accounting exam

ion 11 pts

A business entity is an individual, association, or organization with control over economic resources and which engages in economic activities.

True

False

Flag this QuestionQuestion 21 pts

To reconcile the bank statement, which of the following amounts would be subtracted from the bank statement balance?

service charge

deposits in transit

outstanding checks

amounts collected by the bank for the depositor’s account

Flag this QuestionQuestion 31 pts

Because the first formal accounting record of a transaction is made in a journal from source document information,

a journal is commonly referred to as a(n)

account.

book of original entry.

ledger.

cross-reference.

Flag this QuestionQuestion 41 pts

A T account has three parts: the title, the debit side, and the credit side.

True

False

Flag this QuestionQuestion 51 pts

Melissa Taylor has gross earnings of $425 and withholdings of $26.35 for Social Security tax, $6.16 for Medicare tax, and $35 for federal income tax. Her employer pays $26.35 for Social Security tax, $6.16 for Medicare tax, $3 for FUTA tax, and $9 for SUTA tax. The total cost of Melissa to her employer is

$437.00.

$469.51.

$425.00.

$32.51.

Flag this QuestionQuestion 61 pts

The federal unemployment tax is levied on

employers and is not deducted from employees’ earnings.

employers and is deducted from employees’ earnings.

employees and employers.

employees and is deducted from customer payments.

Flag this QuestionQuestion 71 pts

Whenever the bank mails a credit memo to the depositor indicating the amount of interest credited to the account, the transaction that would be entered in the accounting records of the depositor would include

debiting Interest Earned and crediting Cash.

debiting Cash and crediting Interest Earned.

debiting Cash and crediting Interest Expense.

debiting Interest Expense and crediting Cash.

Flag this QuestionQuestion 81 pts

At least two accounts are affected by every transaction.

True

False

Flag this QuestionQuestion 91 pts

The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting.

True

False

Flag this QuestionQuestion 101 pts

The balance sheet reports

revenue.

expenses.

net income.

liabilities.

Flag this QuestionQuestion 111 pts

Expense accounts normally have debit balances.

True

False

Flag this QuestionQuestion 121 pts

The cash basis of accounting is used by some small businesses and by most individuals for tax purposes.

True

False

Flag this QuestionQuestion 131 pts

Merchandise returned by the customer for a refund is called a sales return.

True

False

Flag this QuestionQuestion 141 pts

An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.

True

False

Flag this QuestionQuestion 151 pts

Liabilities represent an “inside” interest in a business.

True

False

Flag this QuestionQuestion 161 pts

When all taxes have been paid, the Social Security Tax Payable account will have

a credit balance.

a debit balance.

equal debit and credit balances.

a zero balance.

Flag this QuestionQuestion 171 pts

Journalizing does NOT include

crediting account(s) that are affected.

debiting account(s) that are affected.

entering the date.

posting the debits and credits to the accounts.

Flag this QuestionQuestion 181 pts

While certain distinctive problems may arise in keeping the accounts of any specific enterprise, the principles of accounting on the cash basis are generally the same.

True

False

Flag this QuestionQuestion 191 pts

For EVERY transaction, the accountant enters the

year, month, and day.

month and day.

year and day.

day.

Flag this QuestionQuestion 201 pts

Selling goods on account is not common practice at the retail level of the distribution process.

True

False

Flag this QuestionQuestion 211 pts

In reconciling a bank statement, the bank statement balance is $1,000 and the balance per books is $1,205. A bank service charge is $5; a deposit in transit totals $500; and outstanding checks total $300. The journal entry for a bank service charge would include

debiting Cash and crediting Owner’s Capital.

debiting Accounts Payable and crediting Cash.

debiting Cash and crediting Miscellaneous Expense.

debiting Miscellaneous Expense and crediting Cash.

Flag this QuestionQuestion 221 pts

Prepaid Insurance is an asset account.

True

False

Flag this QuestionQuestion 231 pts

The third pair of columns on a 10-column work sheet prepared at the end of the period would be the

Income Statement columns.

Adjustments columns.

Balance Sheet columns.

Adjusted Trial Balance columns.

Flag this QuestionQuestion 241 pts

A corporation is usually managed by

stockholders.

two or more partners.

a professional manager.

a proprietor.

Flag this QuestionQuestion 251 pts

A credit memo states the amount of a sales allowance or return.

