Accounting exam 1

The nor,al balance of an account is the A. The difference between the left side and the right side B. The difference between the right and the left side C. Increase side of the account D. Decrease side of the account

C. Increase side of the account

Zena Brown has the following balances in its assets, liability, and owner's equity accounts. Cash ???? Office Equipment $ 26,500 Accounts Payable $ 30,300 Zena Brown, Capital $ 115,700 What is the balance of Cash? A. $119,500 B. $146,000 C. $121,500 D. $156,000

A. $119,500

Which transaction below increases an asset and the owner's equity A. A sale of merchandise on credit B. A purchase of equipment on credit C. A purchase of equipment with cash D. Payment of rent with cash

A. A sale of merchandise on credit

Based on the accounts reflected below, the missing value for Equipment for the fundamental accounting equation to be in balance is what amount? Assume that all accounts have normal balances. Cash—$30,800 Accounts Payable—$20,000 Jack Carter, Capital—$60,000 Equipment—$XX,XXX Supplies—$9,200 A. $25.000 B. $30.000 C. $40.000 D. $20.000

C. $ 40.000

Financial statements are A. A summarized description of a firm's accounting system B. A summary of records and procedures that make up the accounting system C. Accumulated financial data summarized in periodic reports D. Accumulated transactions of the firm's sales activities

C. Accumulated financial data summarized in periodic reports

When equipment is purchased for cash A. assets increase and liabilities decrease B. Assets and expenses increase C. Assets and liabilities increase D. assets, liabilities and owner's equity are all unchanged.

D. Assets, liabilities and owner's equity are all unchanged (When equipment is purchased for cash the business receives property in the form of equipment. As a result Equipment (an asset) increases. Cash (an asset) decreases as it was spent to obtain the Equipment. These asset changes offset each other such that total assets remain unchanged. Neither liabilities nor owner's equity are impacted by this transaction. The fundamental accounting equation remains in balance.)

When a business purchases supplies on credit: A. liabilities increase and owner's equity decreases. B. assets and liabilities increase. C. assets decrease and owner's equity increase. D. assets increase and revenues increase.

B. assets and liabilities increase. (When a business purchases supplies on credit, supplies (an asset) increases and accounts payable (a liability) increases. The fundamental accounting equation remains in balance.)

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

C. debit to Cash and a credit to Accounts Receivable. (The journal entry to record the receipt of cash from clients on account must both increase Cash (via a debit) and reduce Accounts Receivable (via a credit).)

All of the following are goals of internal control except: A. ensure reliability of accounting data. B. fraud prevention. C. encourage noncompliance with management policies and applicable laws. D. policies and procedures to safeguard assets.

C. encourage noncompliance with management policies and applicable laws.

A nonprofit organization such as a public school is a(n) A. Economic unit B. Social unit C. Economic entity D. Social entity

D. Social entity

What is the increase side for Cash; Accounts Payable; and Trayton Eli, Capital? A. right, left, right respectively B. right, right, right respectively C. left, left, left respectively D. left, right, right respectively

D. left, right, right respectively

Which of the following is a user of financial information who is considered to be inside the business? A. Owners B. Unions C. Customers D. Suppliers

A. Owners

Generally accepted accounting principles are accounting standards that are changed and refined in response to changes in the environment in which businesses operate. A. True B. False

A. True

Increases are recorded on which side of asset, liability, and owner's equity accounts? A. debit, credit, credit respectively B. debit, credit, debit respectively C. Credit, debit, debit respectively D. credit, credit, credit respectively

A. debit, credit, credit respectively

An organization that has two or more owners who are legally responsible for the debts and taxes of the business is a: A. partnership. B. social entity. C. corporation. D. sole proprietorship.

A. partnership.

An error in which the digits of a number are switched, for example 571 is recorded as 517 is an example of a: A. Transposition B. Switch C. Slide D. Summation

A. transition

When revenue is earned, which of the following would not be a common result of the transaction? A. A debit to the accounts receivable B. A credit to the Accounts Payable C. A credit to the Feeds Income account D. A debit to the Cash account

B. A credit to the Accounts Payable (When revenue is earned and cash is immediately paid, cash increases via a debit while Fees Income increases via a credit. When revenue is earned and payment is owned, Accounts receivable increases via a debit while Fees Income increases via a credit. However, Accounts Payable (a liability account) would not typically be impacted when revenue is earned.)

The CPA designation stands for: A. certified Public Appraiser B. Certified Public Accountant C. certified Public Associate D. Certified Public Analyst

B. Certified Public Accountant

Generally accepted accounting principles are not needed to ensure that financial information is fairly presented in the operating results and financial positions of firms A. True B. False

B. False

The names of three accounting jobs include all but: A. Accounts payable clerk B. Logistic manager C. Accountant D. Bookkeeper

B. Logistic manager

To become a Certified Bookkeeper, one must meet all requirements below except: A. Submit evidence that you satisfy the experience requirements for the designation. B. Pass a criminal background check. C. Pass the national certified bookkeeper exam. D. Sign a code of ethics.

B. Pass a criminal background check.

What does a single line within an amount column of a financial statement indicate? A. That the amount below it are being added or subtracted B. That the amounts above it are being added or subtracted C. That the underlined figure is a key item within the financial statement D. That the underlined figure is the final amount in a column

B. That the amounts above it are being added or subtracted (A single line indicates that the amounts above it are being added or subtracted. A double line indicates that the underlined figure is the final amount in a column.)

One requirement for becoming a CPA is to pass the: A. SEC accounting Examination B. Uniform CPA exam C. State board examination D. Final CPA examination

B. Uniform CPA Exam

The entity that has final authority over the financial reporting of publicly owned corporations is the A. Financial accounting standards (FASB) B. Internal revenue services (IRS) C. Securities and Exchange Commissions (SEC) D. Federal Trade Commission (FTC)

C. Securities and Exchange Commission (SEC) (The SEC oversees the financial information provided by publicly owned corporations to their investors and potential investors. The SEC has delegated the job of determining proper accounting standards to the accounting profession. However, the SEC has the final say on matters of financial reporting by publicly owned corporations.)

U Fix It Hardware had revenues of $105,000 and expenses of $60,000. How does this affect owner's equity? A. $90,000 increase B. $40,000 decrease C. $165,000 decrease D. $45,000 increase

D. $45,000 increase

The following are all characteristics of a sole proprietorship except A. The owner's income of the business are combined to compute the total tax responsibility of the owner B. The owner of a sole proprietorship is legally responsible for the debts of the business C. The life of the business ends when the owner is no longer willing or able to keep the business going D. A sole proprietorship is legally separate from its owner

D. A sole proprietorship is legally separate from its owner (A sole proprietor is legally responsible for all debts, taxes and other liabilities of the business.)

Amounts that are owed to a business are known as A. Accounts payable B. Capital C. Expenses D. Accounts receivables

D. Accounts receivables (Accounts receivable are amounts owed to a business by its customers. On the other hand, accounts payable are amounts a business must pay in the future, capital is the financial investment in a business, and an expense is an outflow of cash, use of other assets, or incurring of a liability.)

The journal entry to record the payment of cash on account to a creditor should include a A. Debit to cash and credit to Accounts Payable B. Debit to accounts Receivable and a credit to cash C. Debit to cash and a credit to Accounts receivables D. Debit to accounts payable and a credit to cash

D. Debit to accounts payable and a credit to cash (The journal entry to record the payment of cash on account to a creditor must both reduce Accounts Payable (via a debit) and reduce Cash (via a credit).)

Errors in the Parker Interiors trial balance include all items below except: PARKER INTERIORS Trial Balance December 31, 20X1 Debit Credit Cash 15,000 Accounts Receivable 10,000 Equipment 7,000 Accounts Payable 15,000 C. Parker, Capital 22,000 C. Parker, Drawing 10,000 Fees Income 14,000 Rent Expenses 2,000 Supplies Expenses 2,000 Telephone Expenses 5,000 Totals 55,000 47,000 A. C. Parker, Drawing should be debited. B. Total Debits and total Credits should equal $51,000. C. Fees Income should be credited. D. Equipment should be credited.

D. Equipment should be credited.

The normal balance side for asset, liability and owner's equity account is A. Right, right, right B. Right, right, left C. Left, left, right D. Left, right, right

D. Left, right, right