1. Three branches of accounting are ____________, ____________, and _________. 2. The accounting equation is _________ = _________ + ________. 3.

Money owed to an outsider is a(n) _________. 4. The different between assets and liabilities is _________. 5. To purchase on account is to create a _________. 6. To classify and summarize a single item of an account group, we use a form called an _________. 7. The accounts make up a record called a ____________. 8. The left side of the account is known as the ___________, while the right side of the account is known as the ________. 9. The schedule showing the balance sheet of each account at the end of the period is known as the ____________. 10. The statement that shows net income for the period is known as the _______ statement. 11. Below is an income statement with some of the information missing. Fill in the information needed to complete the income statement. Sales income Operation expenses: Wages expense Rent expense Utilities expenses Total expenses Net income 20,780 (a) 4,560 38,670 43,560 (b)

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12. The income statement and the balance sheet are prepared on the _______ basis while the cash flow statement is prepared on the ________ basis. 13. Machinery costing _____________, purchased November 30, the estimated useful life is 5 years, the scrap value is 2,000. The company uses the straight-line method of depreciation. And the adjusting entry for December 31 on the first year as follows: Depreciation expense machinery Accumulated depreciation machinery 150 150

14. The beginning balance of Merchandise Inventory would be the same amount as the ending balance of the ________ period. 15. When inventory is physically counted at the end of an accounting period, we have the _________ method. 16. In a rising market, net income under _____________ would be smaller, thus producing a smaller tax. a. FIFO (first in first out) b. LIFO (last in first out) c. WAC (weighted average cost) 17. The holder of a promissory note can usually obtain money by taking it to a bank and ________ it. 18. The face of a promissory note plus the ____________ is known as maturity value. 19. The market value of a fixed asset at the end of its service is known as a __________. 20. When income produced by an asset is the same each year, the recommended method of depreciation is ___________. 21. When use rather than time is the key factor, _____________ is the preferred method of depreciation. 2 of 14

22. Which transaction will descrease the capital? a. Bought machinery on account. b. Paid the above bill. c. Withdrew money for personal use. 23. The event of making a sale on credit will effect on profit and cash respectively: a. increase / none b. none / increase c. none / none 24. The event of receiving cash from a credit customer (trade receivable) will effect on profit and cash respectively: a. increase / increase b. none / increase c. increase / none 25. Capital is the interest of the owners in an enterprise, also known as owners equity a. True b. False 26. Account Payable is a. Asset b. Liability c. Capital 27. Account Receivable is a. Asset b. Liability

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c. Capital 28. In T account form, Expenses are increased on a. Debit side b. Credit side 29. Income is increased on a. Debit side b. Credit side 30. Account payable is increased on a. Debit side b. Credit side 31. Capital is decreased through drawing for personal use on a. Debit side b. Credit side 32. Which explanation of the following transaction is correct: Equipment Cash a. b. 20,000 20,000

Sold of equipment for cash Purchase of equipment by cash

33. Purchase of equipment of 10,000, 20% for cash, balance on account. Which entry is correct: a. Cash Accounts Payable 2,000 8,000

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Equipment b. Accounts Payable Equipment Cash c. Equipment Cash Accounts Payable d. Equipment Cash Accounts Payable 10,000 10,000 2,000

10,000

10,000 8,000

2,000 8,000

8,000 2,000

34. A business pays weekly salaries of 1,000 on Friday for 5 day work week. Which of the following entries is correct if the fiscal period ends on Tuesday: a. Salaries Expense Salaries Payable b. Salaries Expense Salaries Payable c. Salaries Payable Cash d. Salaries Payable Cash 400 400 400 400 1,000 1,000 1,000 1,000

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35. An insurance policy covering a 2 year period was purchased on November 1 for 1,200. The amount was debited to Prepaid Insurance. Which adjusting entry is correct for the 2month period ending December 31. a. Insurance Expense Cash b. Insurance Expense 1,200 1,200 100 100

Prepaid Insurance c. Cash 100 Prepaid Insurance d. Insurance Expense 100

100

Prepaid Insurance

100

36. Beginning Inventory + _______________________ = Goods Available for sales 37. Goods Available for Sale Ending Inventory = __________________________ 38. A company has Beginning Inventory, 55,000; Purchases, 75,000; Purchase Returns, 21,000; Ending Inventory, 44,000. Calculate the Cost of Good Sold:

_______________ ##### This promissory note is used for the question from 39 to 42 ##### July 17, 2012

I, Jack Smith, promise to pay Bright Future Ltd., 1,000, 90 days from date, at 15% interest.

