Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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The normal balance side of any revenue account is ____.
a. | the debit side | c. | the left side | b. | the credit side | d. | none of the
above |
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2.
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Total assets are $22,000.00. Supplies are bought on account for $1,500.00. The
total assets are now ____.
a. | $22,000.00 | c. | $20,500.00 | b. | $23,500.00 | d. | $25,000.00 |
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3.
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The last step in the posting procedure is writing ____.
a. | the entry date in the Date column of the account | b. | the journal page
number in the Post. Ref. column of the account | c. | the entry amount in the Debit or Credit column
of the account | d. | none of the above |
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4.
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When cash is paid for insurance, ____.
a. | the Prepaid Insurance account is decreased | b. | the Prepaid
Insurance account is credited | c. | the balance of the Prepaid Insurance account is
increased | d. | none of the above |
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5.
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Information needed to prepare an income statement's expense section is
obtained from a work sheet's Account Title column and ____.
a. | Income Statement Debit column | c. | Balance Sheet Debit
column | b. | Income Statement Credit column | d. | Balance Sheet Credit
column |
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6.
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If any kind of error is made in preparing a check, ____.
a. | a new check should be prepared | b. | VOID should be written on the check
stub | c. | VOID should be written on the check | d. | all of the
above |
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7.
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Temporary accounts begin each new fiscal period with a ____.
a. | debit balance | c. | zero balance | b. | credit balance | d. | balance equal to the net
income |
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8.
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Information needed for recording the closing entries is obtained from the
____.
a. | general ledger accounts' Debit Balance columns | b. | work sheet's
Income Statement and Balance Sheet columns | c. | balance sheet | d. | income
statement |
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9.
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Which accounting concept applies when expenses are reported in the same fiscal
period that they are used to produce revenue?
a. | Business Entity | c. | Matching Expenses with Revenue | b. | Going
Concern | d. | Adequate
Disclosure |
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10.
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When total revenue is greater than total expenses, the difference is a
____.
a. | net income | c. | debit balance | b. | net loss | d. | none of the
above |
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11.
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A business has the following expense accounts: 510, Advertising Expense; 520,
Miscellaneous Expense; 530, Repair Expense. A new account titled Utilities Expense is added. The
account number for this new account is ____.
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12.
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The journal entry to close Sales is ____.
a. | debit Income Summary; credit Sales | b. | debit Sales; credit Income
Summary | c. | debit Income Summary; credit owner's capital | d. | none of the
above |
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13.
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If an error is recorded in a journal entry, ____.
a. | cancel the error by drawing a neat line through the error | b. | correct the entry by
writing the correct item above the canceled error | c. | do not erase the incorrect
item | d. | all of the above |
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14.
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At the end of a month, if the amount of cash is the same as the balance shown on
the next check stub, ____.
a. | the journal is proved | c. | debits equal credits | b. | cash is proved | d. | none of the
above |
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15.
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Information needed to prepare a balance sheet liabilities section is obtained
from a work sheet's Account Title column and ____.
a. | Income Statement Debit column | c. | Balance Sheet Debit
column | b. | Income Statement Credit column | d. | Balance Sheet Credit
column |
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16.
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On a work sheet, the balance of Cash is extended to the ____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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17.
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If the Trial Balance columns are not equal and the difference can by divided
evenly by 9, the error most likely is ____.
a. | in transposed numbers or a "slide" | b. | subtraction | c. | addition | d. | in writing an amount
in the wrong column |
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18.
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A signature or stamp on the back of a check transferring ownership is
____.
a. | a signature card | c. | an endorsement | b. | a deposit slip | d. | none of the
above |
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19.
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If posting is interrupted, the accounting personnel know to resume posting
____.
a. | on the line with a blank Post. Ref. column in the journal | b. | at the beginning of
the journal page | c. | the next day | d. | all of the
above |
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20.
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Information needed to journalize a closing entry for revenue is obtained from
the ____.
a. | work sheet's Income Statement Credit column | b. | work sheet's
Income Statement Debit column | c. | work sheet's Adjustments Debit
column | d. | work sheet's Adjustments Credit column |
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21.
