Multiple Choice Identify the
choice that best completes the statement or answers the question.
|
|
1.
|
The entry to journalize payment to replenish a petty cash fund is ____.
a. | debit Cash; credit Petty Cash | b. | debit the appropriate expense and other
accounts; credit Petty Cash | c. | debit Petty Cash; credit
Cash | d. | debit the appropriate expense and other accounts; credit
Cash |
|
|
2.
|
Each account in a subsidiary ledger has ____.
a. | three amount columns | c. | four amount columns | b. | two amount columns | d. | none of the
above |
|
|
3.
|
A business expecting to make money and continue in business indefinitely is
applying the accounting concept ____.
a. | Business Entity | c. | Going Concern | b. | Historical Cost | d. | Objective
Evidence |
|
|
4.
|
The amount of sales tax a business collects is ____.
a. | an expense. | c. | revenue | b. | an asset | d. | a liability |
|
|
5.
|
Supplies bought for use in a business are recorded in the ____.
a. | supplies account | c. | cash account | b. | purchases account | d. | supplies expense
account |
|
|
6.
|
Using a cash register tape as a source document for weekly cash and credit card
sales is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Objective
Evidence | b. | Realization of Revenue | d. | Business Entity |
|
|
7.
|
A listing of customer accounts, account balances, and total amount due from all
customers is a ____.
a. | subsidiary ledger | c. | schedule of accounts receivable | b. | controlling
list | d. | schedule of accounts
payable |
|
|
8.
|
The journal entry for a cash and credit card sales transaction is ____.
a. | debit Sales; credit Cash; credit Sales Tax Payable | b. | debit Sales Tax
Payable; debit Cash; credit Sales | c. | debit Cash; credit Sales; credit Sales Tax
Payable | d. | debit Cash; debit Sales Tax Payable; credit Sales |
|
|
9.
|
Special amount columns are used for transactions that occur ____.
a. | once during the fiscal year | c. | infrequently | b. | once every
month | d. | frequently |
|
|
10.
|
A form prepared by the customer showing the price deduction taken by the
customer for returns and allowances is a ____.
a. | purchase invoice | c. | purchases allowance | b. | memorandum | d. | debit
memorandum |
|
|
11.
|
A subsidiary ledger containing only accounts for vendors from whom items are
purchased or bought on account is ____.
a. | an accounts receivable ledger | c. | an accounts payable
ledger | b. | a general ledger | d. | none of the above |
|
|
12.
|
When a customer account balance is changed, ____.
a. | all vendor numbers will change | b. | the total of all account balances will be less
than the balance of the controlling account | c. | the balance of the controlling account Accounts
Receivable is also changed | d. | none of the
above |
|
|
13.
|
The total amount of the purchases journal is posted to the general ledger
account(s) ____.
a. | Purchases | c. | Accounts Payable | b. | Purchases and Accounts
Payable | d. | none of the
above |
|
|
14.
|
The entry to journalize buying supplies for cash is ____.
a. | debit Purchases; credit Supplies | b. | debit Supplies; credit Cash | c. | debit Accounts
Payable; credit Supplies | d. | debit Purchases; credit
Cash |
|
|
15.
|
When a business pays for insurance, Prepaid Insurance is ____.
a. | decreased by a credit | c. | decreased by a debit | b. | increased by a credit | d. | increased by a
debit |
|
|
16.
|
The amount on each line of a purchases journal is posted as a ____.
a. | credit to an account in the accounts payable ledger | b. | credit to an account
in the accounts receivable ledger | c. | debit to an account in the accounts payable
ledger | d. | debit to an account in the accounts receivable ledger |
|
|
17.
|
A schedule of accounts receivable is prepared ____.
a. | before all current entries are posted | b. | before the special column totals are
posted | c. | at the beginning of the month | d. | after all current entries are
posted |
|
|
18.
|
Using a sales invoice as a source document for recording a sale on account is an
application of the accounting concept ____.
a. | Business Entity | c. | Matching Expenses with Revenue | b. | Realization of
Revenue | d. | Objective
Evidence |
|
|
19.
|
The special amount column totals of the cash receipts journal are ____.
a. | posted often | b. | posted to the general ledger controlling
account at the end of each month | c. | not posted | d. | posted monthly to a
customer account |
|
|
20.
|
The total amount due from all charge customers is summarized in a general ledger
account titled ____.
a. | Revenue | c. | Accounts Receivable | b. | Sales | d. | Accounts
Payable |
|
|
21.
|
To indicate that column totals are not to be posted, ____.
a. | a check mark is placed in the Post. Ref. column of the journal on the total
line | b. | a check mark is placed in parentheses under the total | c. | an account number is
placed in the Post. Ref. column of the journal | d. | nothing is placed under the
total |
|
|
22.
|
When a business receives revenue, Sales is ____.
a. | decreased by a debit | c. | increased by a credit | b. | increased by a
debit | d. | decreased by a
credit |
|
|
23.
|
Prepaid Insurance is ____.
a. | an owner's equity account | c. | an asset
account | b. | a liability account | d. | none of the above |
|
|
24.
|
A transaction that increases cash and decreases owner's equity is
____.
a. | expense | c. | revenue | b. | withdrawal | d. | none of the
above |
|
|
25.
|
The asset most commonly withdrawn by business owners is ____.
a. | cash | c. | supplies | b. | contributions | d. | insurance |
|
|
26.
|
The total of the schedule of accounts receivable should equal ____.
a. | the cash account | b. | the accounts receivable account balance in the
general ledger | c. | the debit and credit proof | d. | none of the
above |
|
|
27.
|
Sales invoices should be ____.
a. | used as source documents for sales on account | b. | numbered in
sequence | c. | all of these | d. | prepared in
triplicate |
|
|
28.
|
When a credit is posted to the accounts receivable ledger, ____.
a. | the source document number and page number of the journal are written in the Post.
Ref. column of the account | b. | Balance is written in the Item
column | c. | the new amount posted in the Credit column is subtracted from the previous
balance | d. | the credit amount is written in the Debit column of the
account |
|
|
29.
|
A deduction that a vendor allows on the invoice amount to encourage prompt
payment is called ____.
a. | a trade discount | c. | terms of sale | b. | a markup | d. | a cash discount |
|
|
30.
|
Recording the actual amount paid for merchandise or other items bought is an
application of the accounting concept ____.
a. | Objective Evidence | c. | Business Entity | b. | Historical Cost | d. | Going Concern |
|
|
31.
|
An account in a general ledger that summarizes all accounts in a subsidiary
ledger is ____.
a. | a controlling account | c. | a capital account | b. | a contra account | d. | an expense
account |
|
|
32.
|
The amount of sales tax on a sale is calculated as price of goods ____.
a. | plus the sales tax rate | c. | divided by the sales tax
rate | b. | times the sales tax rate | d. | minus the sales tax rate |
|
|
33.
|
A sale on account transaction ____.
a. | decreases the balance of the Accounts Receivable account | b. | increases the amount
to be collected later from a customer | c. | decreases the amount to be collected later from
a customer | d. | increases the balance of the Accounts Payable account |
|
|
34.
|
The retail price listed in a catalog or on an Internet site is called the
____.
a. | markup | c. | list price | b. | full price | d. | trade discount |
|
|
35.
|
The price a business pays for goods it purchases to sell is ____.
a. | markup | c. | cost of goods sold | b. | cost of sales | d. | cost of
merchandise |
|
|
36.
|
The amount paid for rent is recorded as a debit to ____.
a. | Supplies | c. | Cash | b. | Miscellaneous Expense | d. | Rent Expense |
|
|
37.
|
If a customer buys $300.00 worth of merchandise and the sales tax is 8%, the
total bill the customer must pay is ____.
a. | $324.00 | c. | $300.00 | b. | $304.00 | d. | $342.00 |
|
|
38.
|
The amount of sales tax collected is recorded in a ____.
a. | separate revenue account | c. | separate ledger | b. | combined revenue
account | d. | separate liability
account |
|
|
39.
|
When a business pays cash for supplies, ____.
a. | liabilities increase | c. | assets and liabilities decrease | b. | assets and
liabilities increase | d. | assets
increase and assets decrease |
|
|
40.
|
The account used to summarize the owner's equity in a business is
____.
a. | owner's equity | c. | equity | b. | a liability | d. | capital |
|
|
41.
|
Total assets are $19,500.00. Cash is paid for $1,500.00 of supplies. The total
assets are now ____.
a. | $22,500.00 | c. | $19,500.00 | b. | $18,000.00 | d. | $21,000.00 |
|
|
42.
|
To open a new customer account, ____.
a. | the customer name is obtained from the first invoice prepared | b. | the customer number
is assigned | c. | the customer name and number are written on the account form | d. | all of the
above |
|
|
43.
|
When merchandise is sold on account and sales tax is also collected,
____.
a. | the accounts receivable account balance is increased | b. | Accounts Receivable
is credited for the total sale and sales tax | c. | Sales is debited for the price of the
goods | d. | the sales tax is not reported |
|
|
44.
|
The amount added to the cost of merchandise to establish the selling price is
known as the ____.
a. | list price | c. | cash discount | b. | trade discount | d. | markup |
|
|
45.
|
Daily general ledger account balances are ____.
a. | needed if the dollar amounts are large | b. | usually not necessary | c. | posted to the
accounts receivable ledger daily | d. | necessary to do monthly financial
statements |
|
|
46.
|
What is the formula for calculating the invoice amount?
a. | Total List Price ¸ Trade Discount = Invoice
Amount | b. | Total List Price - Trade Discount = Invoice
Amount | c. | Total List Price ´ Trade Discount = Invoice
Amount | d. | Total List Price + Trade Discount = Invoice Amount |
|
|
47.
|
An increase in revenue resulting from a sale on account should be recorded
____.
a. | at the end of the fiscal period | c. | at the end of each
month | b. | when the final payment is made | d. | at the time of the
sale |
|
|
48.
|
When a debit is posted to the accounts payable ledger, ____.
a. | the cash account increases | b. | the debit amount is written in the Debit column
of the account | c. | the controlling account is increased by the entry | d. | all of the
above |
|
|
49.
|
If cash is increased by $2,000.00 when the owner invests cash in the business,
then capital is ____.
a. | not changed | c. | increased by $1,000.00 | b. | increased by
$2,000.00 | d. | decreased by
$2,000.00 |
|
|
50.
|
Cash is increased by ____.
a. | withdrawals | c. | expenses | b. | revenue | d. | none of the
above |
|
|
51.
|
In a cash sales transaction with sales tax, the ____.
a. | sales tax amount collected is a liability | b. | sales tax amount
collected is an asset | c. | balance of the sales account is
decreased | d. | balance of the cash account is decreased |
|
|
52.
|
When posting the Accounts Receivable Credit column total of the cash receipts
journal, return to the journal and write ____.
a. | the account number under the column total in parentheses | b. | the account number
in the Post. Ref. column | c. | a check mark under the column
total | d. | none of the above |
|
|
53.
|
A liability account that summarizes the amounts owed to all vendors is titled
____.
a. | Accounts Receivable | c. | Accounts Payable | b. | Purchases | d. | Sales |
|
|
54.
|
A business that buys and resells merchandise to retail merchandising businesses
is known as a ____.
a. | wholesale merchandising business | c. | partnership | b. | corporation | d. | vendor |
|
|
55.
|
The journal entry for a cash receipt on account is ____.
a. | debit Cash; credit Accounts Payable | b. | debit Accounts Payable; credit
Cash | c. | debit Cash; credit Accounts Receivable | d. | debit Accounts Payable; credit Accounts
Receivable |
|
|
56.
|
The amount added to the cost of merchandise to establish the selling price is
____.
a. | cost of sales | c. | cost of merchandise | b. | markup | d. | cost of goods
sold |
|
|
57.
|
The source document for recording a purchase on account transaction is a
____.
a. | purchase invoice | c. | check | b. | sales invoice | d. | memorandum |
|
|
58.
|
A cash payments journal is used to journalize ____.
a. | adjusting entries | c. | only cash payment transactions | b. | all cash
transactions | d. | closing
entries |
|
|
59.
|
In a T account, the debit side is ____.
a. | the right side | c. | both A and B | b. | the left side | d. | neither A nor B |
|
|
60.
|
The ledger that contains all accounts needed to prepare financial statements is
the ____.
a. | accounts receivable ledger | c. | accounts payable
ledger | b. | general ledger | d. | subsidiary ledger |
|
|
61.
|
A general ledger sorts and summarizes all information affecting ____.
a. | accounts receivable accounts | b. | income statement and balance sheet
accounts | c. | accounts payable accounts | d. | none of the
above |
|
|
62.
|
The entry to journalize a purchase of merchandise on account is ____.
a. | debit Accounts Payable; credit Merchandise | b. | debit Purchases;
credit Merchandise | c. | debit Purchases; credit Accounts
Payable | d. | debit Accounts Payable; credit Purchases |
|
|
63.
|
When cash is received on account, the balance of the ____.
a. | cash account decreases | b. | sales account increases | c. | sales tax payable
account decreases | d. | accounts receivable account
decreases |
|
|
64.
|
The values of all things owned (assets) are on the accounting equation's
____.
a. | credit side | c. | left side | b. | right side | d. | none of the
above |
|
|
65.
|
A vendor number is written in the Post. Ref. column of the journal as the last
posting step to ____.
a. | show that posting of this line to the accounts payable ledger is
complete | b. | start a new journal page | c. | identify the vendor | d. | show the general
ledger account to which the total was posted |
|
|
66.
|
The purchases account is classified as ____.
