Question 1

Which financial statement reports an organization's financial position at a single point in time?

Accepted Answer

A) Income statement. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Cash flow statement. 
E) Trial balance. 
A) Income statement. 
B) Balance sheet. 
C) Statement of retained earnings. 
D) Cash flow statement. 
E) Trial balance.

Question 2

A business uses a credit to record:

Accepted Answer

A) An increase in an expense account. 
B) A decrease in an asset account. 
C) A decrease in an unearned revenue account. 
D) A decrease in a revenue account. 
E) A decrease in a common stock account. 
A) An increase in an expense account. 
B) A decrease in an asset account. 
C) A decrease in an unearned revenue account. 
D) A decrease in a revenue account. 
E) A decrease in a common stock account.

Question 3

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts,that is,assets first,then liabilities,then common stock and dividends,followed by revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 4

Eduardo Martinez,the sole stockholder of Eduardo's Dance Studio,started the business by investing $10,000 cash and donating a building worth $20,000 in exchange for common stock.Identify the general journal entry below that Eduardo's will make to record the transaction.

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 10,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 30,000 & \
\hline \text { Cash } & & 10,000 \
\hline \text { Building } & & 20,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 10,000 & \
\hline \text { Building } & 20,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Owner's Investments } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash \& Building } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 10,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 30,000 & \
\hline \text { Cash } & & 10,000 \
\hline \text { Building } & & 20,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 10,000 & \
\hline \text { Building } & 20,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Owner's Investments } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Cash \& Building } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$

Question 5

Eduardo's Dance Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100.The client paid immediately.Identify the general journal entry below that Eduardo's will make to record the transaction.

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Rental Revenue } & 100 & \
\hline \text { Instruction Revenue } & 150 & \
\hline \text { Cash } & & 250 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Revenue } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Rental Revenue } & 100 & \
\hline \text { Instruction Revenue } & 150 & \
\hline \text { Cash } & & 250 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Revenue } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$

Question 6

HH Consulting & Design provided $800 of consulting work and $100 of design work to the same client.It billed the client for the total amount and is expecting to collect from the client next month.Which of the following general journal entries will HH Consulting & Design make to record this transaction?

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Design Revenue } & 100 & \
\hline \text { Consulting Revenue } & 800 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 800 & \
\hline \text { Design Revenue } & & 100 \
\hline \text { Consulting Revenue } & & 800 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Consulting Revenue } & 800 & \
\hline \text { Design Revenue } & 100 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Design Revenue } & 100 & \
\hline \text { Consulting Revenue } & 800 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 800 & \
\hline \text { Design Revenue } & & 100 \
\hline \text { Consulting Revenue } & & 800 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Consulting Revenue } & 800 & \
\hline \text { Design Revenue } & 100 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$

Question 7

An account balance is:

Accepted Answer

A) The total of the credit side of the account. 
B) The total of the debit side of the account. 
C) The difference between the total debits and total credits for an account including the beginning balance. 
D) Assets = liabilities + equity. 
E) Always a credit. 
A) The total of the credit side of the account. 
B) The total of the debit side of the account. 
C) The difference between the total debits and total credits for an account including the beginning balance. 
D) Assets = liabilities + equity. 
E) Always a credit.

Question 8

Identify the item below that would cause the trial balance to not balance.

Accepted Answer

A) A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B) The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and $2,350 credit to Accounts Payable. 
C) A $50 cash receipt for the performance of a service was not recorded at all. 
D) The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E) The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750. 
A) A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B) The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and $2,350 credit to Accounts Payable. 
C) A $50 cash receipt for the performance of a service was not recorded at all. 
D) The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E) The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

Question 9

A report that lists a business's accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Accepted Answer

A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal. 
A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal.

Question 10

Identify the account below that is classified as an asset account:

Accepted Answer

A) Unearned Revenue 
B) Accounts Payable 
C) Supplies 
D) Common Stock 
E) Service Revenue 
A) Unearned Revenue 
B) Accounts Payable 
C) Supplies 
D) Common Stock 
E) Service Revenue

Question 11

Booth Industries has liabilities of $105 million and total assets of $350 million.Its debt ratio is 40.0%.

Accepted Answer

A) True 
 B)False

Question 12

Identify the statement below that is true.

