Question 1

When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service.

Accepted Answer

A)  Prepaid Rent, debit; Rent Revenue, credit. 
B)  Cash, debit; Unearned Rent, credit. 
C)  Cash, debit; Prepaid Rent, credit. 
D)  Cash, debit; Rent Expense, credit. 
A)  Prepaid Rent, debit; Rent Revenue, credit. 
B)  Cash, debit; Unearned Rent, credit. 
C)  Cash, debit; Prepaid Rent, credit. 
D)  Cash, debit; Rent Expense, credit.

Question 3

Accounts are classified in the ledger

Accepted Answer

A)  chronologically 
B)  alphabetically 
C)  in accordance with their appearance in the financial statements 
D)  with the accounts used most often listed first 
A)  chronologically 
B)  alphabetically 
C)  in accordance with their appearance in the financial statements 
D)  with the accounts used most often listed first

Question 4

Which of the following entries records the payment of insurance for the current month?

Accepted Answer

A)  Cash, debit; Insurance Expense, credit 
B)  Insurance Expense, debit; Cash, credit 
C)  Insurance Expense, debit; Accounts Receivable, credit 
D)  Prepaid Insurance, debit; Cash, credit 
A)  Cash, debit; Insurance Expense, credit 
B)  Insurance Expense, debit; Cash, credit 
C)  Insurance Expense, debit; Accounts Receivable, credit 
D)  Prepaid Insurance, debit; Cash, credit

Question 5

Richardson Company has a condensed income statement as shown. $$\begin{array} { | l | l | l | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Sales } & \$ 150,000 & \$ 165,500 \
\hline \text { Total operating expenses } & 133,000 & 147,500 \
\hline \text { Net income } & 17,000 & 18,000 \
\hline
\end{array}$$ Using horizontal analysis, calculate the amount and percent change for sales. Round to one decimal place.

Accepted Answer

A)  $17,000), 11.3%) 
B)  $15,500), 10.3%) 
C)  $18,000), 10.9%) 
D)  $15,500), 9.4%) 
A)  $17,000), 11.3%) 
B)  $15,500), 10.3%) 
C)  $18,000), 10.9%) 
D)  $15,500), 9.4%)

Question 6

Expenses can result from

Accepted Answer

A)  increasing stockholders' equity 
B)  consuming services 
C)  using up liabilities 
D)  purchasing assets 
A)  increasing stockholders' equity 
B)  consuming services 
C)  using up liabilities 
D)  purchasing assets

Question 7

Several types of errors can be made during the journalizing and posting process. Match the following with their best description.
-Column incorrectly added.

Accepted Answer

A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors 
A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors

Question 8

Several types of errors can be made during the journalizing and posting process. Match the following with their best description.
-Debit or credit posting omitted.

Accepted Answer

A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors 
A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors

Question 9

$$\begin{array} { | l | l | c | l | l | l | } 
\hline \text { March } & 10 & \text { Accounts Payable } & & 800 & \
\hline & & \text { Cash } & & & 800 \
\hline & & \text { Paid creditors on account. } & & & \
\hline
\end{array}$$ What effects does this journal entry have on the accounts?

Accepted Answer

A)  decrease Accounts Payable, increase Cash 
B)  increase Cash, decrease Accounts Payable 
C)  increase Accounts Payable, increase Cash 
D)  decrease Accounts Payable, decrease Cash 
A)  decrease Accounts Payable, increase Cash 
B)  increase Cash, decrease Accounts Payable 
C)  increase Accounts Payable, increase Cash 
D)  decrease Accounts Payable, decrease Cash

Question 10

The double-entry accounting system records each transaction twice.

Accepted Answer

A) True 
 B)False

Question 11

A credit to the cash account will increase the account.

Accepted Answer

A) True 
 B)False

Question 12

Several types of errors can be made during the journalizing and posting process. Match the following with their best description.
-Amount incorrectly entered on trial balance.

