1.

   An optional step in the accounting cycle is the preparation of

a. Adjusting entries
b. Closing entries
c. Financial statements
d. A postclosing trial balance
2. Which of the following steps in the accounting cycle are listed in logical order?
a. Post the reversing entries, prepare the financial statements and then take a trial balance.
b. Prepare the closing entries, prepare the adjusting entries and then prepare the financial statements.
c. Prepare an unadjusted trial balance, prepare the adjusting entries and then prepare the financial statements.
d. Post the closing entries, take a post-closing trial balance and then prepare financial statements.
3. The accounting equation must remain in balance
a. Throughout each step in the accounting cycle
b. Only when journal entries are recorded.
c. Only at the time the trial balance is prepared.
d. Only when formal financial statements are prepared.
4. The system of bookkeeping that recognizes the two-fold effect of an accountable event is known as?
a. Double-entry c. Cash basis
b. Single-entry d. Accrual
5. Which of the following is not an advantage of double entry bookkeeping?
a. Provide that all clerical errors will be revealed and corrected.
b. The complete effect of all transactions is recorded.
c. Complete accounting permits fair presentation of financial statements.
d. Provides more effective internal control.

6. It is the accounting device that is used to store the recorded monetary information from the entity’s transaction and events.
a. Account c. Ledger
b. Journal d. Source document
7.  A general journal
a. Chronologically lists transactions and other events expressed in terms of debits and credits.
b. Contains one record for each of the asset, liability, equity, revenue and expense accounts.
c. Lists all the increases and decreases in each account in one place.
d. Contains only adjusting entries.
8. Accumulated depreciation is an example of
a. Nominal and adjunct account
b. Real and adjunct account
c. Nominal and contra account
d. Real and contra account
9. Which is an example of a nominal and contra account?
a. Freight in
b. Sales discount
c. Purchases
d. Allowance for doubtful accounts
10. Which of the following best describes a general journal?
a. The general journal directly provides data for a trial balance.
b. The general journal eliminates the need for control accounts in the ledger.
c. The general journal provides a continuing balance of the amount to date in each of the accounts.
d. The general journal provides a chronological listing of transactions in a debit-credit form.
11. A simple journal entry
a. Consists of one debit and one credit c. Consists of one debit and two credits
b. Consists of two debits and one credit d. Is only a memorandum entry
12. In recording transactions
a. The word “debit” means increase and the word “credit” means decrease.
b. Assets, expenses and drawing accounts are credited for increases.
c. Liabilities, revenue and capital accounts are credited for increases.
d. Assets, expenses and drawing accounts are debited for decreases.
13. Which of the following is not a possible combination of a journal entry?
a. Increase in asset and increase in liability.
 b. Decrease in equity and increase in liability.
c. Decrease in liability and decrease in asset.
d. Increase in asset and decrease in equity.
14. Which is false concerning the rules of debit and credit?
a. The left side of an account is always the debit side and the right side is always the credit side.
b. The normal balance of any account appears on the side used for recording increases.
c. Increases in assets and expenses are debit entries, and increases in liabilities, owner’s equity and revenue are credit entries.
d. The word “debit” means to increase and the word “credit” means to decrease.
15. Which type of accounts measure economic flows over a period of time?
a. Real accounts c. Mixed accounts
b. Nominal accounts d. Contra accounts