True/False
Indicate whether the statement is true or
false.
|
|
|
1.
|
A post-closing trial balance verifies the equality of debits and credits in a
general ledger after the closing entries are posted.
|
|
|
2.
|
After each transaction, the accounting equation must remain in balance.
|
|
|
3.
|
A balance sheet reports financial information on a specific date and includes
the assets, liabilities, and owner’s equity.
|
|
|
4.
|
Payments for advertising, equipment repairs, utilities, and rent are expense
transactions.
|
|
|
5.
|
The owner’s capital amount reported on a balance sheet is calculated as:
capital account balance plus drawing account balance less net income.
|
|
|
6.
|
Ownership of a check cannot be transferred.
|
|
|
7.
|
An amount written in parenthesis on a financial statement indicates an
estimate.
|
|
|
8.
|
A check with a blank endorsement can be cashed by anyone who has the
check.
|
|
|
9.
|
Double lines are ruled across a journal’s amount columns to indicate that
the totals have been verified as correct.
|
|
|
10.
|
Each transaction changes the balances in at least two accounts.
|
|
|
11.
|
When cash is paid for supplies, the supplies account is increased by a
debit.
|
|
|
12.
|
Cash is increased with a credit.
|
|
|
13.
|
A balance sheet has three sections: heading, assets, and liabilities.
|
|
|
14.
|
Cash is always proved at the end of the month.
|
|
|
15.
|
Increases to liability accounts are recorded on the debit side.
|
|
|
16.
|
When items are bought and paid for at a future date, another way to state this
is to say these items are bought on account.
|
|
|
17.
|
A list of accounts used by a business is a chart of accounts.
|
|
|
18.
|
The most common type of withdrawal by an owner from a business is the withdrawal
of cash.
|
|
|
19.
|
Voided checks should be recorded in the journal.
|
|
|
20.
|
An amount recorded on the left side of a T account is a credit.
|
|
|
21.
|
Withdrawals are assets taken out of a business for the owner’s personal
use.
|
|
|
22.
|
Asset accounts increase on the credit side.
|
|
|
23.
|
When two asset accounts are changed in a transaction, there must be an increase
and a decrease.
|
|
|
24.
|
An accounting device used to analyze transactions is a T account.
|
|
|
25.
|
A bank requires that the signature of the person authorized to sign checks be on
the signature card.
|
|
|
26.
|
Each asset account has a normal debit balance.
|
|
|
27.
|
The accounting equation is most often stated as: Assets + Liabilities =
Owner’s Equity.
|
|
|
28.
|
The formula for calculating net income is: total revenue minus total expenses
equals net income.
|
|
|
29.
|
The balance of an account increases on the same side as the normal balance
side.
|
|
|
30.
|
Total assets are the amount the owner has invested in the business.
|
Multiple Choice
Identify the choice that best completes the
statement or answers the question.
|
|
|
31.
|
The normal balance side of an asset account is the
a. | debit side. | c. | decrease side. | b. | credit side. | d. | right side. |
|
|
|
32.
|
Since contra accounts are offsets to their related accounts, contra account
normal balances are
a. | debits. | b. | credits. | c. | opposite the normal
balances of their related accounts. | d. | the same as the normal balances of their
related accounts. |
|
|
|
33.
|
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. |
|
|
|
34.
|
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. |
|
|
|
35.
|
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. |
|
|
|
36.
|
If an amount is recorded on the side of a T account opposite the normal balance
side,
a. | the account balance is increased. | c. | the account balance is
unaffected. | b. | the account balance is decreased. | d. | the account balance is
correct. |
|
|
|
37.
|
On each journal page, the month is written
a. | for each entry. | c. | only for the first entry. | b. | on the first line of
each column. | d. | none of
these. |
|
|
|
38.
|
The procedure for transferring information from a journal entry to a ledger
account is
a. | posting. | c. | file maintenance. | b. | journalizing. | d. | none of these. |
|
|
|
39.
|
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. |
|
|
|
40.
|
When cash is received from sales, the amount is recorded in the
a. | Sales Credit column and Cash Debit column. | b. | Sales Debit column
and Cash Credit column. | c. | General Credit column and Cash Debit
column. | d. | General Debit column and Cash Credit column. |
|
|
|
41.
|
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
these. |
|
|
|
42.
|
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. |
|
|
|
43.
|
The right side of a T account is the
a. | debit side. | c. | normal balance side. | b. | credit side. | d. | equity side. |
|
|
|
44.
|
A petty cash fund is always replenished
a. | daily. | c. | at the end of the month. | b. | weekly. | d. | none of these. |
|
Matching
|
|
|
USE HANDOUT: The parts of an income statement
are identified on your handout with capital letters. Decide the location of each of the
following items. Type the letter identifying your choice in the Answer
column. a. | A | i. | I | b. | B | j. | J | c. | C | k. | K | d. | D | l. | L | e. | E | m. | M | f. | F | n. | N | g. | G | o. | O | h. | H | p. | P |
|
|
|
45.
|
Date of the income statement.
|
|
|
46.
|
The amount of net income or net loss.
|
|
|
47.
|
Business name.
|
|
|
48.
|
Expense account balances.
|
|
|
49.
|
Expense account titles.
|
|
|
50.
|
Heading of the expense section.
|
|
|
51.
|
Heading of the revenue section.
|
|
|
52.
|
Net income or net loss component percentage.
|
|
|
53.
|
Revenue account title.
|
|
|
54.
|
Sales Component percentage.
