Question 1

A credit to a ledger account refers to the entry of an amount on the right side of an account.

Accepted Answer

A) True 
 B)False

Question 2

A trial balance that balances provides proof that all transactions were correctly journalized and posted to the ledger.

Accepted Answer

A) True 
 B)False

Question 3

Collection of an accounts receivable:

Accepted Answer

A)  Increases the total assets of a company. 
B)  Decreases the total assets of a company. 
C)  Does not change the total assets of a company. 
D)  Reduces a company's total liabilities. 
A)  Increases the total assets of a company. 
B)  Decreases the total assets of a company. 
C)  Does not change the total assets of a company. 
D)  Reduces a company's total liabilities.

Question 4

The balance in the Cash account at the end of June:

Accepted Answer

A)  $52,000. 
B)  $350,000. 
C)  $420,000. 
D)  $380,000. 
A)  $52,000. 
B)  $350,000. 
C)  $420,000. 
D)  $380,000.

Question 5

On June 6, the bookkeeper for Creative Band, Inc makes this entry: This transaction:

Accepted Answer

A)  Decreases total assets. 
B)  Involves the sale of equipment for $7,400. 
C)  Increases total assets $7,400. 
D)  Increases liabilities. 
A)  Decreases total assets. 
B)  Involves the sale of equipment for $7,400. 
C)  Increases total assets $7,400. 
D)  Increases liabilities.

Question 6

Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this, she is following the accounting principle of:

Accepted Answer

A)  Revenue realization. 
B)  Adequate disclosure. 
C)  Matching. 
D)  Conservatism. 
A)  Revenue realization. 
B)  Adequate disclosure. 
C)  Matching. 
D)  Conservatism.

Question 7

What are total assets of Precision Manufacturing at the end of June?

Accepted Answer

A)  $710,000. 
B)  $890,000. 
C)  $630,000. 
D)  $460,000. 
A)  $710,000. 
B)  $890,000. 
C)  $630,000. 
D)  $460,000.

Question 8

The essential point of a double-entry system of accounting is that every transaction:

Accepted Answer

A)  Affects accounts on both sides of the balance sheet. 
B)  Is recorded in both the journal and the ledger. 
C)  Increases one ledger account and decreases another. 
D)  Affects two or more ledger accounts and is recorded by an equal dollar amount of debits and credits. 
A)  Affects accounts on both sides of the balance sheet. 
B)  Is recorded in both the journal and the ledger. 
C)  Increases one ledger account and decreases another. 
D)  Affects two or more ledger accounts and is recorded by an equal dollar amount of debits and credits.

Question 9

A journal entry which records revenue must include:

Accepted Answer

A)  A debit to Cash. 
B)  A credit to a revenue account. 
C)  A credit to the owners' equity account. 
D)  A debit to the owners' equity account. 
A)  A debit to Cash. 
B)  A credit to a revenue account. 
C)  A credit to the owners' equity account. 
D)  A debit to the owners' equity account.

Question 10

If the trial balance has a higher debit balance than credit balance, it signifies:

Accepted Answer

A)  Assets are more than liabilities. 
B)  A profit. 
C)  A loss. 
D)  An error has been made. 
A)  Assets are more than liabilities. 
B)  A profit. 
C)  A loss. 
D)  An error has been made.

Question 11

Indicate all of the following statements that correctly describe net income. Net income:

Accepted Answer

A)  Is equal to revenue minus expenses. 
B)  Is equal to revenue minus the sum of expenses and dividends. 
C)  Increases owners' equity. 
D)  Is reported by a company for a period of time. 
A)  Is equal to revenue minus expenses. 
B)  Is equal to revenue minus the sum of expenses and dividends. 
C)  Increases owners' equity. 
D)  Is reported by a company for a period of time.

Question 12

What is the balance in the Cash account at the end of May?

Accepted Answer

A)  $210,000. 
B)  $390,000. 
C)  $600,000. 
D)  $810,000. 
A)  $210,000. 
B)  $390,000. 
C)  $600,000. 
D)  $810,000.

Question 13

Sue Costa, owner of A-1 Cleaning Services, invested an additional $75,000 in the company. Which of the following would be a part of the correct journal entry to record this transaction?

Accepted Answer

A)  A debit to the Cash account. 
B)  A debit to the Equity account. 
C)  A debit to the Capital Stock account. 
D)  A debit to the Cash Received account. 
A)  A debit to the Cash account. 
B)  A debit to the Equity account. 
C)  A debit to the Capital Stock account. 
D)  A debit to the Cash Received account.

