Introduction to Financial Accounting International Edition 8th Edition Curtis L Norton Gary A Porter- Test Bank
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Sample Test
Chapter 3: Processing Accounting Information
MULTIPLE CHOICE
1. Which
one of the following statements is true?
2. External
events (transactions) involve interactions between an entity and a party
outside the entity
3. Every
event or transaction which affects an entity is identified from a source
document.
4. All
economic events can be reliably measured.
5. The
movement of raw material into production is an external event.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
106-107
OBJ: LO:
02-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
2. Which
of the following is an internal event (transaction)?
3. Life
guard salaries are paid by a swim club.
4. Dividends
are distributed to shareholders.
5. Eggs
used to make omelets in a restaurant are purchased.
6. Potato
chips are transferred from the production line to the packaging area.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 106-107
OBJ: LO:
02-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
3. All
of the following are external events (transactions) except for
4. a department
store recognizing losses from shoplifting.
5. a
department store running ads in a local newspaper.
6. a
department store purchasing merchandise from a clothing manufacturer.
7. a
department store selling clothing to customers on credit.
ANS: A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
106-107
OBJ: LO:
02-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
4. Which
of the following events (transactions) is an internal event for a business
entity?
5. An
accountant provides services for clients.
6. An
accountant purchases computer equipment to maintain business records and
prepare legal documents.
7. Periodically,
part of the cost of the computer equipment used by an accountant is assigned to
depreciation expenses.
8. An
accountant receives cash payments from clients who were billed for services.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
106-107
OBJ: LO:
02-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
5. All
of the following events (transactions) would be identified from standard source
documents except for
6. freight
charges for merchandise purchased from suppliers.
7. the
amount to be paid to settle a lawsuit for discrimination in hiring employees.
8. wages
to be paid to hourly employees.
9. commissions
earned by sales employees.
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: p.
108 OBJ: LO:
03-02
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
6. Which
of the following statements is true?
7. Only
the effects of internal transactions must be recognized and recorded in the
entity’s accounting system.
8. An
internal event is a transaction between an entity and its environment.
9. Not
all recognizable events are supported by a standard source document.
10.
Only the effects of external events must be recognized,
measured, and recorded in an entity’s accounting system.
ANS:
C PTS:
1
DIF: Difficulty: Moderate
REF: p.
108 OBJ: LO:
03-02
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
7. Which
of the following would be a case where an event as a transaction is not
supported by a source document?
8. a
purchase of inventory on credit
9. a
cash sale
10.
the financial consequences of a fire loss
11.
recording payroll
ANS:
C
PTS: 1
DIF: Difficulty: Moderate
REF: p.
108 OBJ: LO:
03-02
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
8. Which
of the following statements is false?
9. Checks
and deposit slips are the main source of documents backing up the bank
statement.
10.
Retailers use cash register tapes to recognize sales.
11.
Stock certificates are evidence of being a creditor of the
company.
12.
Time cards are used as the source of information to record
wages.
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: p.
108 OBJ: LO:
03-02
NAT: BUSPROG: Communication
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
9. The
purchase of office equipment on credit has what effect on the accounting
equation?
10.
Assets decrease and stockholders’ equity decreases
11.
Liabilities increase and stockholders’ equity decreases
12.
Assets increase and liabilities increase
13.
Assets decrease and liabilities decrease
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
10.
The payment of employee salaries has what effect on the
accounting equation?
11.
Assets decrease and stockholders’ equity decreases
12.
Liabilities decrease and stockholders’ equity decreases
13.
Assets decrease and liabilities increase
14.
Assets increase and liabilities decrease
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113 OBJ:
LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
11.
During May, Aniston, Inc. purchased office supplies for cash.
The supplies will be used in June. What effect does this purchase transaction
have on the accounting equation?
12.
Assets increase and stockholders’ equity decreases.
13.
Assets increase and liabilities increase.
14.
Assets decrease and liabilities decrease.
15.
There is no effect on the accounting equation as one asset
account increases while another asset account decreases.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
12.
Blecker Corp. made cash sales to customers. What effect does
this transaction have on the accounting equation?
13.
Liabilities increase and stockholders’ equity increases.
14.
There is no effect on the accounting equation as one asset
account increases while another asset account decreases.
15.
Assets increase and liabilities increase.
16.
Assets increase and stockholders’ equity increases.
ANS: D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
13.
