Performing services on account will have the following effects on the components of the basic accounting equation: Increase assets and decrease owner’s equity., Increase assets and increase owner’s equity., Increase assets and increase liabilities., Increase liabilities and increase owner’s equity.

Increase assets and increase owner’s equity.

Payment of an account payable affects the components of the accounting equation in the following way: Decreases owner’s equity and decreases liabilities., Increases assets and decreases liabilities., Decreases assets and increases owner’s equity., Decreases assets and decreases liabilities.

Decreases assets and decreases liabilities.

Which of the following statements is false? A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time., A balance sheet reports the assets, liabilities, and owner’s equity at a specific date., An income statement presents the revenues, expenses, changes in owner’s equity, and resulting net income or net loss for a specific period of time., An owner’s equity statement summarizes the changes in owner’s equity for a specific period of time.

An income statement presents the revenues, expenses, changes in owner’s equity, and resulting net income or net loss for a specific period of time.

Services performed by a public accountant include: Auditing, taxation, and management consulting.

Auditing, taxation, and management consulting.

Which of the following statements about an account is true? Options: The right side of an account is the debit or increase side., An account is an individual accounting record of increases and decreases in specific asset, liability, and owner’s equity items., There are separate accounts for specific assets and liabilities but only one account for owner’s equity items., The left side of an account is the credit or decrease side.

An account is an individual accounting record of increases and decreases in specific asset, liability, and owner’s equity items.

Debits: Options: Increase both assets and liabilities., Decrease both assets and liabilities., Increase assets and decrease liabilities., Increase assets and increase liabilities.

Increase assets and decrease liabilities.

Accounts that normally have debit balances are: Assets, expenses, and revenues., Assets, expenses, and owner’s capital., Assets, liabilities, and owner’s drawings., Assets, owner’s drawings, and expenses.

Assets, owner’s drawings, and expenses.

The expanded accounting equation is:

Assets = Liabilities + Owner’s Capital – Owner’s Drawings + Revenues – Expenses.

Which of the following statements about a journal is false? It is not a book of original entry., It provides a chronological record of transactions., It helps to locate errors because the debit and credit amounts for each entry can be readily compared., It discloses in one place the complete effect of a transaction.

It is not a book of original entry.

The purchase of supplies on account should result in: A debit to Supplies Expense and a credit to Cash., A debit to Supplies Expense and a credit to Accounts Payable., A debit to Supplies and a credit to Accounts Payable., A debit to Supplies and a credit to Accounts Receivable.

A debit to Supplies and a credit to Accounts Payable.

The order of the accounts in the ledger is: Assets, liabilities, owner’s capital, owner’s drawings, revenues, expenses.

Assets, liabilities, owner’s capital, owner’s drawings, revenues, expenses.

A ledger: Options: Contains only asset and liability accounts., Should show accounts in alphabetical order., Is a collection of the entire group of accounts maintained by a company., Is a book of original entry.

Is a collection of the entire group of accounts maintained by a company.

Posting: Normally occurs before journalizing., Transfers ledger transaction data to the journal., Is an optional step in the recording process., Transfers journal entries to ledger accounts.

Transfers journal entries to ledger accounts.

Is a list of accounts with their balances at a given time.

A trial balance will not balance if: A correct journal entry is posted twice., The purchase of supplies on account is debited to Supplies and credited to Cash., A $100 cash drawing by the owner is debited to Owner’s Drawings for $1,000 and credited to Cash for $100., A $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

A $100 cash drawing by the owner is debited to Owner’s Drawings for $1,000 and credited to Cash for $100.

The revenue recognition principle states that:

Revenue should be recognized in the accounting period in which a performance obligation is satisfied.

The time period assumption states that:

The economic life of a business can be divided into artificial time periods.

Which of the following statements about the accrual basis of accounting is false? Events that change a company’s financial statements are recorded in the periods in which the events occur., Revenue is recognized in the period in which services are performed., This basis is in accord with generally accepted accounting principles., Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

Adjusting entries are made to ensure that:

All the responses above are correct.

