Exam 1

The usual ordering of accounts in the general ledger is? a. assets, liabilities, owner's capital, drawings, revenues, and expenses. b. assets, liabilities, drawings, owner's capital, expenses, and revenues. c. liabilities, assets, owner's capital, revenues, expenses, and drawings. d. owner's capital, assets, liabilities, drawings, expenses, and revenues

a. assets, liabilities, owner's capital, drawings, revenues, and expenses.

The primary accounting standard-setting body in the United States is the? a. Financial Accounting Standards Board. b. International Accounting Standards Board. c. Internal Revenue Service. d. Securities and Exchange Commission.

a. Financial Accounting Standards Board.

. If total liabilities decreased by $40,000 and owner's equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period? a. $50,000 decrease. b. $10,000 decrease. c. $10,000 increase. d. $50,000 increase.

b. $10,000 decrease.

28. Liabilities? a. are future economic benefits. b. are existing debts and obligations. c. possess service potential. d. are things of value used by the business in its operation.

b. are existing debts and obligations.

Juggernaut Company buys a $29,000 van on credit. The 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.

b. balance sheet only.

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has? a. earned net income for the period. b. an error because debits do not equal credits. c. suffered a net loss for the period. d. to make an adjusting entry.

c. suffered a net loss for the period.

In recording an accounting transaction in a double-entry system? a. the number of debit accounts must equal the number of credit accounts. b. there must always be entries made on both sides of the accounting equation. c. the amount of the debits must equal the amount of the credits. d. there must only be two accounts affected by any transaction.

c. the amount of the debits must equal the amount of the credits.

The left side of an account is? a. blank. b. a description of the account. c. the debit side. d. the balance of the account.

c. the debit side.

Ethics are the standards of conduct by which one's actions are judged as? a. right or wrong. b. honest or dishonest. c. fair or unfair. d. All of these answer choices are correct.

d. All of these answer choices are correct.

The adjusted trial balance is prepared? a. after financial statements are prepared. b. before the trial balance. c. to prove the equality of total assets and total liabilities. d. after adjusting entries have been journalized and posted.

d. after adjusting entries have been journalized and posted.

A current asset is? a. the last asset purchased by a business. b. an asset which is currently being used to produce a product or service. c. usually found as a separate classification in the income statement. d. an asset that a company expects to convert to cash or use up within one year.

d. an asset that a company expects to convert to cash or use up within one year.

Transactions in a journal are initially recorded in? a. account number order. b. dollar amount order. c. alphabetical order. d. chronological order.

d. chronological order.

All of the following are characteristics of accounting information except? a. faithful representation. b. comparability. c. relevance. d. flexibility.

d. flexibility.

In order to close the owner's drawings account, the? a. income summary account should be debited. b. income summary account should be credited. c. owner's capital account should be credited. d. owner's capital account should be debited.

d. owner's capital account should be debited.

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates? a. no errors have been made. b. no errors can be discovered. c. that all accounts reflect correct balances. d. the mathematical equality of the accounting equation.

d. the mathematical equality of the accounting equation.

A reversing entry? a. reverses entries that were made in error. b. is the exact opposite of an adjusting entry made in a previous period. c. is made when a business disposes of an asset it previously purchased. d. is made when a company sustains a loss in one period and reverses the effect with a profit in the next period.

b. is the exact opposite of an adjusting entry made in a previous period.

. Balance sheet accounts are considered to be a. temporary owner's equity accounts. b. permanent accounts. c. capital accounts. d. nominal accounts.

b. permanent accounts.

Equipment is classified in the balance sheet as? a. a current asset. b. property, plant, and equipment. c. an intangible asset. d. a long-term investment.

b. property, plant, and equipment.

Generally accepted accounting principles are? a. income tax regulations of the Internal Revenue Service. b. standards that indicate how to report economic events. c. theories that are based on physical laws of the universe. d. principles that have been proven correct by academic researchers.

b. standards that indicate how to report economic events.

16. Which of the following is in accordance with generally accepted accounting principles? a. Accrual-basis accounting. b. Cash-basis accounting. c. Both accrual-basis and cash-basis accounting. d. Neither accrual-basis nor cash-basis accounting.

a. Accrual-basis accounting.

At January 31, 2020, the balance in Bigelow Inc.'s supplies account was $780. During February, Bigelow purchased supplies of $900 and used supplies of $1,150. At the end of February, the balance in the supplies account should be? a. $530 debit. b. $1,030 debit. c. $530 credit. d. $830 debit.

a. $530 debit.

During the year 2020, Dallas Company earned revenues of $90,000, had expenses of $62,000, purchased assets with a cost of $10,000 and had owner drawings of $6,000. Net income for the year is? a. $18,000. b. $22,000. c. $28,000. d. $32,000.

c. $28,000.

Which of the following is not part of the accounting process? a. Recording. b. Identifying. c. Financial decision making. d. Communicating.

c. Financial decision making.

Which of the following steps in the accounting cycle would not generally be performed daily? a. Journalize transactions. b. Post to ledger accounts. c. Prepare adjusting entries. d. Analyze business transactions.

c. Prepare adjusting entries.

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? a. Identification. b. Communication. c. Recording. d. Analysis.

c. Recording.

Depreciation is the process of? a. valuing an asset at its fair value. b. increasing the value of an asset over its useful life in a rational and systematic manner. c. allocating the cost of an asset to expense over its useful life in a rational and systematic manner. d. writing down an asset to its real value each accounting period.

c. allocating the cost of an asset to expense over its useful life in a rational and systematic manner.

Monthly and quarterly time periods are called? a. calendar periods. b. fiscal periods. c. interim periods. d. quarterly periods

c. interim periods.

An item is considered material if? a. it doesn't cost a lot of money. b. it is of a tangible good. c. it is likely to influence the decision of an investor or creditor. d. the cost of reporting the item is greater than its benefits.

c. it is likely to influence the decision of an investor or creditor.