the business.

The owner's equity statement: A. reports the amount of an organization's assets, liabilities, and owner's equity as of a specific date. B. consists of three sections - (1) operating activities, (2) investing activities, and (3) financing activities. C. reports the revenues and expenses for a period of time based on the matching concept. D. reports the changes in owner's equity for a period of time.

reports the changes in owner's equity for a period of time.

The revenue recognition concept states that: A. revenue should be recognized in the accounting period in which it is earned. B. expenses should be matched with revenues. C. the economic life of a business can be divided into artificial time periods. D. the fiscal year should correspond with the calendar year.

revenue should be recognized in the accounting period in which it is earned.

Net income will result during a time period when: A. assets exceed liabilities. B. assets exceed revenues. C. expenses exceed revenues. D. revenues exceed expenses.

revenues exceed expenses

The entry to close revenue account(s) will include a: A. debit to the revenue account(s). B. credit to the revenue account(s). C. debit to Income Summary. D. credit to Cash.

salaries payable

Which account would appear in the post-closing trial balance? A. Salaries Payable B. Supplies Expense C. Depreciation Expense D. Fees Earned

salaries payable

An account that will have a zero balance after closing entries have been journalized and posted is: A. Service Revenue. B. Advertising Supplies. C. Prepaid Insurance. D. Accumulated Depreciation

service revenue