Question 1

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances.

Accepted Answer

A) True 
 B)False

Question 2

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Accepted Answer

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

Question 3

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 4

All of the following are asset accounts except:

Accepted Answer

A) Accounts Receivable. 
B) Buildings. 
C) Supplies expense. 
D) Equipment. 
E) Prepaid insurance. 
A) Accounts Receivable. 
B) Buildings. 
C) Supplies expense. 
D) Equipment. 
E) Prepaid insurance.

Question 5

The following accounts appear on either the Income Statement (IS) or Balance Sheet (BS). In the space to the left of each account, write the letters, IS or BS to identify the statement on which the account appears.
____ 1. Office Equipment
____ 2. Rent Expense
____ 3. Unearned Fees Revenues
____ 4. Rent Expense
____ 5. Accounts Payable
____ 6. Common Stock
____ 7. Fees Revenue
____ 8. Cash
____ 9. Notes Receivable
____ 10. Wages Payable

Accepted Answer

1. BS; 2. IS; 3. BS;

Question 6

A customer's promise to pay on credit is classified as an account payable by the seller.

Accepted Answer

A) True 
 B)False

Question 7

The numbering system used in a company's chart of accounts:

Accepted Answer

A) Is the same for all companies. 
B) Is determined by generally accepted accounting principles. 
C) Depends on the source documents used in the accounting process. 
D) Typically begins with balance sheet accounts. 
E) Typically begins with income statement accounts. 
A) Is the same for all companies. 
B) Is determined by generally accepted accounting principles. 
C) Depends on the source documents used in the accounting process. 
D) Typically begins with balance sheet accounts. 
E) Typically begins with income statement accounts.

Question 8

On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was:

Accepted Answer

A) A decrease of $9,500. 
B) An increase of $9,500. 
C) An increase of $30,500. 
D) A decrease of $30,500. 
E) An increase of $73,500. 
A) A decrease of $9,500. 
B) An increase of $9,500. 
C) An increase of $30,500. 
D) A decrease of $30,500. 
E) An increase of $73,500.

Question 9

Debit means increase and credit means decrease for all accounts.

Accepted Answer

A) True 
 B)False

Question 10

Indicate whether a debit or credit entry would be required to record the following changes in each account.
a. To decrease Cash.
b. To increase Common Stock.
c. To decrease Accounts Payable.
d. To increase Salaries Expense.
e. To decrease Supplies.
f. To increase Revenue.
g. To decrease Accounts Receivable.
h. To increase Dividends.

Accepted Answer

a. Credit, b. Credit

Question 11

Identify the statement that is incorrect.

Accepted Answer

A) Higher financial leverage involves higher risk. 
B) Risk is higher if a company has more liabilities. 
C) Risk is higher if a company has higher assets. 
D) The debt ratio is one measure of financial risk. 
E) Lower financial leverage involves lower risk. 
A) Higher financial leverage involves higher risk. 
B) Risk is higher if a company has more liabilities. 
C) Risk is higher if a company has higher assets. 
D) The debt ratio is one measure of financial risk. 
E) Lower financial leverage involves lower risk.

Question 12

A business's source documents may include all of the following except:

Accepted Answer

A) Sales tickets. 
B) Ledgers. 
C) Checks. 
D) Purchase orders. 
E) Bank statements. 
A) Sales tickets. 
B) Ledgers. 
C) Checks. 
D) Purchase orders. 
E) Bank statements.

Question 13

Masterworks purchased $17,000 of Equipment by signing a promissory note. The correct journal entry to record this transaction is:

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 14

Describe what source documents are and the purpose they serve in a business.

Accepted Answer

Source documents are the proof that tran

Question 15

A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

Accepted Answer

A) True 
 B)False

Question 16

Identify the statement below that is correct.

Accepted Answer

A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable. 
A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable.

Question 17

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

Accepted Answer

A) A debit to an unearned revenue account. 
B) A debit to a prepaid expense account. 
C) A credit to an unearned revenue account. 
D) A credit to a prepaid expense account. 
E) No entry is required at the time of collection. 
A) A debit to an unearned revenue account. 
B) A debit to a prepaid expense account. 
C) A credit to an unearned revenue account. 
D) A credit to a prepaid expense account. 
E) No entry is required at the time of collection.

Question 18

Blade, Inc. has the following account balances at Dec 31 of the current year. What is the correct missing balance for Retained Earnings?

Accepted Answer

A) $16,900 credit. 
B) $16,900 debit. 
C) $5,500 debit. 
D) $3,000 credit. 
E) $3,000 debit. 
A) $16,900 credit. 
B) $16,900 debit. 
C) $5,500 debit. 
D) $3,000 credit. 
E) $3,000 debit.

Question 19

The debt ratio is calculated by dividing total assets by total liabilities.

Accepted Answer

A) True 
 B)False

Question 20

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.

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances.

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

All of the following are asset accounts except:

A customer's promise to pay on credit is classified as an account payable by the seller.

The numbering system used in a company's chart of accounts:

Debit means increase and credit means decrease for all accounts.

Identify the statement that is incorrect.

A business's source documents may include all of the following except:

Masterworks purchased $17,000 of Equipment by signing a promissory note. The correct journal entry to record this transaction is:

Describe what source documents are and the purpose they serve in a business.

A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

Identify the statement below that is correct.

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

Blade, Inc. has the following account balances at Dec 31 of the current year. What is the correct missing balance for Retained Earnings?

The debt ratio is calculated by dividing total assets by total liabilities.

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

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

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 and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 2: Accounting System and Financial Statements

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances.

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

All of the following are asset accounts except:

A customer's promise to pay on credit is classified as an account payable by the seller.

The numbering system used in a company's chart of accounts:

Debit means increase and credit means decrease for all accounts.

Identify the statement that is incorrect.

A business's source documents may include all of the following except:

Masterworks purchased $17,000 of Equipment by signing a promissory note. The correct journal entry to record this transaction is:

Describe what source documents are and the purpose they serve in a business.

A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

Identify the statement below that is correct.

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

Blade, Inc. has the following account balances at Dec 31 of the current year. What is the correct missing balance for Retained Earnings?

The debt ratio is calculated by dividing total assets by total liabilities.

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

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

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 and International Operations

Reporting and Analyzing Partnerships

Filters