Question 14

A trial balance consists of:

Accepted Answer

A)  A two-column schedule of all debit and credit entries posted to ledger accounts. 
B)  A two-column financial statement intended for distribution to interested parties outside the business. 
C)  A two-column schedule showing the totals of all debits and of all credits made in journal entries. 
D)  A two-column schedule listing names and balances of all ledger accounts. 
A)  A two-column schedule of all debit and credit entries posted to ledger accounts. 
B)  A two-column financial statement intended for distribution to interested parties outside the business. 
C)  A two-column schedule showing the totals of all debits and of all credits made in journal entries. 
D)  A two-column schedule listing names and balances of all ledger accounts.

Question 15

In a trial balance prepared for Wilson Trucking on January 5, 2012, the total of the debit column is:

Accepted Answer

A)  $1,580,000. 
B)  $1,399,000. 
C)  $1,620,000. 
D)  $3,120,000. 
A)  $1,580,000. 
B)  $1,399,000. 
C)  $1,620,000. 
D)  $3,120,000.

Question 16

The term revenue can best be described as:

Accepted Answer

A)  The selling price of goods and services rendered to customers during a given accounting period. 
B)  The cash received from selling goods and serving customers during a given accounting period. 
C)  The net increase in owners' equity during a given period. 
D)  The "bottom line" in the income statement. 
A)  The selling price of goods and services rendered to customers during a given accounting period. 
B)  The cash received from selling goods and serving customers during a given accounting period. 
C)  The net increase in owners' equity during a given period. 
D)  The "bottom line" in the income statement.

Question 17

Davis, Inc., a music group, entertained at a black-tie dinner dance on April 26, and collected the fee in full at the end of the evening. This transaction:

Accepted Answer

A)  Causes an increase in assets and revenue, as well as an increase in owners' equity. 
B)  Is recorded by debiting Cash and crediting the Retained Earnings account. 
C)  Causes an increase in assets and a decrease in owners' equity. 
D)  Violates the matching principle unless any expenses associated with this cash receipt are paid prior to recording the revenue. 
A)  Causes an increase in assets and revenue, as well as an increase in owners' equity. 
B)  Is recorded by debiting Cash and crediting the Retained Earnings account. 
C)  Causes an increase in assets and a decrease in owners' equity. 
D)  Violates the matching principle unless any expenses associated with this cash receipt are paid prior to recording the revenue.

Question 18

Which of the following is not considered an analytical aspect of the accounting profession?

Accepted Answer

A)  Evaluating an organization's operational efficiency. 
B)  Forecasting the probable results of future operations. 
C)  Designing systems that provide information to decision makers. 
D)  Journalizing and posting business transactions. 
A)  Evaluating an organization's operational efficiency. 
B)  Forecasting the probable results of future operations. 
C)  Designing systems that provide information to decision makers. 
D)  Journalizing and posting business transactions.

Question 19

Which of the following is not true regarding the general ledger account for Cash?

Accepted Answer

A)  The balance of the account indicates the amount of cash owned by the business on a particular date. 
B)  Each debit entry in the Cash account represents a cash receipt. 
C)  Debit entries are made before credit entries. 
D)  Credit entries in the Cash account represent cash payments. 
A)  The balance of the account indicates the amount of cash owned by the business on a particular date. 
B)  Each debit entry in the Cash account represents a cash receipt. 
C)  Debit entries are made before credit entries. 
D)  Credit entries in the Cash account represent cash payments.

Question 20

In a trial balance prepared for Ceramic Products on January 1, 2009, the total of the credit column is:

Accepted Answer

A)  $182,000. 
B)  $196000. 
C)  $166,000. 
D)  $286,000. 
A)  $182,000. 
B)  $196000. 
C)  $166,000. 
D)  $286,000.

Exam 3: The Accounting Cycle: Capturing Economic Events

A credit to a ledger account refers to the entry of an amount on the right side of an account.

A trial balance that balances provides proof that all transactions were correctly journalized and posted to the ledger.

Collection of an accounts receivable:

The balance in the Cash account at the end of June:

On June 6, the bookkeeper for Creative Band, Inc makes this entry: This transaction:

Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this, she is following the accounting principle of:

What are total assets of Precision Manufacturing at the end of June?

The essential point of a double-entry system of accounting is that every transaction:

A journal entry which records revenue must include:

If the trial balance has a higher debit balance than credit balance, it signifies:

Indicate all of the following statements that correctly describe net income. Net income:

What is the balance in the Cash account at the end of May?

Sue Costa, owner of A-1 Cleaning Services, invested an additional $75,000 in the company. Which of the following would be a part of the correct journal entry to record this transaction?

A trial balance consists of:

In a trial balance prepared for Wilson Trucking on January 5, 2012, the total of the debit column is:

The term revenue can best be described as:

Davis, Inc., a music group, entertained at a black-tie dinner dance on April 26, and collected the fee in full at the end of the evening. This transaction:

Which of the following is not considered an analytical aspect of the accounting profession?

Which of the following is not true regarding the general ledger account for Cash?

In a trial balance prepared for Ceramic Products on January 1, 2009, the total of the credit column is:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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