Carl and Stefanie each invest $15,000 in a business and are
given shares of stock in Thibeau Industries as evidence of their ownership
interests. For this transaction, identify the effect on the accounting
equation.
14.
Assets increase and liabilities increase.
15.
Assets increase and stockholders’ equity increases.
16.
Liabilities increase and stockholders’ equity decreases.
17.
Liabilities decrease and assets decrease.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
14.
Land is purchased on credit. For this transaction, identify the
effect on the accounting equation.
15.
Assets increase and liabilities increase.
16.
Assets increase and owners’ equity increases.
17.
Liabilities increase and owners’ equity decreases.
18.
Liabilities decrease and assets decrease.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
15.
Services are provided for customers who are sent bills for the
amount they owe. For this transaction, identify the effect on the accounting
equation.
16.
Assets increase and liabilities increase.
17.
Assets increase and stockholders’ equity increases.
18.
Liabilities increase and stockholders’ equity decreases.
19.
Liabilities decrease and assets decrease.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO: 03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
16.
Payment is received from customers who were billed earlier for
services provided for them. For this transaction, identify the effect on the
accounting equation.
17.
Assets increase and liabilities increase.
18.
Assets increase and stockholders’ equity increases.
19.
Liabilities increase and stockholders’ equity decreases.
20.
There is no effect on the accounting equation as one asset
account increases while another asset account decreases.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
17.
Payment is made for land purchased earlier on credit. For this
transaction, identify the effect on the accounting equation.
18.
Assets increase and liabilities increase.
19.
Assets increase and stockholders’ equity increases.
20.
Liabilities increase and stockholders’ equity decrease.
21.
Liabilities decrease and assets decrease.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
18.
A bill is received for electric service; the charge for the
electricity is recorded, but payment will be made later. For this transaction,
identify the effect on the accounting equation.
19.
Assets increase and liabilities increase.
20.
Assets increase and stockholders’ equity increases.
21.
Liabilities increase and stockholders’ equity decreases.
22.
Liabilities decrease and assets decrease.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
19.
Payment is made for an electric bill which was received and
recorded earlier. For this transaction, identify the effect on the accounting equation.
20.
Assets increase and liabilities increase.
21.
Assets increase and stockholders’ equity increases.
22.
Liabilities increase and stockholders’ equity decreases.
23.
Liabilities decrease and assets decrease.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
20.
Services are provided for customers who pay for the services
immediately. For this transaction, identify the effect on the accounting
equation.
21.
Assets increase and liabilities increase.
22.
Assets increase and stockholders’ equity increases.
23.
Liabilities increase and stockholders’ equity decreases.
24.
Liabilities decrease and assets decrease.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
21.
Owners of Thibeau Industries, Carl and Stefanie, are sent a
dividend check from the company. For this transaction, what is the effect on
the accounting equation for Thibeau Industries?
22.
Assets decrease and stockholders’ equity decreases.
23.
Assets increase and stockholders’ equity increases.
24.
Liabilities increase and stockholders’ equity decreases.
25.
Liabilities increase and stockholders’ equity decreases.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
22.
One effect on the accounting equation when a firm borrows money
is
23.
Stockholders’ equity decreases.
24.
Assets increase.
25.
Liabilities decrease.
26.
Assets decrease.
ANS:
B
PTS: 1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
23.
One effect on the accounting equation when a firm lends money is
24.
stockholders’ equity decreases.
25.
liabilities decrease.
26.
liabilities increase.
27.
total assets remain the same.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
24.
Which of the following statements best describes the effects of
recognizing revenue earned by a business entity?
25.
Assets increase only when cash sales are made.
26.
Stockholders’ equity increases only when credit sales are made.
27.
Assets and stockholders’ equity increase when either cash or
credit sales are made.
28.
Assets increase, but stockholders’ equity decreases, when either
cash or credit sales are made.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
25.
Which of the following statements best describes one effect of
recognizing expenses incurred by a business entity?
26.
Assets will increase.
27.
Liabilities will decrease.
28.
Stockholders’ equity will increase.
29.
Stockholders’ equity will decrease.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO: 03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
26.
Which of the following statements regarding the activities of
Marcus Corp. is true?
27.
Revenues decrease Marcus’ stockholders’ equity.
28.
Expenses increase Marcus’ stockholders’ equity.
29.
Expenses decrease Marcus’ stockholders’ equity.
30.
None of these answer choices is correct.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
27.
Which of the following transactions does not affect the total
assets of Horizon Sailing Corp.?
28.
A bill is received for the telephone service used by Horizon
Sailing during the past month.
29.
Dividends are paid by Horizon Sailing.
30.
Customers are billed for sales made on credit by Horizon
Sailing.
31.
A new computer is purchased on credit by Horizon Sailing.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
28.
Which of the following transactions affects the liabilities for
Gravette, Inc.?
29.
Supplies are purchased for cash by Gravette.
30.
Gravette places an order for merchandise with a supplier; the
merchandise will be shipped to Ernest White in 60 days.
31.
The owners of Gravette invest $100,000 in the company.
32.
Payment is made on a bank loan which Gravette had obtained 6
months ago.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
29.
The Holmes Company purchased a building for $75,000 in cash.
What is the effect on current assets?
30.
Increase in current assets
31.
Decrease in current assets
32.
No effect on current assets
33.
Unable to determine
ANS:
B
PTS: 1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
30.
Louisiana Enterprises received payment from its customers for
previous sales on credit. What was the impact on its working capital?
31.
Increase in working capital
32.
Decrease in working capital
33.
No effect on working capital
34.
Unable to determine
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Application
31.
Given a current ratio of 5 to 3, what is the effect of paying a
supplier within 30 days of the purchase?
32.
The current ratio would increase.
33.
The current ratio would decrease.
34.
The current ratio would remain the same.
35.
Unable to determine.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
32.
Given that Curtain Corp.’s current ratio is 3 to 2, what is the
effect of obtaining a patent from the inventor in exchange for shares of stock
in Curtain Corp.?
33.
The current ratio would increase.
34.
The current ratio would decrease.
35.
The current ratio would remain the same.
36.
Unable to determine.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
Krenshaw Rentals
Use the five transactions for Krenshaw Rentals described below
to answer the question(s) that follow(s).
Oct 1 Krenshaw purchases two new saws
on credit at $375 each. The saws are added to Krenshaw’s rental
inventory. Payment is due in 30 days.
8
Krenshaw accepts advance deposits for tool rentals of $75.
15
Krenshaw receives a bill from Farmer’s Electric Company for $150. Payment
is due in 30 days.
20
Customers are charged $750 by Krenshaw for tool rentals. Payment is due
from the customers in 30 days.
31
Krenshaw receives $500 in payments from the customers that were billed for
rentals on October 20.
33.
Refer to the transactions for Krenshaw Rentals.
Based on the above transactions, how much is still owed to
Krenshaw on October 31 from its customers?
1. $ -0-
2. $ 250
3. $ 500
4. $ 750
ANS:
B
PTS: 1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
34.
If the business has an _________ from a customer, then the
customer has an ________ to the business.
35.
account receivable; account receivable
36.
account payable; account payable
37.
account receivable; account payable
38.
account payable; account receivable
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
35.
If the landlord has rent _________, then the tenant has rent
_________.
36.
revenue; revenue
37.
revenue; expense
38.
expense; revenue
39.
expense; expense
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
36.
Your bookkeeper is off for the day and you are trying to figure
out what her last entry in the journal could be for. Unfortunately, she only
recorded the debit side of the transaction as $4,400 to Accounts Payable. It is
possible that this debit could correspond to:
37.
A purchase of equipment costing $4,400 on credit.
38.
A payment of $4,400 to a supplier to settle a balance due.
39.
A $4,400 sale to a customer.
40.
A $4,400 issuance of the company’s capital stock.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 113-115 | pp.
116-120
OBJ: LO: 03-03 | LO: 03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
37.
Which of the following entries causes a decrease in assets and
in net income?
38.
The entry to record the payment of utilities with cash.
39.
The entry to record the payment of rent for three months in
advance.
40.
The entry to record accrued wages payable.
41.
The entry to record revenue earned but not yet received.
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 108-113 | pp.
116-123
OBJ: LO: 03-03 | LO: 03-05 | LO: 03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
38.
A list of all asset, liability, stockholders’ equity, revenue,
and expense accounts, along with their assigned account numbers, which are used
by a company is a(an)
39.
Account
40.
General Journal
41.
General Ledger
42.
Chart of Accounts
ANS:
D
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
39.
The following transactions occurred during March, the first
month of operations for Canyon Products, Inc.:
1. Issued
50,000 shares of capital stock in exchange for $600,000 cash
2. Purchased
land for $400,000, using a $150,000 cash down payment and signing a note
payable for the balance.
3. Made
a $60,000 cash payment on the note payable from the purchase of land.
4. Purchased
equipment on credit from Burton, Inc. for $63,000.
What is the balance in the Cash account at the end of March?
1. $810,000
2. $210,000
3. $600,000
4. $390,000
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
40.
Double-entry accounting is best characterized as:
41.
The number of debit entries posted to the ledger equals the
number of credit entries.
42.
The number of ledger accounts with debit balances is equal to
the number with credit balances.
43.
Every transaction affects both an asset account and either a
liability account or a stockholders’ equity account.
44.
The total dollar amount of debit entries posted to the ledger is
equal to the dollar amount of the credit entries.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
41.
The record used to accumulate monetary information for each
individual asset, liability, stockholders’ equity, revenue, and expense item is
a(an)
42.
Account
43.
General Journal
44.
General Ledger
45.
Chart of Accounts
ANS:
A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
42.
The system of accounting in which there are at least two
accounts affected in every transaction so that the accounting equation stays in
balance is a(an).
43.
Double-entry system
44.
Debit
45.
Credit
46.
Journalizing
ANS:
A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-120
OBJ: LO: 03-04 | LO:
03-05 NAT: BUSPROG:
Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
43.
A file or book which contains a record for all accounts used by
a company, including the account balance, is called a
44.
chart of accounts
45.
general journal
46.
general ledger
47.
trial balance
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
44.
An abbreviated version of an account which is useful for
analyzing the effects of business transactions is the
45.
chart of accounts
46.
double entry system
47.
T account
48.
trial balance
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
45.
An entry made to the right side of an account is called a
46.
debit
47.
credit
48.
double-entry system
49.
journal entry
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
46.
Debit entries are used to
47.
increase asset accounts
48.
decrease expense accounts
49.
increase liability accounts
50.
increase revenue accounts
ANS: A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
47.
Credit entries are used to
48.
increase asset accounts.
49.
increase liability accounts.
50.
decrease revenue accounts.
51.
decrease liability accounts.
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp. 116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
48.
Which of the following accounts is increased by a credit entry?
49.
Sales Revenue
50.
Salary Expense
51.
Accounts Receivable
52.
Dividends
ANS:
A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
49.
Which of the following accounts is increased by a debit entry?
50.
Common Stock (Capital Stock)
51.
Equipment
52.
Unearned Subscription Revenue
53.
Notes Payable
ANS: B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
50.
All of the following accounts have normal debit balances except
51.
Accounts Receivable
52.
Dividends
53.
Office Supplies Expense
54.
Sales
ANS:
D
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120 OBJ:
LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
51.
All of the following accounts have normal credit balances except
52.
Accounts Payable
53.
Common Stock (Capital Stock)
54.
Investments
55.
Service Revenue
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
52.
Which pair of accounts has the same set of rules for debit and
credit entries?
53.
Common Stock (Capital Stock) and Accounts Payable
54.
Salaries Expense and Retained Earnings
55.
Cash and Notes Payable
56.
Sales Revenue and Accounts Receivable
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
53.
Which pair of accounts has the same set of rules for debit and
credit entries?
54.
Service Revenue and Rent Expense
55.
Dividends and Retained Earnings
56.
Equipment and Salaries Expense
57.
Accounts Receivable and Accounts Payable
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
Parachute Country Club
Use the selected accounts for Parachute Country Club presented
below to answer the following question(s).
CASH
ACCOUNTS RECEIVABLE
8/1 Balance
6,000
8/2
1,800
8/7 900
8/3 500
8/5 400
8/7 900
DEPOSITS RECEIVED IN ADVANCE
(A Liability Account)
SALES
8/3
500
8/2 1,800
8/5 400
54.
Read the information for Parachute Country Club.
On which date did the country club make a credit sale of club
memberships?
1. August
2
2. August
3
3. August
5
4. August
7
ANS:
A
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
55.
Read the information on Parachute Country Club.
On which date did the company make cash sales for daily golf and
swimming fees?
1. August
2
2. August
3
3. August
5
4. August
7
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
56.
Read the information on Parachute Country Club.
On which date did the country club collect an advance deposit?
1. August
2
2. August
3
3. August
5
4. August
7
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
57.
