Financial Accounting Chapter 1-2 quiz practice

Ending amounts on the statement of changes in equity are the same as those on the

Balance sheet

Which of the following is not a form of business organization?

Charity

Which of the following is not an expense?

Dividends paid

A document that is used to chronologically record a business's debit and credit transactions is called a

General journal

Amounts are posted from the ________ to the ________

Journal, general ledger

This accumulates information regarding the increases and decreases in a specific asset, liability, or equity item

Ledger account

A company purchases supplies and records these as an asset. As they are used, they are expensed. This is an example of

Matching

An accounting policy requiring a corporation to capitalize any asset over $5,000 in value would be an example of:

Materiality

The statement of cash flows is divided into which sections?

Operating, investing, and financing

Which of the following best describes a trial balance?

Provides a mathematical check before the financial statements are prepared.

The primary qualitative characteristics of accounting information are:

Relevance and faithful representation

Statement of Owner's Equity

Report of changes in equity over a period; adjusted for increases (owner investment and net income) and for decreases (withdrawals and net loss).

A company purchased land in 1950 for $10,000. Although the land is now worth $300,000 the accounting records are not changed. This is an application of which accounting convention?

Stable monetary

Amounts on the income statement are transferred to the

Statement of changes in equity

Which of the following describes a corporation? 1. The owners have limited liability 2. It is a business that two or more owners own 3. It always sells its stock publicly 4. Its profits are taxed on the owner's personal tax return

1. The owners have limited liability Definition

Consider the following general ledger T-account: The ending balance is: 1. $8,400 debit 2. $3,500 credit 3. $4,900 debit 4. $4,900 credit

3. $4,900 debit

Customer payments received in advance of the product or service being provided is recorded in which general ledger account?

Unearned Revenue

Credits always decrease which accounts?

assets and expenses

An example of an asset is:

cash

Debits always decrease which accounts?

liabilities, revenue, common stock

revenue - expenses

net income

US GAAP is adopted by

sec

Debit means

the left side of an account

Credit means

the right side of an account

Which of the following is not a stockholders' equity account?

Investments

Which of the following does not describe a proprietorship?

It is a separate legal entity

Which of the following does not describe a partnership?

It is not a separate legal entity

Credits always increase which accounts?

Assets, Liabilities and Common Stock

Debits always increase which accounts?

Assets, dividends, and expenses

A business purchases a vehicle for $35,000. Since the vehicle was advertised for $40,000 the company decided to record the asset at $40,000. This is a violation of which accounting principle?

Historical cost

A business purchases a vehicle for $35,000. Since the vehicle was advertised for $40,000 the company decided to record the asset at $40,000. This is a violation of which accounting principle? Relevance Historical cost Materiality Recognition

Historical cost

A company purchased a building worth $500,000 by paying $50,000 in cash and acquiring a bank loan for the remainder. The effect on the accounting equation is:

Increase in assets and liabilities by $450,000

Which of the following is not a liability?

accounts receivable and prepaid expenses

Double‐entry accounting requires

debits equal credits

owner investment + net income + withdraws

end capital