1) An accounting device used to record increases and decreases in individual assets, liabilities, capital, revenue, expenses, and withdrawals is a(n):
A) chart of accounts.
B) account.
C) trial balance.
D) footing.
2) Accounting provides information to:
A) managers.
B) government.
C) investors.
D) All of these answers are correct.
3) A compound entry is:
A) a transaction involving more than one debit and/or credit.
B) used to prepare the trial balance.
C) the same as the chart of accounts.
D) found on the income statement.
4) Which of the following is a characteristic of a sole proprietorship?
A) Business owned by more than one person
B) Easy to form
C) Each stockholder acts as an owner of the company
D) Can continue indefinitely
5) A formal account that has columns for date, explanation, post reference, debit, and credit is called the:
A) T account.
B) standard account form.
C) ledger.
D) chart of accounts.
6) A partnership is a business which is:
A) easy to form.
B) ends with the death of a partner.
C) owned by more than one person.
D) All of these answers are correct.
7) A ledger:
A) is a group of accounts and their balances.
B) can replace the financial statements.
C) is the same as a chart of accounts.
D) None of these answers are correct.
8) Which is an advantage of a sole proprietorship form of business?
A) There is limited personal risk.
B) The business can continue indefinitely.
C) The owner makes all the decisions.
D) All of these answers are correct.
9) The left side of any account is the:
A) debit side.
B) credit side.
C) ending balance.
D) footings.
10) Which of the following is not a type of business organization?
A) Corporation
B) Partnership
C) Sole proprietorship
D) Operation
11) The right side of any account is the:
A) debit side.
B) credit side.
C) ending balance.
D) footings.
12) A corporation:
A) can continue indefinitely.
B) is owned by stockholders.
C) has limited risk to stockholders.
D) all of the above.
13) The side that increases the account balance, by the rules of debit and credit, is said to be the:
A) debit side.
B) credit side.
C) normal balance.
D) None of these answers are correct.
14) The Sarbanes-Oxley Act was passed to:
A) prevent fraud at public companies.
B) replace all of the old accounting procedures with new ones.
C) improve the accuracy of the company's financial reporting.
D) Both A and C are correct.
15) The Accounts Payable account is:
A) a revenue, and it has a normal debit balance.
B) an expense, and it has a normal credit balance.
C) a liability, and it has a normal debit balance.
D) a liability, and it has a normal credit balance.
16) A legal firm would be considered a:
A) merchandise company.
B) manufacturer.
C) service company.
D) None of the above are correct.
17) An account that would be increased by a credit is:
A) Cash.
B) Accounts Receivable.
C) Utilities Expense.
D) Accounts Payable.
18) Which of the following will be recorded in the owner's equity column as an increase?
A) An exchange of assets
B) The purchase of an asset on credit
C) An investment by the owner
D) A withdrawal by the owner
19) An account is said to have a debit balance if:
A) the footing of the debits exceeds the footing of the credits.
B) there are more entries on the debit side than on the credit side.
C) its normal balance is debit without regard to the amounts or number of entries on the debit side.
D) the last entry of the accounting period was posted on the debit side.
20) The purchase of supplies for cash would affect which account category?
A) Assets
B) Liabilities
C) Capital
D) Expense
21) A debit may signify a(n):
A) increase in asset accounts.
B) increase in liability accounts.
C) increase in the capital account.
D) decrease in expense accounts.
22) Items owned by the business such as land, supplies and equipment are:
A) assets.
B) liabilities.
C) owner's equity.
D) revenue.
23) A credit may signify a(n):
A) increase in assets.
B) decrease in liabilities.
C) increase in capital.
D) increase in withdrawals.
24) Which of the following is not an asset?
A) Cash
B) Accounts Receivable
C) Accounts Payable
D) Buildings
25) Which of the following types of accounts has a normal credit balance?
A) Withdrawals
B) Assets
C) Expenses
D) Revenues
26) If total liabilities increased by $6,000 and the assets increased by $8,000 during the accounting period, what is the change in the owner's equity amount?
A) Increase of $2,000
B) Decrease of $2,000
C) Increase of $10,000
D) Decrease of $10,000
27) Which of the following types of accounts has a normal debit balance?
A) Withdrawals
B) Assets
C) Expenses
D) All of these answers are correct.
28) The claims of creditors against the assets are:
A) expenses.
B) revenues.
C) liabilities.
D) owner's equity.
29) When recording transactions in two or more accounts and the totals of the debits and credits are equal, it is called:
A) debiting.
B) crediting.
C) posting.
D) double-entry bookkeeping.
30) The Owner's Equity of Logan's Company is equal to one-quarter of the total assets. Liabilities equal $60,000. What is the amount of Owner's Equity?
A) $40,000
B) $20,000
C) $30,000
D) None of these answers are correct.
31) Which of the following groups of accounts have a normal debit balance?
A) Revenue, liabilities, and capital
B) Assets, capital, and withdrawals
C) Liabilities, expenses, and assets
D) Assets, expenses, and withdrawals
32) Assets are equal to:
A) liabilities + owner's equity.
B) liabilities - owner's equity.
C) liabilities - revenues.
D) revenues - expenses.
33) The ledger is:
A) a group of accounts that records data from business transactions.
B) a tool used to make sure that all accounts have normal balances.
C) a chronological record of the day's transactions.
D) a tool used to ensure that debits equal credits.
34) The basic accounting equation is:
A) Assets = Revenues - Expenses.
B) Assets = Liabilities - Owner's Equity.
C) Assets = Owner's Equity - Liabilities.
D) Assets = Liabilities + Owner's Equity.
35) Which of the following accounts would be increased by a debit?
A) Cash
B) Accounts Payable
C) Capital
D) Fees Earned
36) An acceptable variation of the accounting equation is:
A) Assets - Liabilities = Owner's Equity.
B) Assets + Owner's Equity = Liabilities.
C) Assets = Liabilities - Owner's Equity.
D) All of these answers are correct.
37) What is the proper entry to show the owner making an investment in the company?
A) A credit to Cash and a debit to Capital
B) A debit to Cash and a credit to Capital
C) A debit to Cash and a credit to Revenue
D) A credit to Cash and a debit to Revenue
38) If total liabilities are $18,000 and owner's equity is $21,000, the total assets must be:
A) $39,000.
B) $5,000.
C) $20,000.
D) $17,000.