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After the adjusting entry for Supplies has been posted, Supplies Expense has an
up-to-date balance, which is the ____.
a. | same as the beginning balance for Supplies | b. | same as the ending
balance for Supplies | c. | value of supplies bought during the fiscal
period | d. | value of supplies used during the fiscal period |
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22.
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If cash is increased by $2,000.00 when the owner invests cash in the business,
then capital is ____.
a. | increased by $2,000.00 | c. | increased by $1,000.00 | b. | decreased by
$2,000.00 | d. | not
changed |
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23.
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The normal balance side of any expense account is ____.
a. | the debit side | c. | the right side | b. | the credit side | d. | none of the
above |
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24.
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Which accounting concept applies when a work sheet is prepared at the end of
each fiscal cycle to summarize the general ledger information needed to prepare financial
statements?
a. | Business Entity | c. | Adequate Disclosure | b. | Accounting Period Cycle | d. | Consistent
Reporting |
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25.
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The accounts listed on a post-closing trial balance are ____.
a. | those that have balances after the closing entries are posted | b. | all general ledger
accounts | c. | those that have no balances after adjusting and closing entries | d. | those that appear in
the work sheet's Trial Balance columns |
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26.
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A single line ruled across the journal's amount columns indicates
____.
a. | the date is the last day of the month | b. | the totals have been verified as
correct | c. | a cash sales transaction is to be recorded | d. | none of the
above |
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27.
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A petty cash fund is always replenished ____.
a. | daily | c. | at the end of the month | b. | weekly | d. | none
of the above |
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28.
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The date on a monthly income statement prepared on July 31 is written as
____.
a. | For Month Ended July 31, 20-- | c. | 20--, July 31 | b. | July 31,
20-- | d. | none of the
above |
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29.
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Adjustments are analyzed and planned ____.
a. | in the ledgers | c. | on a work sheet | b. | on the financial statements | d. | none of the
above |
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30.
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The normal balance side of an owner's capital account is ____.
a. | the debit side | c. | the left side | b. | the credit side | d. | none of the
above |
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31.
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A form showing proof of a petty cash payment is a ____.
a. | check | c. | petty cash check stub | b. | petty cash
slip | d. | journal |
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32.
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The first digit in the account number 120 means that the account is in the ____
division of the general ledger.
a. | expense | c. | liability | b. | revenue | d. | asset |
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33.
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The amount paid for rent is recorded as a debit to ____.
a. | Miscellaneous Expense | c. | Supplies | b. | Rent Expense | d. | Cash |
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34.
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Information needed for closing entries is found in the ____.
a. | Income Statement and Balance Sheet columns of the work sheet | b. | Income Statement and
Adjustments columns of the work sheet | c. | Trial Balance and Adjustments columns of the
work sheet | d. | Trial Balance and Balance Sheet columns of the work
sheet |
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35.
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On a work sheet, the balance of the Sales account is extended to the
____.
a. | Balance Sheet Debit column | c. | Income Statement Debit
column | b. | Balance Sheet Credit column | d. | Income Statement Credit column |
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36.
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A check must be signed with ____.
a. | the same signature as on the signature card | b. | only the first and
last name | c. | a restrictive endorsement | d. | black ink |
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37.
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When $1,500.00 cash is received on account, ____.
a. | Sales is increased with a credit and Cash is increased with a
credit | b. | Accounts Receivable is increased with a debit and Cash is increased with a
credit | c. | Accounts Receivable is decreased with a credit and Cash is increased with a
debit | d. | Accounts Receivable is decreased with a debit and Cash is increased with a
debit |
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38.
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A new account to be added between accounts 530 and 540 will be assigned the
number ____.
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39.
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Changes recorded on a work sheet to update general ledger accounts at the end of
a fiscal period are ____.
a. | found on a trial balance | b. | recorded in a work sheet's Income
Statement columns | c. | reported on financial
statements | d. | adjustments |
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40.
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When the owner withdraws cash, the owner's drawing account is ____.
a. | increased by a debit | c. | decreased by a debit | b. | increased by a credit | d. | decreased by a
credit |
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41.
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Following the same accounting procedures in the same way in each accounting
period is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Consistent
Reporting | b. | Accounting Period Cycle | d. | Going Concern |
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42.
