Financial Accounting information for decision makers John J Wild 7th Edition Test Bank

Financial Accounting information for decision makers John J Wild  7th Edition  Test Bank
Product Code: 222
Availability: In Stock
Price: $24.99
Qty:     - OR -   Add to Wish List
Add to Compare

Description

Chapter 02
Accounting System and Financial Statements

True / False Questions

[Question]
1. Accounting records are also referred to as the books.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Accounting Records

[Question]
2. The first step in the analyzing and recording process is to analyze each transaction and event from source documents.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Source Documents
Topic: Accounting Records

[Question]
3. Preparation of a trial balance is the first step in the analyzing and recording process.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Accounting Records

[Question]
4. Items such as sales slips, invoices, checks, and purchase orders are source documents.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C1
Topic: Source Documents

[Question}
5. An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Account

[Question]
6. According to the seller, a customers promise to pay is called an account payable.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C2
Topic: Account Receivable
Topic: Account Payable
Topic: Account

[Question]
7. Dividends are a type of business expense.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Dividends
Topic: Account

[Question]
8. As prepaid expenses are used up, the costs of these assets become expenses.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C2
Topic: Prepaid Expenses
Topic: Account

[Question]
9. Land and buildings are generally recorded in the same ledger account.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C2
Topic: Land
Topic: Building
Topic: Account

[Question]
10. It is not necessary to keep separate accounts for all items of importance for business decisions.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C2
Topic: Account

[Question]
11. Unearned revenues are classified as liabilities.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Unearned Revenue

[Question]
12. Cash dividends should be treated as an expense to the business.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Dividends

[Question]
13. When a company provides services for which cash will not be received until some future date, the company should record unearned revenue for the amount charged to the customer.
Answer: FALSE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C2
Topic: Account
Topic: Unearned Revenue
Topic: Revenue Recognition

[Question]
14. The chart of accounts is a list of all the accounts used by a company and a corresponding identification number.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C3
Topic: Chart of Accounts

[Question]
15. An account balance is the difference between the debits and credits for an account including any beginning balance.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Account Balance

[Question]
16. Debit means the right-hand side of any account.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit

[Question]
17. In a double-entry accounting system, the total amount debited must always equal the-total amount credited.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Double Entry Accounting System
Topic: Debit
Topic: Credit

[Question]
18. Increases in liability accounts are recorded as debits.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit
Topic: Liabilities

[Question]
19. Debits increase both asset and expense accounts.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit
Topic: Assets
Topic: Expenses

[Question]
20. Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C4
Topic: Double Entry Accounting System

[Question]
21. A revenue account normally has a debit balance.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C4
Topic: Debit
Topic: Revenue

[Question]
22. Accounts are normally decreased by debits.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C4
Topic: Debit

[Question]
23. The dividends account normally has a credit balance since it is an equity account.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C4
Topic: Credit
Topic: Dividends

[Question]
24. Asset accounts normally have credit balances and expense accounts normally have debit balances.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Credit
Topic: Debit
Topic: Assets
Topic: Expenses

[Question]
25. Common Stock normally has a debit balance.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit
Topic: Common Stock

[Question]
26. A debit entry is always favorable.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C4
Topic: Debit

[Question]
27. A transaction that decreases an asset account and increases a liability account must also affect one or more other accounts.
Answer: TRUE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Assets
Topic: Liabilities
Topic: Accounting Equation

[Question]
28. A transaction that increases an asset and decreases a liability must also affect one or more other accounts.
Answer: TRUE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Assets
Topic: Liabilities
Topic: Accounting Equation

[Question]
29. If insurance coverage for the next three years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.
Answer: TRUE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A1
Topic: Assets
Topic: Prepaid Expenses
Topic: Transaction Analysis

[Question]
30. The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.
Answer: TRUE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A1
Topic: Assets
Topic: Liabilities
Topic: Transaction Analysis
Topic: Debit
Topic: Credit

[Question]
31. If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.
Answer: FALSE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A1
Topic: Transaction Analysis
Topic: Debit
Topic: Credit
Topic: Assets

[Question]
32. If a company provides services to a customer on credit, the service provider company should credit Accounts Receivable.
Answer: FALSE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A1
Topic: Transaction Analysis
Topic: Debit
Topic: Credit
Topic: Assets

[Question]
33. When a company bills a customer for $600 for services rendered, the journal entry to record this transaction will include a $600 debit to Services Revenue.
Answer: FALSE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A1
Topic: Transaction Analysis
Topic: Unearned Revenue
Topic: Debit
Topic: Credit

[Question]
34. The debt ratio reflects the risk of a company to both its owners and creditors.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
35. The higher the debt ratio, the higher risk of a company not being able to meet its obligations.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
36. The debt ratio is calculated by dividing total assets by total liabilities.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
37. A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio
Topic: Financial Leverage

[Question]
38. If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt.
Answer: FALSE

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio
Topic: Financial Leverage

[Question]
39. Hamilton Industries has total liabilities of $105 million and total assets of $350 million. Its debt ratio is 333.3%.
Answer: FALSE

Feedback: $105 million/$350 million = 30%

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
40. High financial leverage is always bad for a companys owners.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
41. A compound journal entry affects no more than two accounts.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Compound Entry

[Question]
42. Posting is the transfer of the information from each journal entry to the ledger.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Posting

[Question]
43. Transactions are first recorded in the ledger.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Learning Objective: 02-P1
Topic: Ledger
Topic: Accounting Cycle

[Question]
44. The journal is known as a book of original entry.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Journal

[Question]
45. A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Journal

[Question]
46. The journal is known as the book of final entry because financial statements are prepared from it.
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Journal

[Question]
47. A trial balance that balances is not proof of complete accuracy in recording transactions.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P2
Topic: Trial Balance

[Question]
48. IFRS requires that companies report four financial statements with explanatory notes: balance sheet; income statement; statement of changes in equity, and statement of cash flows.
Answer: TRUE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Global
AICPA BB: Industry
AICPA BB: Legal
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P3
Topic: International Financial Reporting Standards
Topic: Financial Statements

[Question]
49. Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts: assets, liabilities, equity, revenues, and expenses.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P2
Topic: Chart of Accounts

[Question]
50. The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P2
Learning Objective: 02-P3
Topic: Trial Balance
Topic: Financial Statements
Topic: Debit
Topic: Credit

[Question]
51. A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P2
Topic: Trial Balance
Topic: Errors

[Question]
52. If cash was incorrectly debited for $100 instead of correctly credited for $100, the cash account is out of balance by $100.
Answer: FALSE

Feedback: Cash is increased with the debit. It takes $100 credit to reverse the debit and
another $100 credit to reduce the account as should have been done in the first place. Therefore, cash is out of balance by $200 (rather than $100).

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P2
Topic: Errors
Topic: Trial Balance
Topic: Debit
Topic: Credit
Topic: Cash

[Question]
53. The balance sheet provides a link between beginning and ending income statements.
Answer: FALSE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P3
Topic: Balance Sheet
Topic: Income Statements

[Question]
54. The heading on each financial statement lists the three Ws Who (the name of the organization), What (the name of the statement), and Where (the organizations address)
Answer: FALSE

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P3
Topic: Heading
Topic: Financial Statements

[Question]
55. Other names for the income statement are earnings statement, statement of operations, or profit and loss statement.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P3
Topic: Income Statement

[Question]
56. Another name for the balance sheet is the statement of financial position.
Answer: TRUE

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P3
Topic: Balance Sheet

Multiple Choice Questions

[Question]
57. The accounting process begins with:
A. Analysis of business transactions and events.
B. Preparation of financial statements and other reports.
C. Summarizing the recorded effects of business transactions.
D. Presentation of financial information to decision-makers.
E. Preparation of the trial balance.
Answer: A

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Accounting Cycle

[Question]

58. Which of the following list of events properly reflects the early steps taken in the accounting process?
A. Record relevant transactions, post journal information to ledger accounts, analyze each transaction, and prepare and analyze the trial balance.
B. Post journal information to ledger accounts, analyze each transaction, post journal information to ledger accounts, and prepare and analyze the trial balance.
C. Prepare and analyze the trial balance, analyze each transaction, post journal information to ledger accounts, record relevant transactions.
D. Analyze each transaction, post journal information to ledger accounts, record relevant transactions, and prepare and analyze the trial balance.
E. Analyze each transaction, record relevant transactions, post journal information to ledger accounts, and prepare and analyze the trial balance.

Answer: E

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Accounting Cycle

[Question]
59. A sales invoice:
A. Is a type of use document.
B. Is a source document.
C. Is not needed by buyers.
D. Gives rise to an entry in the accounting process.
E. Is not necessary in accounting.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C1
Topic: Source Documents

[Question]
60. Source documents include all of the following except:
A. Sales tickets
B. Ledgers
C. Checks
D. Purchase orders
E. Bank statements
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-C1
Topic: Source Documents

[Question]
61. Source documents:
A. Include the ledger.
B. Are the origins of accounting information.
C. Must be in electronic form.
D. Are based on accounting entries.
E. Include the chart of accounts.
Answer: B

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C1
Topic: Source Documents

[Question]
62. For what reason do most sellers require customers to have their receipts in order to exchange or return purchased items?
A. The receipt contains coded information that the seller needs to prepare and analyze the trial balance.
B. Sellers wish to ensure that the sale in question was rung up on the register in the first place.
C. This is a legal requirement mandated by a federal law.
D. The receipt is serving as a promissory note.
E. To create an environment in which customers do not want to return items.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C1
Topic: Source Documents

[Question]
63. A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):
A. Journal
B. Posting
C. Trial balance
D. Account
E. Chart of accounts
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Account

[Question]
64. An account used to record the owners investments in the business is called:
A. Dividends
B. Common Stock
C. Revenue
D. Expense
E. Liability
Answer: B

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Common Stock
Topic: Account

[Question]
65. The account used to record the transfers of assets from a business to its stockholders is:
A. A revenue account
B. The dividends account
C. Common stock account
D. An expense account
E. A liability account
Answer: B

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Dividends
Topic: Account

[Question]
66. Which of the following statements is correct?
A. When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
B. Promises of future payment are called accounts payable.
C. Increases and decreases in cash are always recorded in the retained earnings account.
D. An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
E. Liabilities include accounts receivable.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C2
Topic: Prepaid Expenses
Topic: Accounts Payable
Topic: Retained Earnings
Topic: Cash
Topic: Land
Topic: Buildings
Topic: Accounts Receivable
Topic: Liabilities
Topic: Account

[Question]
67. Unearned revenues are:
A. Revenues that have been earned and received in cash.
B. Revenues that have been earned but not yet collected in cash.
C. Liabilities created when a customer pays in advance for products or services before the revenue is earned.
D. Recorded as an asset in the accounting records.
E. Increases to retained earnings.
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Unearned Revenue
Topic: Account

[Question]
68. Prepaid expenses are:
A. Payments made for products and services that do not ever expire.
B. Classified as liabilities on the balance sheet.
C. Decreases in retained earnings.
D. Assets that represent prepayments of future expenses.
E. Promises of payments by customers.
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Prepaid Expenses
Topic: Account

[Question]
69. A written promise to pay a definite sum of money on a specific future date is a(n):
A. Unearned revenue
B. Prepaid expense
C. Credit account
D. Note payable
E. Account receivable
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Note Payable
Topic: Account

[Question]
70. A collection of all accounts (with account balances) used by a business is called a:
A. Journal
B. Book of original entry
C. General Journal
D. Balance column journal
E. General Ledger
Answer: E

