The double-entry system requires the transaction to be recorded

in at least two different accounts

Under accrual basis of acctg, when bs completes service, but has not been paid

(dr) Accts Receivable (cr) Service Revenue

derives its value from the rights and privileges it provides the owner

Prepaid Expenses are...

paid and recorded in an asset account before they are used or consumed.

If a company has overdrawn its bank balance, then

Cash Acct will show a credit balance

The Adjusted Trial Balance proves

Debits = Credits after adjustments are made

Which accts increase & decrease in the same manner

Prepaid Insurance and Advertising Expense

Incurred, but not paid yet or recorded

The guidelines for reporting financial accounting information are called:

Generally Accepted Accounting Principles

The US government agency that oversees US financial markets is the:

Securities and Exchange Commission (SEC)

The permanent accounts that are not closed at the end of the accounting period are:

Assets, Liabilities, and Owners Capital

The accounting cycle is

when cash is pd for goods, sold to clients, & $$ collected from customers

Crediits decrease Assets, and increase liabilities

Which of the following is a true statement about closing the books of a business?

Revenue and Expenses are closed to Income Summary Acct

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Acct1010 Exam 1

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Questions 47

Answers

1
The Income Summary account appears on which financial statement?
Income Statement
None of the above
Balance Sheet
Statement of Owner's Equity
2
The double-entry system requires the transaction to be recorded
in at least two different accounts
in two sets of books
in a Journal and Ledger
as Revenue and Expense
3
Under accrual basis of acctg, when bs completes service, but has not been paid
(dr) Svc Rev (cr) Accts Payable
No transaction yet
(dr) Accts Receivable (cr) Service Revenue
(dr) Svc Rev (cr) Accts Receivable
4
Debit & Credit mean
Credit increases and Debit decreases
Debit Right & Credit Left
Debit Left & Credit Right
Debit increases & Credit decreases
5
An intangible asset
is worthless because it has no physical substance
can't be classified on balance sheet because it lacks physical substance
derives its value from the rights and privileges it provides the owner
is converted into a tangible asset during the operating cycle
6
Which account increases as credit?
Supplies Expense
Owner's Withdrawal
Sales Revenue
Supplies
7
Owner's Contribution is reported on the
Income Statement
Statement of Owners Equity
Balance Sheet
Statement of Cash Flows
8
In preparing closing entries at the end of the accounting period, the account Owner Withdrawals account is closed into:
Expenses
Owners Capital
Income Summary
Revenues
9
Prepaid Expenses are...
paid and recorded in an asset account after they are used or consumed.
incurred but not yet paid or recorded.
paid and recorded in an asset account before they are used or consumed.
incurred and already paid or recorded.
10
The matching (expense) recognition principle matches:
Creditors with Investors
Customers with Clients
Assets with Liabilities
Expenses with Revenues
11
The assumption that requires the items on the financial statements to be measured in terms of a monetary unit.
Monetary Unit Principle
Going Concern Assumption
Economic Entity Assumption
Monetary Unit Assumption
12
Providing information that is complete, neutral, and free from error is:
Relevance
Reliability
Faithful Representation
Comparability
13
If a company has overdrawn its bank balance, then
Cash Acct debits exceed its credits
Cash Acct will show a debit balance
Cash Acct will show a credit balance
(dr) Cash (cr) Accts Payable
14
The classification and normal balance of the Unearned Revenue account?
Expense, Debit
Liability, Credit
Asset, Debit
Revenues, Credit
15
The principle that states acquired assets are recorded at their actual cost is called the
Economic Entity Assumption
Cost Principle
Monetary Unit Assumption
Going Concern Principle
16
Company accepts prepayment before doing the work
(cr) Cash (dr) Liabilities
(dr) Cash (cr) Liabilities
(dr) Liabilities (cr) Revenue
(dr) Revenue (cr) Liabilities
17
Beg Cap Bal $350K, Revenues $500K, Expenses $380K, Withdrawals $40K. End Capital Bal ?
810,000
510,000
430,000
470,000
18
The Adjusted Trial Balance proves
financial statements are correct under GAAP
Financial Statements are complete
Debits = Credits after adjustments are made