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Information needed to journalize a closing entry for expenses is obtained from
the ____.
a. | work sheet's Income Statement Credit column | b. | work sheet's
Income Statement Debit column | c. | work sheet's Adjustments Debit
column | d. | work sheet's Adjustments Credit column |
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43.
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Assuring that financial statements contain all information necessary to
understand a business's financial condition is an application of the accounting concept
____.
a. | Adequate Disclosure | c. | Objective Evidence | b. | Going Concern | d. | Accounting Period
Cycle |
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44.
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When supplies are bought on account, the account debited is ____.
a. | Cash | c. | Accounts Payable | b. | Supplies | d. | none of the
above |
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45.
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Accounts used to accumulate information until it is transferred to owner's
capital accounts are ____ accounts.
a. | asset | c. | temporary | b. | permanent | d. | liability |
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46.
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The first step in the posting procedure is writing ____.
a. | the entry date in the Date column of the account | b. | the journal page
number in the Post. Ref. column of the account | c. | the entry amount in the Debit or Credit column
of the account | d. | none of the above |
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47.
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A lost check with a blank endorsement on it can be cashed by ____.
a. | anyone who has the check | b. | only the person whose name follows the words
"Pay to the order of" | c. | only the person who endorsed the
check | d. | no one |
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48.
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The journal entry to close the drawing account is ____.
a. | debit Sales; credit Income Summary | b. | debit owner's capital; credit Income
Summary | c. | debit Income Summary; credit owner's capital | d. | debit owner's
capital account; credit owner's drawing account |
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49.
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When the owner invests cash in a business, the owner's capital account is
____.
a. | increased by a debit | c. | decreased by a debit | b. | increased by a credit | d. | decreased by a
credit |
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50.
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When the revenue is greater than the total expenses, ____.
a. | the income summary account has a credit balance | b. | the income summary
account has a debit balance | c. | debits equal credits | d. | none of the
above |
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51.
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If the Trial Balance columns are not equal and the difference is 1, the error
often is ____.
a. | transposed numbers or a "slide" | b. | in writing an amount
in the wrong column | c. | in posting | d. | in
addition |
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52.
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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 |
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53.
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When supplies are bought on account, the business to whom money is owed is
____.
a. | an asset account | c. | an equity account | b. | a liability account | d. | a capital
account |
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54.
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The journal entry to adjust Prepaid Insurance is ____.
a. | debit Prepaid Insurance; credit Insurance Expense | b. | debit Insurance
Expense; credit Prepaid Insurance | c. | debit Income Summary; credit Prepaid
Insurance | d. | debit Insurance Expense; credit Income Summary |
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55.
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The journal entry to close Income Summary when there is a net income is
____.
a. | debit Sales; credit Income Summary | b. | debit owner's capital; credit Income
Summary | c. | debit owner's capital account; credit Sales | d. | debit Income
Summary; credit owner's capital |
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56.
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When the total expenses are greater than the total revenue, ____.
a. | the income summary account has a credit balance | b. | the income summary
account has a debit balance | c. | debits equal credits | d. | none of the
above |
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57.
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When cash is paid on account, the amount is recorded in the ____.
a. | Sales Credit column and Cash Debit column | b. | General Debit column
and Cash Credit column | c. | General Credit column and Cash Debit
column | d. | General Debit column and Accounts Payable Debit
column |
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58.
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If a pair of work sheet columns do not balance and the difference between the
totals is an amount that appears elsewhere on the work sheet, the error is probably ____.
a. | an error in addition | b. | an amount that has been written in the wrong
column | c. | an amount that has not been extended | d. | a slide |
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59.
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Debits must equal credits ____.
a. | in a T account | c. | on the equation's right side | b. | in the
equation's left side | d. | in all transactions |
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60.
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The last step in the accounting cycle is ____.
a. | to journalize and post the closing entries | b. | to prepare a work
sheet and financial statements | c. | to analyze transactions and journalize and post
them | d. | none of the above |
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61.
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The accounting equation is most often stated as ____.
a. | Assets = Liabilities | c. | Assets = Liabilities + Owner's Equity | b. | Cash =
Assets | d. | Liabilities + Assets
= Owner's Equity |
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62.
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The percentage relationship between one financial statement item and the total
that includes that item is ____.
a. | an adjustment | c. | a component percentage | b. | an
endorsement | d. | none of the
above |
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63.
