Question 1

In the expanded version of the accounting equation income and expenses are sub-groupings of:

Accepted Answer

A)  assets. 
B)  equity. 
C)  liabilities. 
D)  bank. 
A)  assets. 
B)  equity. 
C)  liabilities. 
D)  bank. B

Question 2

A list of ledger accounts and their balances is called a:

Accepted Answer

A)  chart of accounts. 
B)  listing. 
C)  general ledger. 
D)  trial balance. 
A)  chart of accounts. 
B)  listing. 
C)  general ledger. 
D)  trial balance. D

Question 3

The term used in the Framework for the Preparation and Presentation of Financial Statements for income which arises in the course of the ordinary activities of an entity is:

Accepted Answer

A)  revenue. 
B)  gain. 
C)  fees. 
D)  profit. 
A)  revenue. 
B)  gain. 
C)  fees. 
D)  profit. A

Question 4

A regular withdrawal of cash by the owner from the business is treated as a reduction in equity and is recorded in an account called:

Accepted Answer

A)  creditors. 
B)  debtors. 
C)  drawings. 
D)  mortgage. 
A)  creditors. 
B)  debtors. 
C)  drawings. 
D)  mortgage.

Question 5

On 15 May Osaka paid $715 cash for an 18-month insurance policy including 10% GST. 	Which of the following is the general journal entry to record the payment?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 6

Which of these errors would be detected by a trial balance?

Accepted Answer

A)  A cash sale was recorded in the sales account as $237 instead of $273 but was correctly recorded in the bank account. 
B)  Office salaries were recorded as office expenses. 
C)  The sales assistant pocketed the cash from a cash sale and did not ring it up on the register. 
D)  Purchase of inventory on credit was recorded as a debit to the plant and equipment account and a credit to creditors. 
A)  A cash sale was recorded in the sales account as $237 instead of $273 but was correctly recorded in the bank account. 
B)  Office salaries were recorded as office expenses. 
C)  The sales assistant pocketed the cash from a cash sale and did not ring it up on the register. 
D)  Purchase of inventory on credit was recorded as a debit to the plant and equipment account and a credit to creditors.

Question 7

A trial balance is prepared to:

Accepted Answer

A)  act as a link between the journal and the ledger. 
B)  determine profit or loss. 
C)  verify the equality of debit and credit postings in the ledger. 
D)  act as an index to the ledger. 
A)  act as a link between the journal and the ledger. 
B)  determine profit or loss. 
C)  verify the equality of debit and credit postings in the ledger. 
D)  act as an index to the ledger.

Question 8

The accounting entry when income is earned on credit is which of the following?

Accepted Answer

A)  Debit cash, credit income 
B)  Debit accounts receivable, credit income 
C)  Debit income, credit accounts payable 
D)  Debit accounts payable, credit income 
A)  Debit cash, credit income 
B)  Debit accounts receivable, credit income 
C)  Debit income, credit accounts payable 
D)  Debit accounts payable, credit income

Question 9

The system of accounting where each transaction effects two or more accounts and the sum of the debit entries equals the sum of the credit entries is called:

Accepted Answer

A)  single entry accounting. 
B)  double-entry accounting. 
C)  twin accounting. 
D)  debit and credit accounting. 
A)  single entry accounting. 
B)  double-entry accounting. 
C)  twin accounting. 
D)  debit and credit accounting.

Question 10

Financial reports prepared between the regular year-end reports are called:

Accepted Answer

A)  interim reports. 
B)  audited reports. 
C)  consolidated reports. 
D)  trial balances. 
A)  interim reports. 
B)  audited reports. 
C)  consolidated reports. 
D)  trial balances.

Question 11

A party to whom the entity owes money for goods or services provided to the entity is called a:

Accepted Answer

A)  creditor. 
B)  debtor. 
C)  debit. 
D)  credit. 
A)  creditor. 
B)  debtor. 
C)  debit. 
D)  credit.

Question 12

Select the entry which correctly records the purchase of a building for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20 year, 8% mortgage. Ignore GST.

Accepted Answer

A)  DR buildings $100 000; CR bank $100 000 
B)  DR buildings $300 000; CR bank $300 000 
C)  DR buildings $300 000; CR bank $100 000; CR mortgage $200 000 
D)  DR buildings $300 000; CR capital $300 000 
A)  DR buildings $100 000; CR bank $100 000 
B)  DR buildings $300 000; CR bank $300 000 
C)  DR buildings $300 000; CR bank $100 000; CR mortgage $200 000 
D)  DR buildings $300 000; CR capital $300 000

Question 13

A listing of the complete ledger account titles and their related numbers is known as a/an:

Accepted Answer

A)  general ledger. 
B)  master file. 
C)  index. 
D)  chart of accounts. 
A)  general ledger. 
B)  master file. 
C)  index. 
D)  chart of accounts.

Question 14

Which statement relating to the general journal is incorrect?