Read the information about Parachute Country Club.
Which of the following describes the transaction which occurred
on August 7?
1. Sold
club memberships on credit.
2. Cash
sales of daily fees.
3. Collected
an advance deposit in cash.
4. Received
cash payments of accounts receivable.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
58.
Read the information about Parachute Country Club.
Assuming that there are no other transactions, how much was owed
to the club by the membership on August 7th?
1. $1,800
2. $1,300
3. $ 900
4. $ 500
ANS:
C PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
59.
A credit means that
60.
the event has an effect on the right side of an account.
61.
the event is unfavorable.
62.
the event is favorable.
63.
the event always decreases the account.
ANS:
A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
60.
The correct term for an entry made to the left side of an
account is
61.
Double-entry system
62.
Debit
63.
Credit
64.
Journalizing
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
61.
What type of account is increased with a debit but is a decrease
to retained earnings?
62.
Liability
63.
Asset
64.
Revenue
65.
Expense
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
62.
Which of the following statements is true?
63.
If a debit entry is made to an account in the general journal,
the same account will receive a credit entry when the amount is posted to the
general ledger
64.
If all transactions are correctly posted to the general ledger,
the sum of the accounts with debit balances should be equal to the sum of the
accounts with credit balances.
65.
Posting occurs when numbers in the general ledger accounts are
transferred to the general journal
66.
If the sum of the debit balances equals the sum of the credit
balances then there were no mistakes made in the posting process
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Comprehension
63.
Which of the following statements is true?
64.
An entry in a general ledger account can be traced to the trial
balance by referring to the page listed in the posting reference column of that
ledger account.
65.
The posting of an amount recorded in the general journal can be
verified by referring to the account number listed in the posting reference
column on that line in the general journal.
66.
Business transactions are recorded first in the general ledger;
then that information is transferred to the general journal.
67.
No explanation is needed for each entry in the general journal.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Comprehension
64.
Maryland Vacations has a $2,200 account receivable from the Miami
Kiwanis. On March 11, the Kiwanis makes a partial payment of $1,050 to
Maryland. The journal entry made on March 11 by Maryland to record this
transaction includes:
65.
A debit to the Cash account of $1,150.
66.
A debit to the Accounts Receivable account of $1,150.
67.
A credit to the Service Revenue account of $1,050.
68.
A credit to the Accounts Receivable account of $1,050.
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-123
OBJ: LO: 03-05 | LO:
03-06 NAT: BUSPROG:
Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
65.
Squidly Products sold and delivered modems to Detail Solutions
for $6,600 to be paid by Detail Solutions in three equal installments over the
next three months. The journal entry made by Squidly to record this transaction
will include:
66.
A credit to Cash for $6,600.
67.
A debit to Accounts Receivable for $6,600.
68.
A debit to Accounts Receivable for $2,200.
69.
A debit to Sales Revenue for $6,600.
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-123
OBJ: LO: 03-05 | LO:
03-06 NAT: BUSPROG:
Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
66.
The purchase of office equipment at a cost of $2,600 with an
immediate down payment of $1,200 and agreement to pay the balance within 60
days is recorded by:
67.
A debit of $2,600 to Office Equipment, a debit of $1,200 to
Accounts Receivable, and a credit of $1,400 to Accounts Payable.
68.
A debit of $1,400 to Accounts Receivable, a debit of $1,200 to
Cash, and a credit of $2,600 to Office Equipment.
69.
A debit of $2,600 to Office Equipment, a credit of $1,200 to
Cash, and a credit of $1,400 to Accounts Payable.
70.
A debit of $2,600 to Office Equipment, a credit of $1,200 to
Cash, and a credit of $1,400 to Accounts Receivable.
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-123
OBJ: LO: 03-05 | LO:
03-06 NAT: BUSPROG:
Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
67.
The record in which transactions are initially recorded in
chronological order as they occur is a(an)
68.
Account
69.
General Journal
70.
General Ledger
71.
Chart of Accounts
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO: 03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
68.
The correct term for the process of transferring amounts from a
book of original entry to specific assets, liabilities, revenues, expenses, and
stockholders’ equity items is
69.
Double-entry system
70.
Posting
71.
Credit
72.
Journalizing
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO: 03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
69.
The correct term for the process of recording the economic
effects of business transactions in a book of original entry is
70.
Double-entry system
71.
Debit
72.