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When services are sold on account for $500.00, ____.
a. | Sales is decreased with a debit and Accounts Receivable is increased with a
credit | b. | Sales is increased with a debit and Accounts Receivable is increased with a
credit | c. | Sales is increased with a credit and Accounts Receivable is increased with a
debit | d. | Sales is increased with a debit and Accounts Receivable is increased with a
debit |
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64.
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The entry to establish a $200.00 petty cash fund is ____.
a. | debit Cash, $200.00; credit Petty Cash, $200.00 | b. | debit Miscellaneous
Expense, $200.00; credit Cash, $200.00 | c. | debit Petty Cash, $200.00; credit Cash,
$200.00 | d. | debit Petty Cash, $200.00; credit Miscellaneous Expense,
$200.00 |
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65.
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A business form ordering a bank to pay cash from a bank account is a
____.
a. | check | c. | receipt | b. | memorandum | d. | all of the
above |
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66.
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The journal entry to close the expense accounts is ____.
a. | debit Income Summary; credit owner's capital | b. | debit Income Summary
for the total expenses; credit each expense account | c. | debit each expense account; credit Income
Summary | d. | none of the above |
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67.
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Check marks are placed in parentheses below the General Debit and Credit column
totals to show that ____.
a. | posting of the totals has been completed | b. | the totals are not
posted | c. | the column totals are equal | d. | all of the
above |
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68.
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Information needed for journalizing the adjusting entries is obtained from the
____.
a. | general ledger account Balance columns | b. | income statement | c. | work sheet's
Adjustments columns | d. | balance sheet |
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69.
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Separate amounts in the Cash Debit column of a journal are ____.
a. | posted frequently | c. | sometimes posted individually | b. | not
posted | d. | all of the
above |
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70.
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A business has total assets of $30,000.00. Then the business pays $1,000.00 on
account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on
account. Total assets are now ____.
a. | $25,750.00 | c. | $28,700.00 | b. | $26,750.00 | d. | none of the
above |
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71.
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An account number in the journal's Post. Ref. column shows ____.
a. | the account to which an amount is posted | b. | the date of the
entry | c. | that work on that journal page is completed | d. | none of the
above |
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72.
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A balance sheet reports a business's financial ____.
a. | condition over a specific period of time | b. | progress over a
specific period of time | c. | condition on a specific
date | d. | progress on a specific date |
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73.
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The journal entry to adjust Supplies is ____.
a. | debit Supplies; credit Supplies Expense | b. | debit Supplies
Expense; credit Supplies | c. | debit Income Summary; credit
Supplies | d. | debit Supplies Expense; credit Income Summary |
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74.
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If a check is endorsed on the back with the words "For deposit only,"
the check can be cashed by ____.
a. | anyone who has the check | b. | the person whose name follows "Pay to the
order of" | c. | only the person who signed the check | d. | no one--it must be
deposited |
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75.
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An income statement reports a business's financial ____.
a. | condition over a specific period of time | b. | progress over a
specific period of time | c. | condition on a specific
date | d. | progress on a specific date |
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76.
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The formula for calculating the total expenses component percentage is
____.
a. | total expenses divided by total sales equals total expenses component
percentage | b. | total sales divided by total expenses equals total expenses component
percentage | c. | total sales minus total expenses divided by net income equals total expenses
component percentage | d. | none of the
above |
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77.
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Information needed to prepare a balance sheet assets section is obtained from a
work sheet's Account Title column and ____.
a. | Income Statement Debit column | c. | Balance Sheet Debit
column | b. | Income Statement Credit column | d. | Balance Sheet Credit
column |
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78.
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On a trial balance, ____.
a. | all general ledger account titles are listed | b. | only general ledger
accounts that have balances are listed | c. | only accounts with debit balances are
listed | d. | only accounts with credit balances are listed |
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79.
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A business form ordering a bank to pay cash from a bank account is a
____.
a. | signature card | c. | check | b. | deposit slip | d. | none of the
above |
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80.
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When a business pays for insurance, Prepaid Insurance is ____.
a. | increased by a debit | c. | decreased by a debit | b. | increased by a credit | d. | decreased by a
credit |
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81.
