Question 1

Which of the following is a financial statement that presents a business's accounting equation?

Accepted Answer

A)  Chart of Accounts 
B)  Trial Balance 
C)  Income Statement 
D)  Balance Sheet 
A)  Chart of Accounts 
B)  Trial Balance 
C)  Income Statement 
D)  Balance Sheet D

Question 2

An accounts receivable requires the business to pay cash in the future.

Accepted Answer

A) True 
 B)False  False

Question 3

A business has the following transactions: The business received $16,000 cash and issued common stock to stockholders.
The business purchases $700 of office supplies on account.
The business purchases $2,000 of furniture on account.
The business performs services to various clients totaling $13,000 on account.
The business pays out $3,000 for salaries expense and $3,500 for rent expense.
The business pays $700 to a supplier for the office supplies purchased earlier.
The business collects $1,000 from one of its clients for services rendered earlier in the month.
At the end of the month, all journal entries are posted to the ledger. Accounts Payable will appear as
Which of the following?

Accepted Answer

A)  Accounts Payable $$\begin{array} { r | r r } 
\hline 700 & 700 & \
& 2,000 & \
\hline & 2,000 & \text { Bal. }
\end{array}$$ 
B)  Accounts Payable   
C)  Accounts Payable $$\begin{array} { r r | r | } 
& 700 & \
& 2,000 & \
& & 700 \
\hline \text { Bal. } & 2,000 & \
\hline
\end{array}$$ 
D)  Accounts Payable   
A)  Accounts Payable $$\begin{array} { r | r r } 
\hline 700 & 700 & \
& 2,000 & \
\hline & 2,000 & \text { Bal. }
\end{array}$$ 
B)  Accounts Payable   
C)  Accounts Payable $$\begin{array} { r r | r | } 
& 700 & \
& 2,000 & \
& & 700 \
\hline \text { Bal. } & 2,000 & \
\hline
\end{array}$$ 
D)  Accounts Payable   A

Question 4

Which of the following is assessed using the debt ratio?

Accepted Answer

A)  profitability 
B)  revenues 
C)  risk of default 
D)  net income 
A)  profitability 
B)  revenues 
C)  risk of default 
D)  net income

Question 5

The trial balance is also known as the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a liability account?

Accepted Answer

A)  Prepaid Advertising 
B)  Cash 
C)  Building 
D)  Unearned Rent 
A)  Prepaid Advertising 
B)  Cash 
C)  Building 
D)  Unearned Rent

Question 7

The accounting equation is made up of four parts or categories.

Accepted Answer

A) True 
 B)False

Question 8

The first step in the flow of accounting data is the preparation of source documents.

Accepted Answer

A) True 
 B)False

Question 9

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E).
 $$\begin{array} { | l | l | } 
\hline \text { Retained Earnings } &\quad\quad\quad\quad \
\hline \text { Unearned Revenue } & \
\hline \text { Building } & \
\hline \text { Interest Revenue } & \
\hline \text { Prepaid Advertising } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 10

Ranger Pool Company received cash of $40,000 and issued common stock. Which of the following accounts will be credited?

Accepted Answer

A)  Accounts Receivable 
B)  Cash 
C)  Common Stock 
D)  Accounts Payable 
A)  Accounts Receivable 
B)  Cash 
C)  Common Stock 
D)  Accounts Payable

Question 11

A business purchases $500 of office supplies on account. What is the effect on the accounting equation?

Accepted Answer

A)  Office Supplies increase and Cash decreases. 
B)  Office Supplies increase and Accounts Payable increase. 
C)  Office Supplies increase and Accounts Payable decrease. 
D)  Total assets increase and total liabilities decrease. 
A)  Office Supplies increase and Cash decreases. 
B)  Office Supplies increase and Accounts Payable increase. 
C)  Office Supplies increase and Accounts Payable decrease. 
D)  Total assets increase and total liabilities decrease.

Question 12

The following are selected current month's balances for Morgan, Inc. $$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & \$ 9,000 \
\hline \text { Revenue } & 11,000 \
\hline \text { Cash } & 3,150 \
\hline \text { Expenses } & 1,600 \
\hline \text { Furniture } & 13,000 \
\hline \text { Accounts Receivable } & 16,000 \
\hline \text { Common Stock } & 7,250 \
\hline \text { Notes Payable } & 6,500 \
\hline
\end{array}$$ Based on this information, calculate the total amount of credits for the trial balance.

Accepted Answer

A)  $26,500 
B)  $22,750 
C)  $24,750 
D)  $33,750 
A)  $26,500 
B)  $22,750 
C)  $24,750 
D)  $33,750

Question 13

Debit refers to the right side of the T-account, and credit refers to the left side.

Accepted Answer

A) True 
 B)False

Question 14

Dividends and expenses increase equity.

Accepted Answer

A) True 
 B)False

Question 15

The accounting analysis system is used to record the dual effects of each transaction.

Accepted Answer

A) True 
 B)False

Question 16

Briefly describe each of the following source documents:
 $$\begin{array} { | l | l | } 
\hline \text { Source Document } & \text { Description } \
\hline \text { Purchase invoices } & \
\hline \text { Bank deposit slips } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 17

Which of the following sequences is the normal sequence of flow of accounting data?

Accepted Answer

A)  Ledger → Journal → Source document 
B)  Journal → Source document → Ledger 
C)  Source document → Journal → Ledger 
D)  Source document → Ledger → Journal 
A)  Ledger → Journal → Source document 
B)  Journal → Source document → Ledger 
C)  Source document → Journal → Ledger 
D)  Source document → Ledger → Journal

Question 18

When is a trial balance usually prepared?

Accepted Answer

A)  after each entry is journalized 
B)  before the financial statements are prepared 
C)  after the financial statements are prepared 
D)  at the beginning of an accounting period 
A)  after each entry is journalized 
B)  before the financial statements are prepared 
C)  after the financial statements are prepared 
D)  at the beginning of an accounting period

Question 19

The normal balance of an account is the increase side of the account.

Accepted Answer

A) True 
 B)False

Question 20

Provide an explanation for each of the follow asset accounts.
 $$\begin{array} { | l | l | } 
\hline \text { Account Name } & \text { Explanation } \
\hline \text { Accounts Receivable } & \
\
\
\hline \text { Prepaid Expense } & \
\
\
\hline \text { Notes Receivable } & \
& \
\
\
\hline
\end{array}$$

Accepted Answer

None

Exam 2: Recording Business Transactions

Which of the following is a financial statement that presents a business's accounting equation?

An accounts receivable requires the business to pay cash in the future.

Which of the following is assessed using the debt ratio?

The trial balance is also known as the balance sheet.

Which of the following is a liability account?

The accounting equation is made up of four parts or categories.

The first step in the flow of accounting data is the preparation of source documents.

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). Retained Earnings Unearned Revenue Building Interest Revenue Prepaid Advertising

Ranger Pool Company received cash of $40,000 and issued common stock. Which of the following accounts will be credited?

A business purchases $500 of office supplies on account. What is the effect on the accounting equation?

Debit refers to the right side of the T-account, and credit refers to the left side.

Dividends and expenses increase equity.

The accounting analysis system is used to record the dual effects of each transaction.

Briefly describe each of the following source documents: Source Document Description Purchase invoices Bank deposit slips

Which of the following sequences is the normal sequence of flow of accounting data?

When is a trial balance usually prepared?

The normal balance of an account is the increase side of the account.

Provide an explanation for each of the follow asset accounts. Account Name Explanation Accounts Receivable Prepaid Expense Notes Receivable

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

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