Professional Documents
Culture Documents
1. A debit is:
A. An increase in an account.
C. A decrease in an account.
3. A credit entry:
A. Increases asset and expense accounts, and decreases liability, owner's capital, and revenue accounts.
C. Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts.
A. When a future expense is paid in advance, the payment is normally recorded in a liability account
called Prepaid Expense.
C. Increases and decreases in cash are always recorded in the owner's capital account.
D. An account called Land is commonly used to record increases and decreases in both the land and
buildings owned by a business.
C. Liabilities created when a customer pays in advance for products or services before the revenue is
earned.
A. Payments made for products and services that do not ever expire.
C. Decreases in equity.
B. That records the effects of transactions and other events in at least two accounts with equal debits
and credits.
C. In which each transaction affects and is recorded in two or more accounts but that could include two
debits and no credits.
8. Rocky Industries received its telephone bill in the amount of $300, and immediately paid it. Rocky's
general journal entry to record this transaction will include a
9. Wisconsin Rentals purchased office supplies on credit. The general journal entry made by Wisconsin
Rentals will include a:
E. Not recorded in the accounting records until the earnings process is complete.
11. Robert Haddon contributed $70,000 in cash and land worth $130,000 to open a new business, RH
Consulting. Which of the following general journal entries will RH Consulting make to record this
transaction?
12. On September 30, the Cash account of Value Company had a normal balance of $5,000. During
September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was
the balance in the Cash account at the beginning of September?
A. A $0 balance.
A. A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense
item.
C. A collection of documents that describe transactions and events entering the accounting process.
D. A list of all accounts with their debit balances at a point in time.
A. Payments made for products and services that do not ever expire.
C. Decreases in equity.
2. Received $2,200 cash investment from Barbara Hanson, the owner of the business.
3. Received $750 from a customer in partial payment of his account receivable which arose from sales
in June.
6. Received $1,250 cash from a customer for services to be rendered next year.
A. $ 900.
B. $ 1,275.
C. $ 2,525.
D. $ 3,275.
E. $11,100.
16. The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit
and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?
A. The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.
B. The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.
C. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.
D. The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.
E. The total of the Debit column of the trial balance will equal the total of the Credit column.
Chapter 1
1. A corporation:
C. Has shareholders who have unlimited liability for the acts of the corporation.
E. All of these.
2. The committee that attempts to create more harmony among the accounting practices of different
countries by identifying preferred practices and encouraging their worldwide acceptance is the:
A. AICPA.
B. FASB.
C. CAP.
D. SEC.
E. IASB.
3. The rule that requires financial statements to reflect the assumption that the business will continue
operating instead of being closed or sold, unless evidence shows that it will not continue, is the:
A. Going-concern principle.
C. Objectivity principle.
D. Cost Principle.
4. The accounting principle that requires accounting information to be based on actual cost and requires
assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is
the:
A. Accounting equation.
B. Cost principle.
C. Going-concern principle.
D. Realization principle.
B. Going-concern principle
C. Cost principle
D. Upon completion of the sale or when services have been performed and the business obtains the
right to collect the sales price.
D. Selling inventory.
E. Buying land.
8. On June 30 of the current year, the assets and liabilities of Phoenix Phildell are as follows: Cash
$20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300.
What is the amount of owner's equity as of July 1 of the current year?
A. $8,300
B. $13,050
C. $20,500
D. $31,100
E. $40,400
9. Photometer Company paid off $30,000 of its accounts payable in cash. What would be the effects of
this transaction on the accounting equation?
10. If the liabilities of a company increased $74,000 during a period of time and equity in the company
decreased $19,000 during the same period, what was the effect on the assets?
E. None of these.
11. FastForward has net income of $18,955, and assets at the beginning of the year of $200,000. Assets
at the end of the year total $246,000. Compute its return on assets.
A. 7.7%.
B. 8.5%.
C. 9.5%.
D. 11.8%.
E. 13.0%.