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After the adjusting entry for Prepaid Insurance has been posted, Insurance
Expense has an up-to-date balance, which is the ____.
a. | same as the beginning balance for Prepaid Insurance | b. | same as the ending
balance for Prepaid Insurance | c. | value of insurance premiums used during the
fiscal period | d. | value of insurance premiums bought during the fiscal
period |
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82.
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The entry to record receipt of cash from the owner as an investment is
____.
a. | debit Capital, credit Cash | c. | debit Cash, credit Accounts
Payable | b. | debit Cash, credit Capital | d. | none of the above |
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83.
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Total assets are $19,500.00. Cash is paid for $1,500.00 of supplies. The total
assets are now ____.
a. | $19,500.00 | c. | $18,000.00 | b. | $21,000.00 | d. | $22,500.00 |
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84.
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When cash is paid for utilities, the amount is recorded in the ____.
a. | Cash Credit column and General Debit column | b. | Sales Credit column
and General Debit column | c. | General Credit column and Cash Debit
column | d. | General Credit column and Sales Credit column |
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85.
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When a business pays cash on account, a liability account is ____.
a. | increased by a debit | c. | decreased by a debit | b. | increased by a credit | d. | decreased by a
credit |
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86.
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An endorsement on the back of a check consisting of the words "Pay to the
order of" and a new check owner's name is a ____.
a. | blank endorsement | c. | restrictive endorsement | b. | special
endorsement | d. | signature
endorsement |
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87.
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A business has total cash of $30,000.00. Then the business pays $1,000.00 on
account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on
account. The balance of the cash account is now ____.
a. | $25,750.00 | c. | $28,700.00 | b. | $26,750.00 | d. | none of the
above |
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88.
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The journal entry to close Income Summary when there is a net loss is
____.
a. | debit Sales; credit Income Summary | b. | debit owner's capital; credit Income
Summary | c. | debit Income Summary; credit owner's capital | d. | debit owner's
capital account; credit Sales |
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89.
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Income summary is ____.
a. | an asset account | c. | a temporary account | b. | a liability account | d. | a permanent
account |
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90.
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The amount of net income calculated on an income statement is correct if
____.
a. | it is the same as net income shown on the work sheet | b. | debits equal
credits | c. | it is the same as the balance sheet | d. | none of the
above |
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91.
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The sections of an income statement are ____.
a. | assets, liabilities, and owner's equity | b. | heading, revenue,
expenses, and net income or net loss | c. | assets, liabilities, and net income or net
loss | d. | assets, revenue, and net income or net loss |
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92.
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After the closing entries are posted, the only accounts with balances are ____
accounts.
a. | owner's equity | c. | temporary | b. | permanent | d. | asset |
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93.
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When a business buys supplies on account, assets ____.
a. | increase | c. | decrease | b. | increase and liabilities
decrease | d. | decrease and
liabilities increase |
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94.
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The formula for calculating the net income component percentage is ____.
a. | net income divided by total sales equals net income component
percentage | b. | total sales divided by total expenses equals net income component
percentage | c. | total sales minus total expenses divided by net income equals total net income
percentage | d. | none of the above |
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95.
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The source document for journalizing a bank service charge is a ____.
a. | check | c. | memorandum | b. | receipt | d. | none of the
above |
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96.
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The bank statement shows a checking account balance of $5,500.00. There are
outstanding checks totaling $600.00, an outstanding deposit of $400.00, and a bank service charge of
$15.00. The checking account balance should be ____.
a. | $5,300.00 | c. | $5,285.00 | b. | $5,700.00 | d. | none of the
above |
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97.
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An endorsement on the back of a check consisting only of a signature is
____.
a. | a blank endorsement | c. | a restrictive endorsement | b. | a special
endorsement | d. | an incorrect
endorsement |
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98.
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Accounts used to accumulate information from one fiscal period to the next are
____ accounts.
a. | revenue | c. | temporary | b. | permanent | d. | expense |
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99.
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Reporting changes in financial information for a specific period of time in the
form of financial statements is an application of the accounting concept ____.
a. | Matching Expenses with Revenue | c. | Consistent
Reporting | b. | Accounting Period Cycle | d. | Going Concern |
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100.
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When a business receives revenue, Sales is ____.
a. | increased by a debit | c. | decreased by a debit | b. | increased by a credit | d. | decreased by a
credit |
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