Accepted Answer

A) If the trial balance is in balance,it proves that no errors have been made in recording and posting transactions. 
B) The trial balance is a book of original entry. 
C) Another name for the trial balance is the chart of accounts. 
D) The trial balance is a list of all accounts from the ledger with their balances at a point in time. 
E) The trial balance is another name for the balance sheet as long as debits balance with credits. 
A) If the trial balance is in balance,it proves that no errors have been made in recording and posting transactions. 
B) The trial balance is a book of original entry. 
C) Another name for the trial balance is the chart of accounts. 
D) The trial balance is a list of all accounts from the ledger with their balances at a point in time. 
E) The trial balance is another name for the balance sheet as long as debits balance with credits.

Question 13

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Accepted Answer

A) Dividends account. 
B) Common Stock account. 
C) Asset account. 
D) T-account. 
E) Balance column sheet. 
A) Dividends account. 
B) Common Stock account. 
C) Asset account. 
D) T-account. 
E) Balance column sheet.

Question 14

What is a trial balance? What is its purpose?

Accepted Answer

The trial balance is a list of all of th

Question 15

In a double-entry accounting system,the total dollar amount debited must always equal the total dollar amount credited.

Accepted Answer

A) True 
 B)False

Question 16

Samuel Sorenson,the sole stockholder,contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business,SS Consulting.Which of the following general journal entries will SS Consulting make to record this transaction?

Accepted Answer

A) Debit Assets $200,000; credit Common Stock,$200,000. 
B) Debit Cash and Land,$200,000; credit Common Stock,$200,000. 
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock,$200,000. 
D) Debit Common Stock,$200,000; credit Cash $70,000,credit Land,$130,000. 
E) Debit Common Stock,$200,000; credit Assets,$200,000. 
A) Debit Assets $200,000; credit Common Stock,$200,000. 
B) Debit Cash and Land,$200,000; credit Common Stock,$200,000. 
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock,$200,000. 
D) Debit Common Stock,$200,000; credit Cash $70,000,credit Land,$130,000. 
E) Debit Common Stock,$200,000; credit Assets,$200,000.

Question 17

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

Accepted Answer

A) $150 understated. 
B) $135 overstated. 
C) $150 overstated. 
D) $15 understated. 
E) $135 understated. 
A) $150 understated. 
B) $135 overstated. 
C) $150 overstated. 
D) $15 understated. 
E) $135 understated.

Which financial statement reports an organization's financial position at a single point in time?

A business uses a credit to record:

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts,that is,assets first,then liabilities,then common stock and dividends,followed by revenues and expenses.

Eduardo Martinez,the sole stockholder of Eduardo's Dance Studio,started the business by investing $10,000 cash and donating a building worth $20,000 in exchange for common stock.Identify the general journal entry below that Eduardo's will make to record the transaction.

Eduardo's Dance Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100.The client paid immediately.Identify the general journal entry below that Eduardo's will make to record the transaction.

An account balance is:

Identify the item below that would cause the trial balance to not balance.

A report that lists a business's accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Identify the account below that is classified as an asset account:

Booth Industries has liabilities of $105 million and total assets of $350 million.Its debt ratio is 40.0%.

Identify the statement below that is true.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

What is a trial balance? What is its purpose?

In a double-entry accounting system,the total dollar amount debited must always equal the total dollar amount credited.

Samuel Sorenson,the sole stockholder,contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business,SS Consulting.Which of the following general journal entries will SS Consulting make to record this transaction?

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

Introducing Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 2: Financial Statements and the Accounting System

Which financial statement reports an organization's financial position at a single point in time?

A business uses a credit to record:

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts,that is,assets first,then liabilities,then common stock and dividends,followed by revenues and expenses.

Eduardo Martinez,the sole stockholder of Eduardo's Dance Studio,started the business by investing $10,000 cash and donating a building worth $20,000 in exchange for common stock.Identify the general journal entry below that Eduardo's will make to record the transaction.

Eduardo's Dance Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100.The client paid immediately.Identify the general journal entry below that Eduardo's will make to record the transaction.

An account balance is:

Identify the item below that would cause the trial balance to not balance.

A report that lists a business's accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Identify the account below that is classified as an asset account:

Booth Industries has liabilities of $105 million and total assets of $350 million.Its debt ratio is 40.0%.

Identify the statement below that is true.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

What is a trial balance? What is its purpose?

In a double-entry accounting system,the total dollar amount debited must always equal the total dollar amount credited.

Samuel Sorenson,the sole stockholder,contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business,SS Consulting.Which of the following general journal entries will SS Consulting make to record this transaction?

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

Introducing Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters