accounting exam 1 practice questions

The following transactions for the month of March have been journalized and posted to the proper accounts.Mar. 1The business received $9,000 cash and issued common stock to stockholders.Mar. 2Paid the first month's rent of $800.Mar. 3Purchased equipment by paying $3,000 cash and executing a note payable for $5,000.Mar. 4Purchased office supplies for $750 cash.Mar. 5Billed a client for $10,000 of design services completed.Mar. 6Received $8,000 on account for the services previously recorded.What is the balance in Cash?

$12,450

Identify the four financial statements of a business.

Balance Sheet, Income Statement, Statement of Stockholder's Equity, Statement of Cash Flows

Sharon Foods Inc. reported the following transactions for September, 2015.A)The business received $25,000 cash and issued common stock. It was credited to Common Stock.B)The business purchased office equipment for $11,500 for which $2,500 cash was paid and the balance was put on a note payable.C)Paid insurance expense of $1,800 cash.D)Paid a utility bill for $900 cash.E)Paid $2,000 cash for September rent.F)The business had sales of $12,000 in September. Of these sales, 60% were cash sales, and the balance was credit sales.G)The business paid $8,000 cash for office furniture.

$9,000

A(n) ____ is a record of increases & decreases in a specific asset, liability, equity, revenue, or expense item.

Account

A business makes a cash payment of $12,000 to a supplier, for supplies purchased two weeks earlier. Which of the following accounts will be debited?

Accounts Payable

A business renders services to a customer for $26,000 on account. Which of the following accounts will be debited?

Accounts Receivable

A customer's promise to pay in the future for services or goods sold is called a(n) ________.

Accounts Receivable

Identify the account below that is classified as an asset in a company's chart of accounts: Accounts Payable Accounts Receivable Common stock Unearned Revenue Service Revenue

Accounts Receivable

A business buys $500 of Office Supplies on account. Which of the following accounts is credited?

Accounts payable

A business makes a payment in cash for advertising expense. Which of the following accounts will be debited?

Advertising Expense

Accounts Receivable, Prepaid Accounts, Supplies, and Land are examples of ____ accounts.

Asset

A liability created when a business collects cash from customers in advance of providing services or delivering goods is called a(n) ________.

unearned revenues

A business paid cash dividends to shareholders. Which of the following accounts will be credited?

Cash

A business purchases equipment for $8,000 cash. Which of the following accounts will be credited?

Cash

Which of the following accounts increases with a credit? Cash Common Stock Accounts Receivable Prepaid Expenses

Common Stock

Whitney Chemicals Company received cash of $40,000 by issuing 4,000 common shares at $10 each. Which of the following accounts will be credited?

Common Stock

Which of the following statements is true of expenses? -Expenses increase stockholders' equity, so an expense account's normal balance is a credit balance. -Expenses decrease stockholders' equity, so an expense account's normal balance is a credit balance. -Expenses increase stockholders' equity, so an expense account's normal balance is a debit balance. -Expenses decrease stockholders' equity, so an expense account's normal balance is a debit balance.

Expenses decrease stockholders' equity, so an expense account's normal balance is a debit balance.

Which of the following statements is true of the Common Stock account? -It is an equity account that has a normal credit balance. -It is a liability account that has a normal credit balance -It is a liability account that has a normal debit balance. -It is an equity account that has a normal debit balance.

It is an equity account that has a normal credit balance.

Accounts Payable, Unearned Revenue, and Note Payable are examples of ____ accounts.

Liability

A business borrows cash by signing a note payable. Which of the following accounts will be credited?

Notes Payable

Which of the following accounts decreases with a debit?Accounts Receivable Notes Payable Cash Land

Notes Payable

Which of the following is an asset account? Salaries Expense Accounts Payable Service Revenue Prepaid Expense

Prepaid Expense

Nuptial Inc. paid the rent for the current month in cash. Which of the following account titles will be debited?

Rent expense

________ represents a debt owed for renting a building currently

Rent payable

Which of the following statements is true of revenue? -Revenues decrease stockholders' equity; so a revenue account's normal balance is a credit balance. -Revenues decrease stockholders' equity; so arevenue account's normal balance is a debit balance. -Revenues increase stockholders' equity; so a revenue account's normal balance is a debit balance. -Revenues increase stockholders' equity; so a revenue account's normal balance is a credit balance.

Revenues increase stockholders' equity; so a revenue account's normal balance is a credit balance.

A journal entry for a $75 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash. Which of the following statements correctly states the effect of the error on the trial balance?

The sum of the credits will equal the sum of the debits.

A journal entry for a $250 payment to purchase office supplies was erroneously recorded as a debit to Office Supplies for $520 and a credit to Cash for $250. Which of the following statements correctly states the effect of the error on the trial balance?

The sum of the debits will exceed the sum of the credits by $270.

A credit is used to record an increase in all of the following accounts except:

Wage expense

Which of the following is a collection of all the accounts, the changes in those accounts, and their balances? a source document a journal a ledger a trial balance

a ledger

Which of the following is a financial statement that presents a business's accounting equation?

balance sheet

When is a trial balance usually prepared?

before the financial statements are prepared

Common Stock and Dividends are examples of ____ accounts.

equity

After initially recording a transaction, the data is then transferred to the ________.

ledger

A business renders services to a client and issues a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be true at the time the invoice is issued?

net income will increase

Which of the following is a liability account? Accounts Receivable Cash Building Notes Payable

notes payable

The account title used for recording the payment of rent in advance for an office building is

prepaid rent

Journalizing a transaction involves ________.

recording the data from source documents to the journal

Amounts earned from delivering goods or services to customers are called ________.

revenues

For Expenses, the category of account and its normal balance is ________.

stockholders' equity and a debit balance

Balance sheet accounts are arranged into ____ general categories.

three