Credit
73.
Journalizing
ANS:
D
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
70.
When the amount for a debit entry in a journal is transferred to
a specific account in the general ledger, it must be recorded
71.
as a debit to that account in the general ledger.
72.
as a credit to that account in the general ledger.
73.
in sum only, without any regard for debit or credit, since the
general ledger accounts do not have spaces for debit and credit entries.
74.
cannot be determined without further information.
ANS:
A
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
71.
Transactions are recorded in the general journal in:
72.
Alphabetical order.
73.
Account number order.
74.
Chronological order.
75.
Financial statement order.
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Comprehension
Morton & Associates
Use the following five transactions for Morton & Associates,
Inc. to answer the question(s).
May 1 Bills are sent to clients for services
provided in April in the amount of $800.
9
Techno, Inc. delivers office furniture ($1,060) and office supplies ($160) to
Morton leaving an invoice for $1,220.
15
Payment is made to Techno, Inc. for the furniture and office supplies delivered
on May 9.
23 A
bill for $430 for electricity for the month of April is received and will be
paid on its due date in June.
31
Salaries of $850 are paid to employees.
72.
See the transactions to Morton & Associates.
The journal entry to record the May 1 transaction will include a
debit of $800 to
1. Sales
Revenue
2. Accounts
Receivable
3. Cash
4. Retained
Earnings
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
73.
See the transactions to Morton & Associates.
The journal entry to record the May 9 transaction will include a
credit of $1,220 to
1. Furniture
and Supplies
2. Cash
3. Accounts
Payable
4. Administrative
Expenses
ANS: C
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
74.
See the transactions to Morton & Associates.
The journal entry to record the May 15 transaction will include
a debit of $1,220 to
1. Salaries
Expense
2. Salaries
Payable
3. Prepaid
Expenses
4. Accounts
Payable
ANS:
D PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
75.
See the transactions to Morton & Associates.
The journal entry to record the May 23 transaction will include
a credit of $430 to
1. Salaries
Expense
2. Cash
3. Prepaid
Expenses
4. Accounts
Payable
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
76.
See the transactions to Morton & Associates.
The journal entry to record the May 31 transaction will include
a credit to
1. Salaries
Expense
2. Salaries
Payable
3. Prepaid
Salaries
4. Cash
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
77.
See the transactions for Morton & Associates.
Based only on these transactions, what is the total amount of
expenses that should appear on the income statement for the month of May?
1. $ 430
2. $ 850
3. $
1,280
4. $
1,440
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 108-113
OBJ: LO:
03-03
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
78.
A list of all accounts and their balances which is used to prove
the equality of debits and credits as of a specific date is a(an)
79.
Account
80.
General Journal
81.
Trial Balance
82.
Chart of Accounts
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
124-126
OBJ: LO: 03-07
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
79.
A trial balance is a(an)
80.
optional financial statement used only by accountants.
81.
device used to prove the equality of debits and credits in the
general ledger.
82.
list of accounts and their balances taken from the chart of
accounts.
83.
financial statement which can be used in place of a balance
sheet.
ANS:
B
PTS:
1
DIF: Difficulty: Easy
REF: pp.
124-126
OBJ: LO:
03-07
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
80.
If the sum of the debits and credits in a trial balance is not
equal, then
81.
there is no concern because the two amounts are not meant to be
equal.
82.
the chart of accounts also does not balance.
83.
it is safe to proceed with the preparation of financial
statements.
84.
most likely an error was made in posting journal entries to the
general ledger or in preparing the trial balance.
ANS:
D
PTS:
1
DIF: Difficulty: Easy
REF: pp.
124-126
OBJ: LO:
03-07
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Comprehension
81.
Which of the following will not cause a trial balance to be out
of balance?
82.
The balance for an account is incorrectly computed.
83.
A debit entry is posted as a credit.
84.
A credit entry is posted to the wrong account as a credit.
85.
An account is accidentally omitted from the trial balance.
ANS:
C
PTS:
1
DIF: Difficulty: Easy
REF: pp.
124-126
OBJ: LO: 03-07
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Comprehension
Wolfe Inc.
Wolfe Inc. reports these account balances at January 1, 2014:
Retained
Earnings $
49,000
Accounts Receivable 20,000
Accounts Payable
24,000
Capital Stock 185,000
Land
153,000
Cash 13,000
Equipment
20,000
Notes Payable 28,000
Buildings
80,000
82.
See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts
receivable and paid $11,000 on its note payable. In Wolfe’s trial balance
prepared on January 1, 2014, the total of the credit column is:
1. $182,000
2. $286,000
3. $196,000
4. $166,000
ANS:
B
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
124-126
OBJ: LO:
03-07
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
83.
See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts
receivable and paid $11,000 on its note payable. In Wolfe’s trial balance
prepared on January 31, 2014, the total of the credit column is:
1. $297,000
2. $287,000
3. $286,000
4. $275,000
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
124-126
OBJ: LO:
03-07
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
84.
See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts
receivable and paid $11,000 on its note payable. On January 31, 2014, the total
liabilities are:
1. $0
2. $56,000
3. $41,000
4. $30,000
ANS:
C
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 108-113 | pp.
124-126
OBJ: LO: 03-03 | LO: 03-07
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
85.
Unfortunately, the bookkeeper notices that two transactions for
Patio Publications were not reflected in the balances of the trial balance: one
to record $800 of accrued wages and salaries to be paid in the next period, and
the other was the use of $560 of office supplies from the supplies on hand. If
the Trial Balance column totals are $15,380 prior to discovering these mistakes,
what are the totals of the Trial Balance columns after the corrections are
made?
86.
$15,860
87.
$15,140
88.
$16,740
89.
$16,180
ANS:
D
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
124-126
OBJ: LO: 03-07
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Analysis
TRUE/FALSE
1. An
external event involves interaction between an entity and its environment.
ANS: T
PTS:
1
DIF: Difficulty: Easy
REF: pp.
106-107
OBJ: LO:
03-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
2. The
initial step in the recording process is posting.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
106-107
OBJ: LO:
03-01
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
3. The
issuance of stock decreases a company’s assets and increases its stockholders’
equity.
ANS:
F
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
4. Payment
of a dividend increases both cash and stockholders’ equity of the distributing
business.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
5. Under
the cost principle, assets are always carried at their current market value.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
6. Every
accounting transaction affects both the balance sheet and the income statement.
ANS:
F
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
7. The
accounting equation must balance after each transaction.
ANS:
T
PTS:
1
DIF: Difficulty: Easy
REF: pp.
108-113
OBJ: LO: 03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
8. Dividends
are a determinant of net income.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
9. If a
company purchases equipment by issuing a note payable, its total assets will
not change.
ANS:
F
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
108-113
OBJ: LO:
03-03
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
10.
A company’s chart of accounts will reflect the nature of its
business.
ANS:
T
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
11.
The origins of single-entry accounting were documented in a book
written by Pacioli over 500 years ago. It includes the concepts of bookkeeping
that are still applied today.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO: 03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
12.
There is a universal chart of accounts that is applicable to all
businesses.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
13.
A T account for Cash cannot contain any credits.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
113-115
OBJ: LO:
03-04
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
14.
A debit entry increases assets, decreases liabilities, or
decreases stockholders’ equity.
ANS:
T
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
15.
The normal balance of the Dividends account is a credit.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
16.
Under the double-entry system of accounting, every transaction
is entered in at least two accounts on opposite sides of T accounts.
ANS:
T
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
17.
A debit is a negative entry.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
18.
With few exceptions, the balance of all accounts should be on
the side of the T account that causes the increase.
ANS:
T
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
116-120
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting |
ACBSP: APC-06-Recording Transactions
KEY: Bloom’s: Knowledge
19.
The credit side of an account is the right side while the debit
side is the left side.
ANS: T
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
20.
When making a general journal entry, there can only be one debit
and one credit.
ANS:
F
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-05
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
21.
Every business transaction is recorded by a debit to a balance
sheet account and a credit to an income statement account.
ANS:
F
PTS:
1
DIF: Difficulty: Moderate
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
22.
Only events that can be measured will be reflected in the
journal entries.
ANS:
T
PTS:
1
DIF: Difficulty: Moderate
REF: pp. 106-107 | pp.
121-123
OBJ: LO: 03-01 | LO: 03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
23.
The ledgers are an example of an accounting book of original
entry.
ANS:
F
PTS:
1
DIF: Difficulty: Easy
REF: pp.
121-123
OBJ: LO:
03-06
NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting
|ACBSP: APC-05-Accounting Cycle
KEY: Bloom’s: Knowledge
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