The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, what is the adjusting entry?

Supplies Expense 750, Supplies 750.

Adjustments for prepaid expenses: Options: Decrease assets and increase revenues., Decrease expenses and increase assets., Decrease assets and increase expenses., Decrease revenues and increase assets.

Decrease assets and increase expenses.

Rivera Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows: Depreciation Expense 1,000, Accumulated Depreciation—Rivera Company 1,000., Depreciation Expense 1,000, Equipment 1,000., Depreciation Expense 1,000, Accumulated Depreciation—Equipment 1,000., Equipment Expense 1,000, Accumulated Depreciation—Equipment 1,000.

Depreciation Expense 1,000, Accumulated Depreciation—Equipment 1,000.

Adjustments for unearned revenues: Options: Decrease liabilities and increase revenues., Have an assets-and-revenues-account relationship., Increase assets and increase revenues., Decrease revenues and decrease assets.

Decrease liabilities and increase revenues.

Adjustments for accrued revenues: Have a liabilities-and-revenues-account relationship., Have an assets-and-revenues-account relationship., Decrease liabilities and increase revenues., Decrease assets and increase revenues.

Have an assets-and-revenues-account relationship.

Anika Wilson earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Anika’s employer at September 30 is:

Salaries and Wages Expense 400, Salaries and Wages Payable 400.

Which of the following statements is incorrect concerning the adjusted trial balance? - An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. - The adjusted trial balance provides the primary basis for the preparation of financial statements. - The adjusted trial balance lists the account balances segregated by assets and liabilities. - The adjusted trial balance is prepared after the adjusting entries have been journalized and posted.

The adjusted trial balance lists the account balances segregated by assets and liabilities.

The trial balance shows Supplies $0 and Supplies Expense $1,500. If $800 of supplies are on hand at the end of the period, what is the adjusting entry?

Debit Supplies $800 and credit Supplies Expense $800.

Which of the following statements is incorrect concerning the worksheet? Options: The worksheet is essentially a working tool of the accountant., The worksheet is distributed to management and other interested parties., The worksheet cannot be used as a basis for posting to ledger accounts., Financial statements can be prepared directly from the worksheet before journalizing and posting the adjusting entries.

The worksheet is distributed to management and other interested parties.

In a worksheet, net income is entered in the following columns: Income statement (Dr) and balance sheet (Cr).

Income statement (Dr) and balance sheet (Cr).

What amount should be shown in the financial statement columns for Equipment after adjusting for depreciation expense of $15,000?

A debit of $120,000 for Equipment in the balance sheet column.

When a net loss has occurred, Income Summary is:

credited and Owner’s Capital is debited.

mutiple choice accounting

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FLASHCARD QUESTION

Front

Which of the following is not a step in the accounting process? Identification., Economic entity., Recording., Communication.

Back

Economic entity.

FLASHCARD QUESTION

Front

Which of the following statements about users of accounting information is incorrect? Management is an internal user., Taxing authorities are external users., Present creditors are external users., Regulatory authorities are internal users.

Back

Regulatory authorities are internal users.

FLASHCARD QUESTION

Front

The historical cost principle states that:

Back

Assets should be recorded at their cost.

FLASHCARD QUESTION

Front

Which of the following statements about basic assumptions is correct? Options: Basic assumptions are the same as accounting principles., The economic entity assumption states that there should be a particular unit of accountability., The monetary unit assumption enables accounting to measure employee morale., Partnerships are not economic entities.

Back

The economic entity assumption states that there should be a particular unit of accountability.

FLASHCARD QUESTION

Front

The three types of business entities are: Proprietorships, partnerships, and corporations.

Back

Proprietorships, partnerships, and corporations.

FLASHCARD QUESTION

Front

Net income will result during a time period when: Revenues exceed expenses.

Back

Revenues exceed expenses.

FLASHCARD QUESTION

Front

As of December 31, 2017, Kent Company has assets of $3,500 and owner’s equity of $2,000. What are the liabilities for Kent Company?

Back

$1,500.

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