a. | an expense account | c. | a liability account | b. | an asset account | d. | a cost account |
|
|
67.
|
An agreement between a buyer and a seller about payment for merchandise is the
____.
a. | correcting entry | c. | sales invoice | b. | terms of sale | d. | purchase
invoice |
|
|
68.
|
Each entry in the purchases journal is an amount that ____.
a. | has been paid to a vendor | c. | is to be collected from a
customer | b. | is to be paid to a vendor | d. | none of the above |
|
|
69.
|
Information to be recorded in the accounts payable ledger is ____.
a. | a debit or credit amount | b. | the date and posting reference
information | c. | the new account balance | d. | all of the
above |
|
|
70.
|
When cash is decreased and supplies are increased by an equal amount,
____.
a. | there is an increase in owner's equity | c. | there is a decrease in
liabilities | b. | liabilities and capital are not changed | d. | there is an increase in
liabilities |
|
|
71.
|
The right side of a T account is the ____.
a. | normal balance side | c. | debit side | b. | credit side | d. | equity side |
|
|
72.
|
The amount remaining after the value of all liabilities is subtracted from the
value of all assets is ____.
a. | a financial report | c. | a transaction | b. | owner's equity | d. | the fair market value of the
business |
|
|
73.
|
The normal balance side of an asset account is the ____.
a. | debit side | c. | credit side | b. | right side | d. | decrease side |
|
|
74.
|
A special journal used to record only sales on account is ____.
a. | a cash receipts journal | c. | a purchases
journal | b. | a cash journal | d. | none of the above |
|
|
75.
|
A transaction that increases accounts receivable and increases owner's
equity is ____.
a. | expense | c. | withdrawal | b. | revenue | d. | none of the
above |
|
|
76.
|
A form prepared by the vendor showing the amount deducted for returns and
allowances is called a ____.
a. | sales invoice | c. | credit memorandum | b. | cash receipt | d. | purchase
invoice |
|
|
77.
|
When opening a new page in an accounts receivable ledger, ____.
a. | a number is written in the Post. Ref. column | b. | the Item column is
left blank | c. | Balance is written in the Item column | d. | none of the
above |
|
|
78.
|
A special journal used to record only cash receipt transactions is ____.
a. | a purchases journal | c. | a cash journal | b. | a cash receipts journal | d. | none of the
above |
|
|
79.
|
The accounting equation is most often stated as ____.
a. | Assets = Liabilities + Owner's Equity | c. | Cash = Assets | b. | Assets =
Liabilities | d. | Liabilities +
Assets = Owner's Equity |
|
|
80.
|
A form describing goods sold, the quantity, and the price is ____.
a. | a receipt | c. | a check | b. | a memorandum | d. | an invoice |
|
|
81.
|
A journal used to record only one kind of transaction ____.
a. | is a special journal | b. | is a general journal | c. | must be used by all
businesses | d. | increases the time required to journalize
transactions |
|
|
82.
|
A journal amount column headed with an account title is a ____.
a. | general debit column | c. | special amount column | b. | general credit
column | d. | general amount
column |
|
|
83.
|
Each entry in the purchases journal is ____.
a. | posted at the end of a month | c. | posted often | b. | posted
daily | d. | none of the
above |
|
|
84.
|
Writing an account title in the Account Title column of a journal is not
necessary if the journal has ____.
a. | a Cash Debit column | c. | a Source Doc. column | b. | a Post. Ref. column | d. | special amount
columns |
|
|
85.
|
A ledger that is summarized in a single general ledger account is a ____.
a. | ledger | c. | controlling ledger | b. | secondary ledger | d. | subsidiary
ledger |
|
|
86.
|
A sale in which cash is received for the total amount of the sale at the time of
the transaction is a ____.
a. | deferred-payment sale | c. | cash sale | b. | credit card sale | d. | convenience
sale |
|
|
87.
|
Recording revenue from transactions at the time goods or services are sold is an
application of the accounting concept ____.
a. | Objective Evidence | c. | Business Entity | b. | Realization of Revenue | d. | Matching Expenses with
Revenue |
|
|
88.
|
The totals of the General columns of the cash payments journal are posted to
____.
a. | the accounts payable ledger | c. | the accounts receivable
ledger | b. | the general ledger | d. | none of the above |
|
|
89.
|
A purchases journal is used to journalize ____.
a. | adjusting entries | b. | all transactions | c. | all purchase of
merchandise on account transactions | d. | all purchase
transactions |
|
|
90.
|
A decrease in owner's equity resulting from the operation of a business is
____.
a. | a withdrawal | c. | revenue | b. | an expense | d. | none of the
above |
|