True

False

Flag this QuestionQuestion 261 pts

Forms and papers that provide information about a business transaction are called

journals.

ledgers.

accounts.

source documents.

Flag this QuestionQuestion 271 pts

To encourage customers who purchase merchandise on account to pay promptly, a cash discount is usually offered.

True

False

Flag this QuestionQuestion 281 pts

On a bank reconciliation, checks issued during the period that were not presented to the bank for payment before the bank statement was prepared are known as

dishonored checks.

outstanding checks.

NSF checks.

deposits in transit.

Flag this QuestionQuestion 291 pts

To debit an account is to enter an amount on the left side of the account.

True

False

Flag this QuestionQuestion 301 pts

A source document prepared by the seller that lists the items shipped, their cost, and the method of shipment is commonly referred to by the seller as a purchase invoice.

True

False

Flag this QuestionQuestion 311 pts

A debit to Accounts Receivable for $50 and a credit to Cash for $50 would be an accurate journal entry to record

petty cash.

electronic funds transfers (EFTs).

ATM deposits.

not sufficient funds (NSF) checks.

Flag this QuestionQuestion 321 pts

To journalize the employer’s payroll taxes, we need to credit all of the following accounts EXCEPT

FUTA Tax Payable.

Medicare Tax Payable.

Social Security Tax Payable.

Payroll Taxes Expense.

Flag this QuestionQuestion 331 pts

A self-employment tax is a contribution to the

Social Security and Medicare programs.

charities of the individual owner’s choice.

SUTA programs.

FUTA programs.

Flag this QuestionQuestion 341 pts

Any accounting period of twelve months’ duration is usually referred to as a fiscal year.

True

False

Flag this QuestionQuestion 351 pts

The accounting equation shows the relationship among the three basic accounting elements—assets, expenses, and owner’s equity.

True

False

Flag this QuestionQuestion 361 pts

An increase or decrease in any asset, liability, owner’s equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.

True

False

Flag this QuestionQuestion 371 pts

The supplier or vendor is the person or firm from whom the merchandise or other property is ordered.

True

False

Flag this QuestionQuestion 381 pts

A business that makes a product to sell is called a manufacturing business.

True

False

Flag this QuestionQuestion 391 pts

A self-employment tax is required of an individual who owns his or her own business and makes

$200 or more.

$1,000 or more.

$1 or more.

$400 or more.

Flag this QuestionQuestion 401 pts

The month in the journal is recorded

for the first and last transaction of the month.

as the first entry on a page.

for the last transaction of the month.

with every transaction.

Flag this QuestionQuestion 411 pts

A sales ticket is a document created as evidence of a sale in a retail business.

True

False

Flag this QuestionQuestion 421 pts

When delivery equipment is purchased on account, the transaction to be entered by the purchaser includes

debiting Delivery Expense and crediting Accounts Payable.

debiting Delivery Equipment and crediting Cash.

debiting Delivery Expense and crediting Cash.

debiting Delivery Equipment and crediting Accounts Payable.

Flag this QuestionQuestion 431 pts

A partnership is owned by stockholders or shareholders and is managed by them.

True

False

Flag this QuestionQuestion 441 pts

The transaction to record payment for delivery equipment that was purchased on account in the previous month

would include

debiting Cash and crediting Accounts Receivable.

debiting Cash and crediting Accounts Payable.

debiting Accounts Payable and crediting Cash.

debiting Delivery Equipment and crediting Cash.

Flag this QuestionQuestion 451 pts

If owner’s equity and liabilities increased during the period, then assets must also have increased.

True

False

Flag this QuestionQuestion 461 pts

If the revenue of a period exceeds the expenses, the excess represents a net loss.

True

False

Flag this QuestionQuestion 471 pts

Major documents used in the purchasing process are the purchase requisition, purchase order, receiving report, and sales invoice.

True

False

Flag this QuestionQuestion 481 pts

To reconcile the bank statement, which of the following amounts would be subtracted from the checkbook balance?

amounts collected by the bank for the depositor’s account

outstanding checks

deposits in transit

service charge

Flag this QuestionQuestion 491 pts

The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the

Balance Sheet columns.

Income Statement columns.

Adjusted Trial Balance columns.

Adjustments columns.

Flag this QuestionQuestion 501 pts

Liability accounts normally have debit balances.

True

False