Question 1

Recording revenue

Accepted Answer

A) increases assets and liabilities. 
B) increases assets and shareholders' equity. 
C) increases assets and decreases shareholders' equity. 
D) has no effect on total assets. 
A) increases assets and liabilities. 
B) increases assets and shareholders' equity. 
C) increases assets and decreases shareholders' equity. 
D) has no effect on total assets.

Question 2

An investment by the shareholders in a company increases

Accepted Answer

A) assets and shareholders' equity. 
B) assets and liabilities. 
C) liabilities and shareholders' equity. 
D) assets only. 
A) assets and shareholders' equity. 
B) assets and liabilities. 
C) liabilities and shareholders' equity. 
D) assets only.

Question 3

The recording process occurs

Accepted Answer

A) once a year. 
B) once a month. 
C) repeatedly during the accounting period. 
D) infrequently - usually every two or three months. 
A) once a year. 
B) once a month. 
C) repeatedly during the accounting period. 
D) infrequently - usually every two or three months.

Question 4

A trial balance will not balance when

Accepted Answer

A) a one-sided entry is posted. 
B) a journal entry is posted twice. 
C) a correct journal entry is not posted. 
D) incorrect accounts are used in journalizing or posting. 
A) a one-sided entry is posted. 
B) a journal entry is posted twice. 
C) a correct journal entry is not posted. 
D) incorrect accounts are used in journalizing or posting.

Question 5

A company that receives money in advance of performing a service

Accepted Answer

A) debits Cash and credits a Prepaid account. 
B) debits Deferred Revenue and credits Accounts Payable. 
C) debits Cash and credits Deferred Revenue. 
D) debits Cash and credits Accounts Receivable. 
A) debits Cash and credits a Prepaid account. 
B) debits Deferred Revenue and credits Accounts Payable. 
C) debits Cash and credits Deferred Revenue. 
D) debits Cash and credits Accounts Receivable.

Question 6

A paid dividend

Accepted Answer

A) decreases assets and shareholders' equity. 
B) increases assets and shareholders' equity. 
C) increases assets and decreases shareholders' equity. 
D) decreases assets and increases shareholders' equity. 
A) decreases assets and shareholders' equity. 
B) increases assets and shareholders' equity. 
C) increases assets and decreases shareholders' equity. 
D) decreases assets and increases shareholders' equity.

Question 7

The chart of accounts is the framework for the accounting database.

Accepted Answer

A) True 
 B)False

Question 8

Accounting systems should record

Accepted Answer

A) all economic events. 
B) events that result in a change in assets, liabilities, or shareholders' equity items. 
C) only events that involve cash. 
D) only events that include revenues, expenses, and cash. 
A) all economic events. 
B) events that result in a change in assets, liabilities, or shareholders' equity items. 
C) only events that involve cash. 
D) only events that include revenues, expenses, and cash.

Question 9

An expense account is a subdivision of the retained earnings account and decreases shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 10

A trial balance is prepared

Accepted Answer

A) on a monthly basis only. 
B) on a quarterly basis only. 
C) on an annual basis only. 
D) at the end of an accounting period which could be monthly, quarterly or annually. 
A) on a monthly basis only. 
B) on a quarterly basis only. 
C) on an annual basis only. 
D) at the end of an accounting period which could be monthly, quarterly or annually.

Question 11

If a company has overdrawn its bank balance, then

Accepted Answer

A) the cash account will show a debit balance. 
B) the cash account will show a credit balance. 
C) the cash account debits will exceed the cash account credits. 
D) this cannot be detected by observing the balance of the cash account. 
A) the cash account will show a debit balance. 
B) the cash account will show a credit balance. 
C) the cash account debits will exceed the cash account credits. 
D) this cannot be detected by observing the balance of the cash account.

Question 12

An accounting report that lists all assets, liabilities, and shareholders' equity accounts and their balances at a specific date is called a

Accepted Answer

A) trial balance. 
B) general journal. 
C) general ledger. 
D) chart of accounts. 
A) trial balance. 
B) general journal. 
C) general ledger. 
D) chart of accounts.