|
|
|
55.
|
Statement name.
|
|
|
56.
|
Total amount of revenue.
|
|
|
57.
|
Total expenses component percentage.
|
|
|
58.
|
Words Net Income or Net Loss.
|
|
|
59.
|
Words Total Expenses.
|
|
|
USE HANDOUT: Identify what column each account
would be extended to on the worksheet. Type the letter identifying your choice in the Answer
column. a. | Balance Sheet Column Debit | c. | Income Statement Column
Debit | b. | Balance Sheet Column Credit | d. | Income Statement Column Credit |
|
|
|
60.
|
Cash
|
|
|
61.
|
Petty Cash
|
|
|
62.
|
Accounts Receivable - R. Price
|
|
|
63.
|
Supplies
|
|
|
64.
|
Prepaid Insurance
|
|
|
65.
|
Accounts Payable - R. Navarro
|
|
|
66.
|
Gary Baldwin, Capital
|
|
|
67.
|
Gary Baldwin, Drawing
|
|
|
68.
|
Sales
|
|
|
69.
|
Advertising Expense
|
|
|
70.
|
Insurance Expense
|
|
|
71.
|
Miscellaneous Expense
|
|
|
72.
|
Rent Expense
|
|
|
73.
|
Supplies Expense
|
|
|
74.
|
Utilities Expense
|
|
|
Match the account with their proper balance;
Debit or Credit. Type the
letter identifying your choice in the Answer column.
|
|
|
75.
|
Cash
|
|
|
76.
|
Petty Cash
|
|
|
77.
|
Supplies
|
|
|
78.
|
Accounts Payable
|
|
|
79.
|
Accounts Receivable
|
|
|
80.
|
Sales
|
|
|
81.
|
Purchases
|
|
|
82.
|
Prepaid Insurance
|
|
|
83.
|
Utilities Expense
|
|
|
84.
|
Miscellaneous Expense
|
|
|
85.
|
Rent Expense
|
|
|
86.
|
Sale Returns & Allowances
|
|
|
87.
|
Purchase Returns & Allowances
|
|
|
88.
|
Sales Tax Payable
|
|
|
89.
|
Salary Expense
|
|
|
Identify which Journal each transaction would be
recorded in. Type the letter
identifying your choice in the Answer column. a. | Sales Journal | d. | Cash Payments
Journal | b. | Purchases Journal | e. | General Journal | c. | Cash Receipts
Journal |
|
|
|
90.
|
Purchased merchandise on account from Crown Distributing. Purchase
Invoice No. 83.
|
|
|
91.
|
Paid cash for advertising. Check No. 292
|
|
|
92.
|
Bought store supplies on account. Memorandum No. 52
|
|
|
93.
|
Sold merchandise on account to Village Crafts. Sales Invoice No. 76
|
|
|
94.
|
Purchases merchandise for cash. Check No. 301
|
|
|
95.
|
Recorded cash and credit card sales. Terminal Summary 34
|
|
|
96.
|
Returned merchandise to Crown Distributing, Memorandum No. 78
|
|
|
97.
|
Received cash on account from Country Crafters. Receipt No. 90
|
|
|
98.
|
Granted credit to Village Crafts for merchandise returned. Credit
Memorandum No. 41
|
|
|
MATCHING a. | Account Balance | d. | Asset | b. | Accounting | e. | Capital | c. | Accounting
Records |
|
|
|
99.
|
Planning, recording, analyzing, and interpreting financial information.
|
|
|
100.
|
Anything of value that is owned.
|
|
|
101.
|
The amount in an account.
|
|
|
102.
|
Organized summaries of a business’s financial activities.
|
|
|
103.
|
The account used to summarize the owner’s equity in the business.
|
|
|
MATCHING a. | Account | d. | Accounting System | b. | Account Title | e. | Business Ethics | c. | Accounting
Equation | f. | Equities |
|
|
|
104.
|
The use of ethics in making business decisions.
|
|
|
105.
|
An equation showing the relationship between among assets, liabilities, and
owner’s equity.
|
|
|
106.
|
The name given to an account.
|
|
|
107.
|
Financial rights to the assets of a business.
|
|
|
108.
|
A planned process for providing financial information that will be useful to
management.
|
|
|
109.
|
A record summarizing all the information pertaining to a single item in the
accounting equation.
|
|
|
MATCHING a. | Ethics | d. | Revenue | b. | Financial Statements | e. | Service Business | c. | Owner’s
Equity | f. | Withdrawals |
|
|
|
110.
|
An increase in owner’s equity resulting from the operations of a
business.
|
|
|
111.
|
Financial reports that summarize the financial conditions and operations of a
business.
|
|
|
112.
|
A business that performs an activity for a fee.
|
|
|
113.
|
Assets taken out of a business for the owner’s personal use.
|
|
|
114.
|
The amount remaining after the value of all liabilities is subtracted from the
value of all assets.
|
|
|
115.
|
The principles of right and wrong that guide an individual in making
decisions.
|
|
|
MATCHING a. | Expense | d. | Sale on Account | b. | Liability | e. | Transaction | c. | Proprietorship |
|
|
|
116.
|
A business owned by one person.
|
|
|
117.
|
A business activity that changes assets, liabilities, or owner’s
equity.
|
|
|
118.
|
An amount owed by a business.
|
|
|
119.
|
A decrease in owner’s equity resulting from the operation of a
business.
|
|
|
120.
|
A sale for which cash will be received at a later date.
|