Used to prepare Financial Statements
19
A person who wants to determine the balance of a particular account should refer to the
General Ledger
Chart of Accounts
General Journal
Source Document
20
The revenue recognition principle dictates that revenue should be recognized in the accounting records:
when it is earned
when cash is received.
in the period that income taxes are paid.
at the end of the month
21
Which accts increase & decrease in the same manner
Prepaid Insurance and Advertising Expense
Utilities Expense and Notes Payable
Accts Payable & Rent Expense
Service Revenue and Equipment
22
All of the following are required steps in the accounting cycle except:
Preparing an adjusted trial balance
journalizing and posting closing
preparing a post-closing trial balance sheet
preparing a cash budget
23
Accrued Expenses
Incurred, but not paid yet or recorded
Incurred and already paid
Paid and recorded after they are used
Paid and recorded before they are used
24
The guidelines for reporting financial accounting information are called:
Generally Accepted Accounting Principles
International Accounting Standards
Generally Approved Auditing Procedures
Faithful Representation
25
There are usually how many closing journal entries?
2
5
3
4
26
The US government agency that oversees US financial markets is the:
Financial Accounting Standards Board (FASB)
International Standards Accounting Board (ISAB)
Securities and Exchange Commission (SEC)
International Financial Reporting Standards (IFRS)
27
The permanent accounts that are not closed at the end of the accounting period are:
Assets, Liabilities, and Owners Capital
Revenues & Expenses
Assets, Liabilities, and Revenues
Revenues, Dividends, Expenses
28
The accounting cycle is
always a year in length
when cash is pd for goods, sold to clients, & $$ collected from customers
is always less than a year in length
five years
29
Adjusting entries are made to ensure that:
expense are recognized in the period in which they are incurred.
revenues are recorded in the period in which they are earned.
Bal sheet and Income statement acct balances at end of term are correct
All of the above
30
Which financial statement is prepared first?
Balance Sheet
Statement of Cash Flows
Statement of Owners' Equity
Income Statement
31
Owner withdrawals are reported on the:
Income Statement
Statement of Cash Flows
Balance Sheet
Owners' Equity Statement
32
Which does NOT affect equity?
Expense
Land Purchase
Withdrawal
Revenue
33
Distributions to Owners
Liabilities
Draws
Expenses
Deductions
34
Debt and obligations of a business are referred to as:
Liabilities
Expenses
Equity
Assets
35
Equipment is classified on the balance sheet as
Current Asset
Long-Term Investment
an Intangible Asset
PPE
36
Which is true?
Credits increase Assets; and decrease Liabilities
Debits > Credits
Debits < Credits
Crediits decrease Assets, and increase liabilities
37
The closing entry process consists of closing:
only Retained Earnings account
All Asset & Liability Accts
all temporary accts
all permanent accounts
38
Which accounts have normal debit balances?
Assets, Expense, and Equity
Assets, Expenses, Withdrawals
Assets, Expense, & Revenues
Assets, Liabilities, and Dividends
39
Accumulated Depreciation is a(n):
contra asset account.
stockholders’ equity account.
expense account.
liability account.
40
Owners of a corporation?
Board of Directors
Stockholders
Founder
CEO
41
Which of the following is a true statement about closing the books of a business?
Expenses are closed to the Expense Summary Acct
Revenues, Expenses & Owners Equity are closed to Summary Acct
Revenue and Expenses are closed to Income Summary Acct
Only Revenues are closed to Income Summary
42
Which account increases as debit
Service Revenue
Owners Withdrawal
Interest Payable
Common Stock
43
A list of accounts and their balances at a given time is called a(n)
Chart of Accounts
General Journal
Trial Balance
Income Statement
44
Which will have Zero Balance at end of closing
Service Revenue
Accumulated Depreciation
Prepaid Insurance
Advertising Supplies
45
Which of the following is not a current liability?
Taxes Payable
Accounts Payable
Wages Payable
Bonds Payable
46
A post-closing trial balance will show:
only Balance Sheet Accounts
zero balances for Balance Sheet
Online Income Statement accounts
Zero Balances for all Accounts
47
Adjusting Entries are classified as
Accruals and Advances
Accruals and Cash
Postponements and Advances
Accruals and Deferrals

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