Accepted Answer

A)  The debit and credit effects of each transaction are shown together. 
B)  It is compiled using the information taken from the entities general ledger. 
C)  It provides a record of transactions in date order. 
D)  It is referred to as a book of original entry. 
A)  The debit and credit effects of each transaction are shown together. 
B)  It is compiled using the information taken from the entities general ledger. 
C)  It provides a record of transactions in date order. 
D)  It is referred to as a book of original entry.

Question 15

A two year insurance policy paid for on l January can initially be recorded in an asset account called:

Accepted Answer

A)  prepaid insurance. 
B)  insurance payable. 
C)  unearned insurance. 
D)  debtors. 
A)  prepaid insurance. 
B)  insurance payable. 
C)  unearned insurance. 
D)  debtors.

Question 16

Which of these is incorrect?

Accepted Answer

A)  The normal balance for an asset is a debit. 
B)  The normal balance for a liability is a credit. 
C)  The normal balance for equity is a debit. 
D)  The normal balance for income is a credit. 
A)  The normal balance for an asset is a debit. 
B)  The normal balance for a liability is a credit. 
C)  The normal balance for equity is a debit. 
D)  The normal balance for income is a credit.

Question 17

Why is the receipt of an order from a customer not regarded as a transaction?

Accepted Answer

A)  Because an exchange between the entity and the customer has not yet occurred. 
B)  Because the computer cannot record it. 
C)  Because the customer might cancel the order. 
D)  The receipt of an order is regarded as a transaction. 
A)  Because an exchange between the entity and the customer has not yet occurred. 
B)  Because the computer cannot record it. 
C)  Because the customer might cancel the order. 
D)  The receipt of an order is regarded as a transaction.

Question 18

Which statement relating to a trial balance is incorrect?

Accepted Answer

A)  A trial balance may be prepared at any time to test the equality of debits and credits in the ledger. 
B)  A trial balance reports the financial position of a business. 
C)  The fact that the sum of the debit column equals the sum of the credit column does not guarantee that no errors have been made in the ledger. 
D)  A trial balance is a list of all the accounts in the ledger with their current balances. 
A)  A trial balance may be prepared at any time to test the equality of debits and credits in the ledger. 
B)  A trial balance reports the financial position of a business. 
C)  The fact that the sum of the debit column equals the sum of the credit column does not guarantee that no errors have been made in the ledger. 
D)  A trial balance is a list of all the accounts in the ledger with their current balances.

Question 19

Speedy Window Cleaning paid $120 of advertising for the month with Cheque No. 000221. Ignore GST. Which of the following reflects the effect on the accounting equation?

Accepted Answer

A)  Decrease in equity of $120; increase in assets of $120. 
B)  Decrease in equity of $120; decrease in assets of $120. 
C)  Increase in assets of $120; increase in liabilities of $120. 
D)  Decrease in assets of $120; increase in equity of $120. 
A)  Decrease in equity of $120; increase in assets of $120. 
B)  Decrease in equity of $120; decrease in assets of $120. 
C)  Increase in assets of $120; increase in liabilities of $120. 
D)  Decrease in assets of $120; increase in equity of $120.

Question 20

The accounting entry to record the payment of a liability is which of the following?

Accepted Answer

A)  Debit an asset account and credit a liability account 
B)  Debit a liability account and credit an asset account 
C)  Debit an equity account and credit a liability account 
D)  Debit a liability account and credit an equity account 
A)  Debit an asset account and credit a liability account 
B)  Debit a liability account and credit an asset account 
C)  Debit an equity account and credit a liability account 
D)  Debit a liability account and credit an equity account

Exam 3: Recording Transactions

In the expanded version of the accounting equation income and expenses are sub-groupings of:

A list of ledger accounts and their balances is called a:

The term used in the Framework for the Preparation and Presentation of Financial Statements for income which arises in the course of the ordinary activities of an entity is:

A regular withdrawal of cash by the owner from the business is treated as a reduction in equity and is recorded in an account called:

On 15 May Osaka paid $715 cash for an 18-month insurance policy including 10% GST. Which of the following is the general journal entry to record the payment?

Which of these errors would be detected by a trial balance?

A trial balance is prepared to:

The accounting entry when income is earned on credit is which of the following?

The system of accounting where each transaction effects two or more accounts and the sum of the debit entries equals the sum of the credit entries is called:

Financial reports prepared between the regular year-end reports are called:

A party to whom the entity owes money for goods or services provided to the entity is called a:

Select the entry which correctly records the purchase of a building for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20 year, 8% mortgage. Ignore GST.

A listing of the complete ledger account titles and their related numbers is known as a/an:

Which statement relating to the general journal is incorrect?

A two year insurance policy paid for on l January can initially be recorded in an asset account called:

Which of these is incorrect?

Why is the receipt of an order from a customer not regarded as a transaction?

Which statement relating to a trial balance is incorrect?

Speedy Window Cleaning paid $120 of advertising for the month with Cheque No. 000221. Ignore GST. Which of the following reflects the effect on the accounting equation?

The accounting entry to record the payment of a liability is which of the following?

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

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