Accepted Answer

A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors 
A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors

Question 13

The process of recording a transaction in the journal is called

Accepted Answer

A)  ledgerizing 
B)  journalizing 
C)  posting 
D)  summarizing 
A)  ledgerizing 
B)  journalizing 
C)  posting 
D)  summarizing

Question 14

In the chart of accounts, each account number has two digits. The first digit indicates the major account group to which the account belongs. Which of the following correctly identifies the major account groups typically represented by the numbers 1 through 5?

Accepted Answer

A)  1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Expenses, 5-Revenues 
B)  1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Revenues, 5-Expenses 
C)  1-Assets, 2-Stockholders' Equity, 3-Revenues, 4-Expenses, 5-Dividends 
D)  1-Stockholders' Equity, 2-Dividends, 3-Revenues, 4-Expenses 
A)  1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Expenses, 5-Revenues 
B)  1-Assets, 2-Liabilities, 3-Stockholders' Equity, 4-Revenues, 5-Expenses 
C)  1-Assets, 2-Stockholders' Equity, 3-Revenues, 4-Expenses, 5-Dividends 
D)  1-Stockholders' Equity, 2-Dividends, 3-Revenues, 4-Expenses

Question 15

Which of the following statements is not true about liabilities?

Accepted Answer

A)  Liabilities are debts owed to outsiders. 
B)  Account titles of liabilities often include the term "payable." 
C)  Cash received before a service is performed creates a liability. 
D)  Liabilities do not include wages owed to employees of the company. 
A)  Liabilities are debts owed to outsiders. 
B)  Account titles of liabilities often include the term "payable." 
C)  Cash received before a service is performed creates a liability. 
D)  Liabilities do not include wages owed to employees of the company.

Question 16

For each of the following accounts, indicate whether its normal balance is on the credit side or the debit side of the T account.
-Accounts Receivable

Accepted Answer

A) Credit side 
B) Debit side 
A) Credit side 
B) Debit side

Question 17

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Accepted Answer

A) True 
 B)False

Question 18

A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.

Accepted Answer

A) True 
 B)False

Question 19

Several types of errors can be made during the journalizing and posting process. Match the following with their best description.
-Balance entered on wrong side of account.

Accepted Answer

A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors 
A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors

Question 20

Which of the following accounts would be increased with a credit?

Accepted Answer

A)  Land; Accounts Payable; Dividends 
B)  Accounts Payable; Unearned Revenue; Common Stock 
C)  Dividends; Accounts Receivable; Unearned Revenue 
D)  Cash; Accounts Receivable; Common Stock 
A)  Land; Accounts Payable; Dividends 
B)  Accounts Payable; Unearned Revenue; Common Stock 
C)  Dividends; Accounts Receivable; Unearned Revenue 
D)  Cash; Accounts Receivable; Common Stock

Exam 2: Analyzing Transactions

When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Which of the following entries records the receipt of cash for two months' rent? The cash was received in advance of providing the service.

Accounts are classified in the ledger

Which of the following entries records the payment of insurance for the current month?

Richardson Company has a condensed income statement as shown. Year 2 Year 1 Sales \ 150,000 \ 165,500 Total operating expenses 133,000 147,500 Net income 17,000 18,000 Using horizontal analysis, calculate the amount and percent change for sales. Round to one decimal place.

Expenses can result from

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Column incorrectly added.

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Debit or credit posting omitted.

March 10 Accounts Payable 800 Cash 800 Paid creditors on account. What effects does this journal entry have on the accounts?

The double-entry accounting system records each transaction twice.

A credit to the cash account will increase the account.

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Amount incorrectly entered on trial balance.

The process of recording a transaction in the journal is called

In the chart of accounts, each account number has two digits. The first digit indicates the major account group to which the account belongs. Which of the following correctly identifies the major account groups typically represented by the numbers 1 through 5?

Which of the following statements is not true about liabilities?

For each of the following accounts, indicate whether its normal balance is on the credit side or the debit side of the T account. -Accounts Receivable

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Balance entered on wrong side of account.

Which of the following accounts would be increased with a credit?

Introduction to Accounting and Business

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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