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Ledger

[Question]
71. A ledger is:
A. A record containing all accounts (with amounts) for a business.
B. A journal in which transactions are first recorded.
C. A collection of documents that describe transactions and events during the accounting process.
D. A list of all accounts with their debit balances at a point in time.
E. A list of all accounts a company uses and includes an identification number assigned to each account.
Answer: A

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C2
Topic: Ledger

[Question]
72. Which of the following statements about the Cash account are true?
A. Because most companies earn their fees in cash, the Cash account is categorized as revenue.
B. For any given transaction, Accounts Receivable and Cash can be used interchangeably because both accounts are measured in terms of cash.
C. The Cash account includes the value of any medium of exchange that a bank accepts for deposit.
D. Cash is the same thing as Retained Earnings.
E. Cash is a liability account.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C2
Topic: Cash
Topic: Revenue
Topic: Accounts Receivable
Topic: Retained Earnings
Topic: Liabilities
Topic: Account

[Question]
73. A list of all accounts used by a company and the identification number assigned to each account is called a:
A. Ledger
B. Journal
C. Trial balance
D. Chart of accounts
E. General Journal
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C3
Topic: Chart of Accounts

[Question]
74. The general ledger of a business:
A. Is a collection of all accounts used in a companys information system.
B. Must be kept in a computer file.
C. Is also called the book of original entry.
D. Is not affected by a companys size and diversity.
E. Is one of the four financial statements.
Answer: A

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C3
Topic: Ledger
Topic: Financial Statements

[Question]
75. A debit is:
A. An increase in an account.
B. The right-hand side of a T-account.
C. A decrease in an account.
D. The left-hand side of a T-account.
E. An increase to a liability account.
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit

[Question]
76. The right side of a T-account is a(n):
A. Debit
B. Increase
C. Credit
D. Decrease
E. Account balance
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Debit
Topic: Credit

[Question]
77. Which of the following statements is incorrect?
A. The normal balance of accounts receivable is a debit.
B. The normal balance of dividends is a debit.
C. The normal balance of unearned revenues is a credit.
D. The normal balance of an expense account is a credit.
E. The normal balance of common stock is a credit.
Answer: D

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Debit
Topic: Credit
Topic: Accounts Receivable
Topic: Dividends
Topic: Unearned Revenue
Topic: Expenses
Topic: Common Stock

[Question]
78. A credit is used to record:
A. An increase in an expense account.
B. An increase in an asset account.
C. An increase in an unearned revenue account.
D. A decrease in a revenue account.
E. A decrease to retained earnings.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Credit
Topic: Expenses
Topic: Unearned Revenue
Topic: Revenue
Topic: Retained Earnings

[Question]
79. A simple account form widely used in accounting to illustrate how debits and credits work is called a:
A. Dividend account
B. Common stock account
C. Drawing account
D. T-account
E. Balance column sheet
Answer: D

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: T Account

[Question]
80. Which of the following statements is correct?
A. The left side of a T-account is the credit side.
B. Debits decrease asset and expense accounts and increase liability, equity, and revenue accounts.
C. The left side of a T-account is the debit side.
D. Credits increase asset and expense accounts and decrease liability, equity, and revenue accounts.
E. In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: T Account
Topic: Credit
Topic: Debit
Topic: Assets
Topic: Expenses
Topic: Liabilities
Topic: Equity
Topic: Double Entry Accounting System

[Question]
81. An account balance is:
A. The total of the credit side of the account.
B. The total of the debit side of the account.
C. The difference between the total debits and total credits for an account including the beginning balance.
D. Assets = Liabilities + Equity
E. Always a credit.
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-C4
Topic: Account Balance
Topic: Debit
Topic: Credit

[Question]
82. Of the following accounts, the one that normally has a credit balance is:
A. Cash
B. Office Equipment
C. Sales Salaries Payable
D. Dividends
E. Sales Salaries Expense
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Debit
Topic: Credit
Topic: Cash
Topic: Office Equipment
Topic: Payables
Topic: Dividends
Topic: Expenses

