Accounting CH 1,2 Practice

If at the end of the accounting period the liabilities total $18,000, and equity totals $32,000, then what must be the total of the assets?

$50,000

Total revenues were $105,000, total expenses, except for wage expense were $50,000, and net income was $35,000. What was the amount of wage expense?

$20,000

Assets total $100,000 and liabilities total $20,000. What is the equity of the business?

$80,000

A provider of health insurance received payment of $24,000 cash from a customer for insurance coverage for the next two years. Recording the receipt of this cash will require which of the following?

An asset to be debited, a liability to be credited

Phillip Atwood received $5,000 after he completed excavation work for a local home builder. Recording the transaction requires which of the following?

An asset to be debited, revenue to be credited

The investment of cash in the business will result in which of the following?

An increase in cash and increase in equity

An account titled Prepaid Rent would be classified as which of the following?

Asset account

The total assets and total liabilities of a firm are reported on which of the following?

Balance Sheet

The recording of financial transactions and events manually or electronically is called which of the following?

Bookkeeping

Keith Farfalle withdrew $5,000 from his pet store, KM's Pets. Recording the withdrawal will result in which of the following changes to the components of the accounting equation?

Decrease in an asset and decrease an equity

If during the accounting period the assets decreased by $10,000, and equity increased by $2,000, then how did liabilities change?

Decreased by $12,000

Which of the following organizations is responsible for setting accounting rules and regulations?

FASB

Withdrawals increase equity (T/F)

False

When cash is received from a customer in payment for an account receivable, how are the elements of the accounting equation affected?

Increase assets (cash) and decrease assets (accounts receivable)

Services rendered for which cash has not yet been received will have what effect on the components of the accounting equation?

Increase in accounts receivable and an increase in equity

Purchasing equipment on account will have what effect on the components of the accounting equation?

Increase in equipment and increase in liabilities

If during the accounting period the assets increased by $14,000, and equity increased by $4,000, then how did liabilities change?

Increased by $10,000

Which of the following statements is true? A) Journalizing precedes posting B) Revenue accounts are increased by debit entries C) An account shows increase and decreases, but does not show the balance D) Debit entries are entries involving the right-hand side on an account E) Journalizing errors should be erased and a correct entry made

Journalizing precedes posting

An accountant has the responsibility to coordinate the annual budget processes of the business corporation she works for. In which of the following areas of accounting is she most likely to be employed?

Managerial Accounting

Beginning capital was $10,000. Withdrawals were $24,000. The owner made additional investments during year of $60,000. The ending capital balance was $90,000. What was the net income or net loss for the period?

Net income, $44,000

Which form of ownership burdens owners with the greatest risk of loss of their personal assets?

Sole Proprietorship

Which of the following is not an equity account? A) Owner's Capital B) Owner's Withdrawals C) Revenue D) Unearned Revenue E) Expenses

Unearned revenue