Question 1
The financial statement that shows revenue and expenses for a period of time is the
A. balance sheet.
B. income statement.
C. statement of owner's equity.
D. statement of cash flows.
Question 2
If a company's revenues are higher than its expenses, it will cause
A. an increase in owner's equity.
B. a decrease in owner's equity.
C. an increase in assets.
D. no effect on owner's equity.
Question 3
Which financial statement shows business results in terms of revenue and expenses?
A. Income statement
B. Balance sheet
C. Statement of owner's equity
D. Statement of cash flows
Question 4
Which of the following is true about expenses?
A. They're costs the company incurs in carrying out operations.
B. They're a subdivision of owner's equity.
C. They record personal expenses not related to the business.
D. Both A and B
Question 5
If beginning capital was $110,000, ending capital was $95,000, and the owner's withdrawals were $10,000, the amount of net income or net loss was a
A. net income of $5,000.
B. net income of $15,000.
C. net loss of $15,000.
D. net loss of $5,000.
Question 6
An accounting report that shows the changes in capital during the accounting period is a/an
A. balance sheet.
B. income statement.
C. statement of owner's equity.
D. All of the above
Question 7
The net income or net loss is calculated on the
A. balance sheet.
B. statement of owner's equity.
C. income statement.
D. None of the above
Question 8
Which statement is prepared for only one date?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of owner's equity
Question 9
Which accounts are affected when the company buys supplies on account?
A. Assets and capital
B. Liabilities and capital
C. Assets and liabilities
D. None of the above
Question 10
Go Blue Retail Store collected $12,000 of its accounts receivable. The expanded accounting equation changes include which of the following?
A. Cash and capital increase of $12,000
B. Cash and revenue increase of $12,000
C. Cash increase and accounts receivable decrease of $12,000
D. Accounts receivable decrease and capital increase of $12,000
Question 11
The payment of accounts payable would
A. increase both assets and liabilities.
B. increase assets and decrease liabilities.
C. decrease both assets and liabilities.
D. decrease assets and increase liabilities.
Question 12
Which transaction has no effect on owner's equity?
A. Paying salaries expense
B. Equipment purchase
C. Billing for services rendered
D. A withdrawal
Question 13
Which items are on both the balance sheet and the statement of owner's equity?
A. Net loss
B. Capital
C. Additional owner's investments
D. Owner's withdrawals
Question 14
Carrie billed her legal clients $6,000 for legal work completed during the month. This transaction will
A. cause a $6,000 increase in revenues and liabilities.
B. cause a $6,000 increase in revenues and a decrease in liabilities.
C. cause a $6,000 increase in assets and revenues.
D. not be recorded until the cash is collected.
Question 15
Which of the following is included in the balance sheet?
A. Revenue
B. Salaries expense
C. Utilities expense
D. Accounts payable
Question 16
Which financial statement is considered a link between the income statement and balance sheet?
A. Statement of cash flows
B. Statement of company assets
C. Statement of company liquidity
D. Statement of owner's equity
Question 17
A company has the following balances in its asset accounts: Cash, $750; Accounts Receivable, $125; Equipment, $2,000; Supplies, $875. The amount of the company's total assets is
A. $875.
B. $1,750.
C. $2,875.
D. $3,750.
Question 18
BPK Industries has a net income for the period of $2,500. The balance in the Owner's Capital account for the beginning of the period is $5,000, and the owner has withdrawn $1,650 for personal expenses. The balance in the Owner's Capital account at the end of the period will be
A. $850.
B. $5,850.
C. $7,500.
D. $9,150.
Question 19
A revenue should be recorded when
A. it's earned.
B. payment is received.
C. the invoice is sent to the customer.
D. None of the above
Question 20
Ryan withdrew cash from the business to pay his personal cellphone bill. The expanded accounting equation changes include a/an
A. increase in both cash and withdrawal.
B. decrease in both cash and withdrawal.
C. decrease in cash and an increase in withdrawal.
D. increase in cash and a decrease in withdrawal.