Accounting 1 Exam

A) the debit balance

the left side of an account is A) the debit balance B) the balance of the account C) a description of the account D) blank

D) transferring journal amounts to ledger accounts

the steps in preparing a trial balance include all of the following except A) providing the equality of the two columns B) totaling the debit and credit columns C) listing the account titles and their balances D) transferring journal amounts to ledger accounts

assets, liabilities, owners capital, owners drawings, revenues, and expenses

what is the usual ordering of accounts in the general ledger?

C) is owned by its stockholders

A business organized as a corporation A) is not a separate legal entity in most states B) requires that stockholders be personally liable for the debts of the business C) is owned by its stockholders D) terminates when one of its original stockholders dies

A) asset accounts

A chart of accounts usually starts with A) asset accounts B) expense accounts C) liability accounts D) revenue accounts

A) that the entry had been posted to a particular account

A number in the reference column in a general journal indicates A) that the entry had been posted to a particular account B) the page number of the journal C) the dollar amount of the transaction D) the date of the transaction

C) only balance sheet accounts

A post-closing trial balance will show A) zero balances for all accounts B) zero balances for balance sheet accounts C) only balance sheet accounts D) only income statement accounts

C) a title, a debit side, and a credit side

An account consists of A) a title, a debit balance, and a credit balance B) a title, a left side, and a debit balance C) a title, a debit side, and a credit side D) a title, a right side, and a credit balance

C) general ledger

An accounting record of the balances of all assets, liabilities, and owners equity accounts is called a A) compound entry B) general journal C) general ledger D) chart of accounts

C) balance sheet

Closing entries may be prepared from all of the following EXCEPT A) adjusted balances in the ledger B) income statement and balance sheet columns of the worksheet C) balance sheet D) income and owners equity statements

D) assets and owners equity both increased by $3,600

Beethoven Company provided consulting services and billed the client $3,600. As a result of this event A) assets remained unchanged B) assets increased by $3,600 C) owners equity increased by $3,600 D) assets and owners equity both increased by $3,600

Recording

Bookkeeping differs from accounting in that bookkeeping primarily involved which part of the accounting process?

C) owners equity will decrease

If an owner makes a withdrawal of cash from a proprietorship, then A) there has been a violation of accounting principles B) owners equity will increase C) owners equity will decrease D) there will be a new liability showing the owner owes money to the business

B) each expense account will be credited

In preparing closing entries A) each revenue account will be credited B) each expense account will be credited C) the owners capital account will be debuted if there is a net income for the period D) the owners drawings account will be debited

1. + in assets / + in owners equity 2. + in assets / + in owners equity 3. + in assets / + in liabilities 4. - in assets / - in owners equity 5. - in assets / - in liabilities

Indicate whether the transaction had an increase (+) or decrease (-) on assets, liabilities, or owners equity 1. Made an investment to start the business 2. Billed customers for services performed 3. purchased equipment on account 4. withdrew cash for personal use 5. paid for equipment purchased in #3 above

D) all of the above

Interpretation of reported information involves each of the following except: A) limitations of reported data B) users of reported data C) meaning of reported data D) all of the above

D) cash

Liabilities of a company would NOT include A) notes payable B) accounts payable C) salaries and wages payable D) cash

C) no changes in total assets

Mellon company purchases $1,500 of equipment from Office Equipment Inc. for cash. The effect on the components of the basic accounting equation of Mellon Company is A) an increase in assets and liabilities B) a decrease in assets and liabilities C) no change in total assets D) an increase in assets and a decrease in liabilities

A) paid and recorded in an asset account before they are used or consumed

Prepaid expenses are A) paid and recorded in an asset account before they are used or consumed B) paid and recorded in an asset account after they are used or consumed C) incurred but not yet paid or recorded D) incurred and already paid or recorded

B) efforts should be recognized with accomplishments

The expense recognition principle indicates that expenses are related to revenues. one way of staying the principle is to say that A) assets should be recognized with liabilities B) efforts should be recognized with accomplishments C) owner withdrawals should be recognized with owner contributions D) cash payments should be recognized with cash receipts

D) none of the above

The ledger should be arranged in A) alphabetical order B) chronological order C) dollar amount order D) none of the above

D) is owned by its stockholders

the corporate form of organization A) requires that stockholders be personally liable for the debts of the business B) terminates when one of its original stockholders dies C) is not a separate legal entity in most states D) is owned by its stockholders

C) is found by computing the difference between the income statement columns of the worksheet

The net income (or loss) for the period A) is found by computing the difference between the income statement credit column and the balance sheet credit column on the worksheet B) cannot be found on the worksheet C) is found by computing the difference between the income statement columns of the worksheet D) is found by computing the difference between the trial balance totals and the adjusted trial balance totals

False

True/False. The head of the sales department signed a contract with a customer to deliver 150,000 units of product over the next year. This should be recorded as a transaction.

true

True/False: Expense recognition is related to revenue recognition

true

True/False: accounting communicated financial information about a business enterprise to both internal and external users

true

True/False: after a transaction has been posted, the reference column in the journal should not be blank

True

True/False: asset prepayments become expenses when they expire

false

True/False: closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year

true

True/False: current liabilities are obligations that the company is to pay within the coming year

false

True/False: debut and credit can be interpreted to mean increase and decrease, respectively

True

True/False: in general, adjusting entries are required each time financial statements are prepared

true

True/False: the double-entry system is a logical method for recording transactions and results in equal amounts for debits and credits for each transaction

false

True/False: the hiring of a new company president is an economic event recorded by the financial information system.

true

True/False: to close net income to owners capital, income summary is debuted and owners capital is credited

false

True/False: transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts

Assets = Liabilities + Owner's Equity

What is the basic accounting equation?

B) accepting cash from an established customer for services to be performed over the next three months

Which of the following does NOT result in immediate revenue recognition A) recording rent earned as an adjusting entry on the last day of the accounting period B) accepting cash from an established customer for services to be performed over the next three months C) billing customers on June 30 for services completed during June D) receiving cash for services performed

D) revenues are increased by debits

Which of the following statements is FALSE A) revenues increase owners equity B) revenues have normal credit balances C) revenues are a positive factor in the computation of net income D) revenues are increased by debits

D) president of the employees labor union

Which of the following would NOT be considered an internal user of accounting data for the LMN company? A) president of the company B) production manager C) merchandise inventory clerk D) president of the employees labor union

A) March

a metal shops employees work overtime to finish an order that is sold on March 28. the office sends a statement to the customer in early april and payment is received by mid-april. the overtime wages should be expensed in A) march B) april c) the period when the workers received their checks D) either in march or april depending on when the pay period ends

A) balance sheet

all of the financial statements are for a period of time except the A) balance sheet B) income statement C) statement of cash flows D) statement of owners equity

A) a credit balance in an expense account

an awareness of the normal balances of accounts would help you spot which of the following as an error in recording? A) a credit balance in an expense account B) a credit balance in a revenue account C) a debit balance in the owners drawing account D) a credit balance in liabilities account

identification, recording, communication

how is the accounting process correctly sequenced?

C) business documents

in recording business transactions, evidence that an accounting transaction has taken place is obtained from A) the internal revenue service B) the SEC C) business documents D) the public relations department

C) creditors

liabilities of a company are owed to A) benefactors B) underwriters C) creditors D) debtors

B) accounts receivable

management could determine the amounts due from customers by examining which ledger account? A) supplies B) accounts receivable C) accounts payable D) service revenue

B) assets - liabilities

owners equity is best depicted by the following: A) residual equity + assets B) assets - liabilities C) assets = liabilities D) liabilities + assets

C) the SEC often mandates guidelines when no accounting principles exist

the SEC and FASB are two organizations that are primarily responsible for establishing generally accepted accounting principles. it is true that A) they are both governmental agencies B) the SEC is a private organization of accountants C) the SEC offend mandates guidelines when no accounting principles exist D) the SEC and FASB rarely cooperate in developing accounting standards

corporation

the business organizational structure that provides the owners' a limited liability

D) general ledger

the entire group of accounts maintained by a company is called the A) general journal B) chart of accounts C) trial balance D) general ledger