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Jack Smith 39. Who is the payee of the note? a. Jack Smith b. Bright Future Ltd. 40. Who is the maker of the note? a. Jack Smith b. Bright Future Ltd. 41. What is the maturity date of the note? ______________ 42. What is the maturity value of the note? ______________ 43. Discount = maturity value x discount rate x ________________ 44. Net Proceeds = _________________ - Discount 45. Write a entry: Company bought office supplies of 3,000 by giving a note _____________________________________________ _____________________________________________ 46. A note: 1,500 principal, 14% interest, 96 days. Determine the interest: _______________ 47. Cost of machine is $20,000, scrap value is $2,000 and estimated useful life is 5 years. Use straight line method to calculate annual depreciation value :_________ 48. If the cost of machine is 23,000, scrap value is 3,000 and its total estimated units produced during its lifetime is and its total estimated units produced during its lifetime is 200,000. Use Unit of Production method to calculate the depreciation for production of 30,000 units: ___________ 49. If an investor holds a bond then the investor will receive:

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a. Dividends b. Interest 50. People those who hold stocks (or shares) of a corporation, then they will be: a. Owners of this corporation b. Creditors of this corporation 51. _________________ is the interest of the owners in a business. 52. An investment in the business increases assets and ________________ 53. Expenses are debited because the decrease _________________ 54. The statement that shows net income for the period is known as the ______________ statement. 55. Two groups of items that make up the income statement are income and ______________. 56. Expense and income must be matched in the same _________________ 57. Assets are properties that are owed and have money value a. True b. False 58. Liabilities are amounts owed to outsiders a. True b. False 59. Capital is the interest of the owners in an enterprise, also known as owners equity a. True b. False 60. Land is

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a. Asset b. Liability c. Capital 61. Withdrew money for personal use will effect on capital a. True b. False 62. In T account form, debit is: a. On right hand side b. On the left hand side 63. Company received the following items from Mr. A as his investment: Cash 4,000; Equipment 10,000 (still owned a balance of 4,000), Supplies 1,000. Which entry is correct: a. Mr. As Capital Cash Equipment Supplies b. Cash Equipment Supplies 4,000 10,000 1,000 15,000 15,000 4,000 10,000 1,000

Mr.As Capital c. Cash 4,000

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Equipment Supplies

10,000 1,000 11,000 4,000

Mr.As Capital Account Payable d. Mr. As Capital Account Payable Cash Equipment Supplies 64. Fill in the blank Sales Operating Expense Net income 11,000 4,000

4,000 10,000 1,000

_________ 10,000 40,000

65. On Jan 1, company paid an insurance premium of 6,000 for 12 months of the year in advance. Which entry is correct on Jan 1: a. Insurance Cash b. Cash 6,000 Insurance c. Cash 6,000 10 of 14 6,000 6,000 6,000

Prepaid Insurance d. Prepaid Insurance Cash 6,000

6,000

6,000

66. On Jan 1, company paid an insurance premium of 6,000 for 12 months of the year in advance. Which entry is correct for adjustment on Jan 31: a. Insurance 500 500

Prepaid Insurance b. Insurance Expense 6,000

Prepaid Insurance c. Insurance Expense 500 500

6,000

Prepaid Insurance d. Prepaid Insurance 500

Insurance Expense

500

67. Accounts Payable account should be on Income Statement or Balance Sheet and should be Debited or Credited. a. Income Statement and Credited b. Balance Sheet and Credited c. Balance Sheet and Debited d. Income Statement and Debited 68. Accounts Receivable account should be on Income Statement or Balance Sheet and should be Debited or Credited: a. Income Statement and Credited

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b. Balance Sheet and Credited c. Balance Sheet and Debited d. Income Statement and Debited 69. If AAA companys $500 account receivable, dated May 15, 2011, was deemed uncollectible in Jan of 2012, the entry in 2012 would be: ____________________________________________ ________________________________________________ 70. A companys sales is 100,000 and experience has shown the approximately 2% of sales will become uncollectible at a future date. The adjusting entry for the bad debt account would be: a. Allowance for bad debt Bad debt expense b. Bad debt expense 2,000 2,000 2,000 2,000

Allowance for bad debt c. Bad debt expense Sales d. Allowance for bad debt Sales 2,000 2,000 2,000 2,000

71. Cost of machine is $23,000, scrap value is $3,000 and estimated useful life is 5 years. Use straight line method to calculate annual depreciation value. What entry would be: ____________________________________________ _____________________________________________

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72. If the asset is expected to generate income evenly over extended period of time, what method should be used: a. Straight Line b. Units of Production c. Sum of the years digit 73. If the asset will produce a difference number of units each year, or if the machinery may wear out early, what method should be used: a. Straight Line b. Units of Production c. Sum of the years digit 74. The inventory method based on the concept that the unit of cost of merchandise sold is the average of all expenditures for inventory is known as ___________. 75. The uniform distribution of depreciation over the life of the asset is known as the _______ method. 76. The ______ method is used to write off the asset based on a series of fractions. 77. The method that produces the largest amount of depreciation in the earlier years, then rapidly declines, is known as the _______ method. 78. The following is a list of business/accounting events. In each case, state the affect (increase, decrease or none) on both profit and cash: Effect on profit on cash ___________ ________ ___________ ________ ___________ ________ (trade ___________ ________ ___________ ___________ ________ ________

a) b) c) d)

Repayment of borrowings Making a sale on credit Buying a current asset on credit Receiving cash from a credit receivable) e) Depreciating a non-current asset f) Buying some inventories for cash

customer

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g) Making a share issue for cash

___________

________

79. Companies and individual that yield a service to the consumer, such as lawyers, doctors, airlines are a. Service business b. Manufacturing business c. Merchandising business d. None of those 80. Companies that convert raw materials into finished products, such as housing construction companies and lumber mills are: a. Service business b. Manufacturing business c. Merchandising business d. None of those

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