ACCT-111 Practice Exam 1
Which of the following accounts decreases with a credit?
Cash
Which of the following accounts may appear on a post-closing trial balance?
Cash, Salaries Payable, and Owner, Capital
A listing of all accounts in numerical order is called a(n) ________.
Chart of accounts
The entries that transfer the revenue, expense, and Owner, Withdrawals balances to the Owner, Capital account to prepare the company's books for the next period are called ________ entries.
Closing
creation and governance of accounting standards in the United States?
Financial Accounting Standards Board
Generally Accepted Accounting Principles (GAAP) are currently formulated by the:
Financial Accounting Standards Board (FASB).
Generally Accepted Accounting Principles (GAAP) stands for
Generally Accepted Accounting Principles
The net income of Hendley Company for the year is $25,000. Withdrawals during the year were $30,000. No new capital contributions were made during the year. Which of the following statements is true? A. Hendley, Capital account increases by $30,000. B. Hendley, Capital will remain the same. C. Hendley, Capital account decreases by $25,000.
Hendley, Capital account decreases by $5,000.
Which of the following is an example of a deferral (or prepaid) adjusting entry?
Recording the usage of office supplies during the period.
The revenue recognition principle requires
Revenue to be recorded only after the business has satisfied its performance obligation.
Amounts earned from delivering goods or services to customers are called ________.
Revenues
Which of the following accounts will be closed by crediting the Income Summary account?
Service Revenue
Which type of business organization is owned by only one owner?
Sole proprietorship
A shortened form of the ledger is called a ________.
T - account
An expense that has been incurred but not yet paid is called a(n) ________.
accrued expense
The detailed record of the changes in a particular asset, liability, or owner's equity is called
an account
The earnings of a sole proprietorship are ________.
combined with the personal income of the proprietor
According to the ________, acquired assets should be recorded at the amount actually paid rather than at the estimated market value.
cost principle
Stuart Allen Company manufactures computer hardware. The president of the company bought a new car as a gift for his daughter and paid for it using cash from the business. Since the company paid for the car, it was recorded in its books as an asset. Which of the following concepts or principles of accounting did the company violate?
economic entity assumption
The owner's claim to the assets of the business is called ________.
equity
The balance sheet reports the
financial position on a specific date
As per the ________, the entity will remain in operation for the foreseeable future.
going concern assumption
A debt that a business owes is called ________.
liability
Assets are listed on the balance sheet in order of their
liquidity
Notes Payable due within two years are classified as ________.
long - term liabilities
Lawton Company records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent?
monetary unit assumption
Adjusting entries are needed to correctly measure the ________.
net income (loss) on the income statement
A balance sheet that lists the assets above the liabilities and owner's equity sections is a(n) ________ balance sheet.
report form.
Which of the following are temporary accounts that are closed at the end of the year?
Revenues, expenses, and Owner, Withdrawals
Which of the following statements is correct? A. Accounts Payable is increased with a credit. B. Unearned Revenue is increased with a debit. C. Prepaid Expenses are decreased with a debit. D. Rent Expense is increased with a credit.
A. Accounts Payable is increased with a credit.
A customer's promise to pay in the future for services or goods sold is called a(n) ________.
Accounts Receivable
Which of the following is true of accrual basis accounting and cash basis accounting?
Accrual accounting records revenue only when it is earned.
Which of the following statements is true of accrual basis accounting?
Accrual basis accounting is required by Generally Accepted Accounting Principles (GAAP).
Which of the following accounts is not closed?
Accumulated Depreciation
The matching principle states that ________.
All expenses should be recorded when they are incurred during the period
Property, plant, and equipment are ________.
Also called fixed or plant assets
The economic resources of a business such as furniture, building, and land are its ________.
Assets
Which of the following is the correct accounting equation?
Assets = Liabilities + Equity
A & D Window Cleaning performed $450 of services but has not yet billed customers for the month. If A & D fails to record the adjusting entry, what is the impact on the financial statements?
Balance sheet: assets understated, equity understated income statement: revenues understated
Which of the following accounts is a liability? A. Unearned Revenue B. Service Revenue C. Accounts Receivable D. Prepaid Rent Expense
A. Unearned Revenue
What do closing entries accomplish?
A. Zero out the revenues, expenses, and Owner, Withdrawals B. Transfer revenues, expenses, and Owner, Withdrawals to the Owner, Capital account C. Brings the Owner, Capital account to its correct ending balance
Accounting is the information system that
A. processes information into reports. B. communicates the results to decision makers. C. measures business activity.
The adjusted trial balance shows
Account balances after adjustments.
Which of the following statements, regarding International Financial Reporting Standards (IFRS), is correct?
Companies who are incorporated in or do significant business in another country might be required to publish financial statements using International Financial Reporting Standards.
Under which of the following categories would Accounts Payable appear?
Current Liabilities
Under which of the following categories would Accounts Receivable appear?
Current assets
accounting information to be complete, neutral, and free from material error?
Faithful representation concept
The left side of an account is used to record which of the following?
Debits
Which of the following accounting elements does the matching principle help to match?
Expenses and revenues
Which of the following statements is true of expenses?
Expenses decrease equity, so an expense account's normal balance is a debit balance.
Which of the following accounts has an ending balance equal to net income immediately before it is closed?
Income Summary
Assume that Global Cleaning Service performed cleaning services for a department store on account for $180. How would this transaction affect Global Cleaning Service's accounting equation?
Increase both assets and equity by $180
Which sequence correctly summarizes the accounting process?
Journalize transactions, post to the accounts, prepare a trial balance
Which of the following is the record holding all the accounts, the changes in those accounts, and their balances?
Ledger
Which of the following is a measure of how quickly an item can be converted to cash?
Liquidity
The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the ________ principle.
Matching
To which of the following accounts should the balance in the Income Summary account be closed?
Owner, Capital
An account that is not closed at the end of the period is called a(n) ________.
Permanent account
The account title used for recording the payment of rent in advance for an office building is ________.
Prepaid Rent
Which of the following assumes that the financial statements of a business can be prepared for specific periods?
Time period concept
Which of the following is considered a fiscal year?
Twelve months