Question 13

For the basic accounting equation to stay in balance, each transaction recorded must

Accepted Answer

A) affect two or fewer accounts. 
B) affect two or more accounts. 
C) always affect exactly two accounts. 
D) affect the same number of asset and liability accounts. 
A) affect two or fewer accounts. 
B) affect two or more accounts. 
C) always affect exactly two accounts. 
D) affect the same number of asset and liability accounts.

Question 14

Which of the following is an asset?

Accepted Answer

A) Service Revenue 
B) Bank Loan Payable 
C) Supplies Expense 
D) Prepaid Rent 
A) Service Revenue 
B) Bank Loan Payable 
C) Supplies Expense 
D) Prepaid Rent

Question 15

When a liability decreases:

Accepted Answer

A) the account is credited and the normal balance is a debit balance. 
B) the account is debited and the normal balance is a credit balance. 
C) the account is credited and the normal balance is a credit. 
D) the account is debited and the normal balance is a credit. 
A) the account is credited and the normal balance is a debit balance. 
B) the account is debited and the normal balance is a credit balance. 
C) the account is credited and the normal balance is a credit. 
D) the account is debited and the normal balance is a credit.

Question 16

An accountant has debited an asset account for $2,000 and credited an expense account for $4,000.Which of the following would be the correct way to complete the recording of the transaction?

Accepted Answer

A) Credit an asset account for $4,000. 
B) Credit a liability account for $2,000. 
C) Credit a shareholders' equity account for $2,000. 
D) Debit a shareholders' equity account for $2,000. 
A) Credit an asset account for $4,000. 
B) Credit a liability account for $2,000. 
C) Credit a shareholders' equity account for $2,000. 
D) Debit a shareholders' equity account for $2,000.

Question 17

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following correctly identifies the normal balances of accounts?

Accepted Answer

The answer of Which of the following correctly identifies the...

Question 19

A credit to a liability account

Accepted Answer

A) indicates an increase in the amount owed to creditors. 
B) indicates a decrease in the amount owed to creditors. 
C) will always increase shareholders' equity. 
D) must be accompanied by a debit to an asset account. 
A) indicates an increase in the amount owed to creditors. 
B) indicates a decrease in the amount owed to creditors. 
C) will always increase shareholders' equity. 
D) must be accompanied by a debit to an asset account.

Question 20

The name given to entering transaction data in the journal is

Accepted Answer

A) transacting. 
B) listing. 
C) posting. 
D) journalizing. 
A) transacting. 
B) listing. 
C) posting. 
D) journalizing.

Recording revenue

An investment by the shareholders in a company increases

The recording process occurs

A trial balance will not balance when

A company that receives money in advance of performing a service

A paid dividend

The chart of accounts is the framework for the accounting database.

Accounting systems should record

An expense account is a subdivision of the retained earnings account and decreases shareholders' equity.

A trial balance is prepared

If a company has overdrawn its bank balance, then

An accounting report that lists all assets, liabilities, and shareholders' equity accounts and their balances at a specific date is called a

For the basic accounting equation to stay in balance, each transaction recorded must

Which of the following is an asset?

When a liability decreases:

An accountant has debited an asset account for $2,000 and credited an expense account for $4,000.Which of the following would be the correct way to complete the recording of the transaction?

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Which of the following correctly identifies the normal balances of accounts?

A credit to a liability account

The name given to entering transaction data in the journal is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 3: The Accounting Information System

Recording revenue

An investment by the shareholders in a company increases

The recording process occurs

A trial balance will not balance when

A company that receives money in advance of performing a service

A paid dividend

The chart of accounts is the framework for the accounting database.

Accounting systems should record

An expense account is a subdivision of the retained earnings account and decreases shareholders' equity.

A trial balance is prepared

If a company has overdrawn its bank balance, then

An accounting report that lists all assets, liabilities, and shareholders' equity accounts and their balances at a specific date is called a

For the basic accounting equation to stay in balance, each transaction recorded must

Which of the following is an asset?

When a liability decreases:

An accountant has debited an asset account for $2,000 and credited an expense account for $4,000.Which of the following would be the correct way to complete the recording of the transaction?

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Which of the following correctly identifies the normal balances of accounts?

A credit to a liability account

The name given to entering transaction data in the journal is

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters