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7. At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning service, had total assets of $3,630 and equity of $2,280. How much were Global Cleaning Service's liabilities? a. $5,910 c. $1,350 b. $3,630 d. $2,280

$1,350 (3630 - 2280)

4. Which of the following accounts is not dosed? a. Depreciation Expense b. Dividends c. Service Revenue d. Accumulated Depreciation

Accumulated Depreciation

1. Accounting is the information system that a. measures business activities. b. communicates the results to decision makers. c. processes information into reports. d. All of the above.

All of the above.

3. The revenue recognition principle requires a. time to be divided into annual periods to measure revenue properly. b. revenue to be recorded only after the business has satisfied its performance obligation. c. expenses to be matched with revenue of the period. d. revenue to be recorded only after the cash is received.

revenue to be recorded only after the business has satisfied its performance obligation.

4. Adjusting the accounts is the process of a. subtracting expenses from revenues to measure net income. b. recording transactions as they occur during the period. c. updating the accounts at the end of the period. d. zeroing out account balances to prepare for the next period.

updating the accounts at the end of the period.

9. Clean Water Softener Systems has Cash of $600, Accounts Receivable of $900, and Office Supplies of $400. Clean owes $500 on Accounts Payable and has Salaries Payable of $200. Clean's current ratio is a. 2.71 b. 2.50 c. 0.63 d. 0.37

2.71 Total Current Liabilities = $500+$200 = $700 Total Current Assets = $600+$900+$400 = $1,900 Current Ratio = $1,900/$700 = 2.71

10. Nathville Laundry reported assets of $800 and equity of $480. What is Nathville's debt ratio? a. 60% b. 40% c. 67% d. not enough information is provided

40%

5. What do dosing entries accomplish? a. Zero out the revenues, expenses, and dividends b. Transfer revenues, expenses, and dividends to the Retained Earnings account c. Bring the Retained Earnings account to its correct ending balance d. All of the above

All of the above

8. Which of the following steps of the accounting cycle is not completed at the end of the period? a. Journalize transactions as they occur. b. Journalize and post the closing entries. c. Prepare the post-closing trial balance. d. Prepare the financial statements

Journalize transactions as they occur.

9. Which sequence correctly summarizes the accounting process? a. Journalize transactions, post to the accounts, prepare a trial balance b. Journalize transactions, prepare a trial balance, post to the accounts c. Post to the accounts, journalize transactions, prepare a trial balance d. Prepare a trial balance, journalize transactions, post to the accounts

Journalize transactions, post to the accounts, prepare a trial balance

8. Pixel Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable. What will the trial balance show for this error? a. Cash is overstated c. Expenses are overstated b. Liabilities are overstated d. The trial balance will not balance

Liabilities are overstated

8. Consider the overall effects on Global Cleaning Service from selling and performing services on account for $6,400 and paying expenses totaling $2,500. What is Global Cleaning Service's net income or net loss? a. Net income of $3,900 c. Net income of $6,400 b. Net loss of $3,900 d. Net income of $8,900

Net income of $3,900 (6400 - 2500)

5. Which of the following is an example of a deferral (or prepaid) adjusting entry? a. Recording the usage of office supplies during the period. b. Recording salaries expense for employees not yet paid. c. Recording revenue that has been earned but not yet received. d. Recording interest expense incurred on a notes payable not due until next year.

Recording the usage of office supplies during the period.

2. Get Fit Now gains a client who prepays $540 for a package of six physical training sessions. Get Fit Now collects the $540 in advance and will provide the training later. After four training sessions, what should Get Fit Now report on its income statement assuming it uses the accrual basis accounting method? a. Service revenue of $360 c. Unearned service revenue of $360 b. Service revenue of $540 d. Cash of $180

Service revenue of $360

4. Which type of business organization is owned by only one owner? a. Corporation c. Sole proprietorship b. Partnership d. Items a, b, and c are all correct.

Sole proprietorship

5. Which of the following characteristics best describes a corporation? a. A business with a single owner b. Is not taxed c. Stockholders not personally liable for entity's debts d. Not a separate taxable entity

Stockholders not personally liable for entity's debts

10. The balance sheet reports the a. financial position on a specific date. b. results of operations on a specific date. c. financial position for a specific period. d. results of operations for a specific period.

financial position on a specific date.

9. A worksheet a. is a journal used to record transactions. b. is a financial statement that reports net income during the period. c. is an internal document that helps summarize data for the preparation of financial statements. d. is a ledger listing the account balances and changes in those accounts.

is an internal document that helps summarize data for the preparation of financial statements.

1. Assets are listed on the balance sheet in the order of their a. purchase date. b. adjustments. c. liquidity. d. balance.

liquidity.

7. The adjusted trial balance shows a. amounts that may be out of balance. b. account balances after adjustments. c. assets and liabilities only. d. revenues and expenses only.

account balances after adjustments

1. The detailed record of the changes in a particular asset, liability, or stockholders' equity is called a. an account. c. a ledger. b. a journal. d. a trial balance.

an account.

9. 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? a. Increase both assets and liabilities by $180 b. Increase both assets and equity by $180 c. Increase both liabilities and equity by $180 d. Decrease liabilities by $180, and increase equity by $180

b. Increase both assets and equity by $180 Accounts Receivable $180 Service Revenue $180 (Both of Revenue and Accounts Receivable are increased, i.e., both equity and asset are increased.)

4. Which of the following statements is correct? a. Prepaid Expenses are decreased with a debit. b. Unearned Revenue is increased with a debit. c. Rent Expense is increased with a credit. d. Accounts Payable is increased with a credit.

Accounts Payable is increased with a credit.

1. Which of the following is true of accrual basis accounting and cash basis accounting? a. Accrual accounting records revenue only when it is earned. b. Accrual accounting is not allowed under GAAP. c. Cash basis accounting records all transactions. d. All of the above are true.

Accrual accounting records revenue only when it is earned.

2. Which of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? a. Land held for investment b. Accumulated Depreciation c. Office Supplies d. Mortgage Payable

Accumulated Depreciation

7. Which of the following accounts may appear on a post-closing trial balance? a. Cash, Salaries Payable, and Retained Earnings b. Cash, Salaries Payable, and Service Revenue c. Cash, Service Revenue, and Salaries Expense d. Cash, Salaries Payable, and Salaries Expense

Cash, Salaries Payable, and Retained Earnings

3. The left side of an account is used to record which of the following? a. Debit or credit, depending on the type of account b. Increases c. Credits d. Debits

Debits

6. Which of the following requires accounting information to be complete, neutral, and free from material error? a. Faithful representation concept c. Economic entity assumption b. Cost principle d. Going concern assumption

Faithful representation concept

3. Generally Accepted Accounting Principles (GAAP) are currently formulated by the a. Financial Accounting Standards Board (FASB). b. Securities and Exchange Commission (SEC). c. Institute of Management Accountants (IMA). d. American Institute of Certified Public Accountants (AICPA).

Financial Accounting Standards Board (FASB).

10A. Which of the following statements concerning reversing entries is true? a. Reversing entries are required by Generally Accepted Accounting Principles. b. Reversing entries are most often used with accrual-type adjustments. c. Reversing entries are dated December 31, the end of the fiscal year. d. Reversing entries are recorded before adjusting entries.

Reversing entries are most often used with accrual-type adjustments.

3. Which situation indicates a net loss within the Income Statement section of the worksheet? a. Total credits exceed total debits c. Total debits equal total credits b. Total debits exceed total credits d. None of the above

Total debits exceed total credits

2. Which of the following accounts is a liability? a. Accounts Receivable b. Service Revenue c. Unearned Revenue d. Prepaid Rent Expense

Unearned Revenue

8. 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? a. balance sheet: assets understated; equity overstated income statement: expense understated b. balance sheet: liabilities overstated; equity understated income statement: revenues understated c. balance sheet: assets overstated, equity understated income statement: expenses understated d. balance sheet: assets understated, equity understated income statement: revenues understated

balance sheet: assets understated, equity understated income statement: revenues understated

11. Assume Global Cleaning Service had net income of $570 for the year. Global Cleaning Service's beginning and ending total assets were $4,520 and $4,180, respectively. Calculate Global Cleaning Service's return on assets for the year. a. 12.6% b. 13.6% c. 13.1% d. 7.63%

c. 13.1% [Average Assets = $4,350 = ($4,520+$4,180)/2 13.1% = $570 / $4,350

2. Which of the following is not an external user of a business's financial information? a. Taxing authorities b. Customers c. employees d. investors

employees