[Question]
83. A debit is used to record a(n):
A. Decrease in an asset account.
B. Decrease in an expense account.
C. Increase in a revenue account.
D. Increase in the balance of common stock.
E. Decrease in the balance of retained earnings.
Answer: E

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Debit
Topic: Assets
Topic: Expenses
Topic: Revenue
Topic: Common Stock
Topic: Retained Earnings

[Question]
84. A credit entry:
A. Increases asset and expense accounts and decreases liability, common stock, and revenue accounts.
B. Is always a decrease in an account.
C. Decreases asset and expense accounts and increases liability, common stock, and revenue accounts.
D. Is recorded on the left side of a T-account.
E. Is always an increase in an account.
Answer: C

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Assets
Topic: Expenses
Topic: Liabilities
Topic: Common Stock
Topic: Revenue
Topic: T Account
Topic: Credit

[Question]
85. Double-entry accounting is an accounting system:
A. That records each transaction twice.
B. That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C. In which the impact of each transaction is checked twice to ensure there are no errors.
D. That may only be used if T-accounts are used.
E. That records the effects of transactions on at least two financial statements.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Double Entry Accounting System
Topic: Debit
Topic: Credit
Topic: Common Stock
Topic: Retained Earnings
Topic: T Account
Topic: Financial Statements
Topic: Transaction Analysis

[Question]
86. Which of the following is a true statement regarding debits and credits?
A. If a company earned a profit, debits will not equal credits.
B. For a business, debits are better than credits.
C. A companys books are not in balance if they have a current period loss.
D. Assets and expenses are both increased with a debit.
E. Liabilities and equity are both increased with a debit.
Answer: D

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-C4
Topic: Debit
Topic: Credit
Topic: Net Income
Topic: Net Loss

[Question]
87. During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the January 31 beginning cash balance?
A. $700
B. $1,100
C. $2,900
D. $0
E. $4,300
Answer: C
Feedback:
Beginning balance + $7,500 $8,600 = $1,800
Beginning balance = $2,900

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A1
Topic Transaction Analysis
Topic: Cash

[Question]
88. The following transactions occurred during July:
a. Received $900 cash for services provided to a customer during July.
b. Received $2,200 cash investment from Barbara Hanson, the owner of the business.
c. Received $750 from a customer in partial payment of his account receivable, which arose from sales in June.
d. Provided services to a customer on credit, $375.
e. Signed a promissory note for a $6,000 bank loan.
f. Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?
A. $900
B. $1,275
C. $2,525
D. $3,275
E. $11,100
Answer: B
Feedback: $900 + $375 = $1,275

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A1
Topic: Revenue Recognition
Topic Transaction Analysis

[Question]
89. These transactions were completed by the art gallery opened by Zed Bennett.
a. Bennett started the gallery, Artery, by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock.
b. Purchased $70 of office supplies on credit.
c. Paid $1,200 cash for the receptionists salary.
d. Sold a painting for an artist and collected a $4,500 cash commission on the sale.
e. Completed an art appraisal and billed the client $200.
What was the balance of the cash account after these transactions were posted?
A. $12,230
B. $12,430
C. $43,300
D. $43,430
E. $61,430
Answer: C
Feedback: $40,000 $1,200 + $4,500 = $43,300

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A1
Topic: Transaction Analysis
Topic: Cash

[Question]
90. The debt ratio is used:
A. To measure the amount of equity relative to the expenses.
B. To reflect the risk associated with a companys debts.
C. Only by banks when a business applies for a loan.
D. To determine how much debt a firm should pay off.
E. To determine who a company owes.
Answer: B

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
91. Which of the following formulas can be used to calculate the debt ratio?
A. Total equity/Total liabilities
B. Total liabilities/Total equity
C. Total liabilities/Total assets
D. Total assets/Total liabilities
E. Total equity/Total assets
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
92. Which of the following statements is incorrect?
A. Higher financial leverage involves higher risk.
B. Risk is higher if a company has more liabilities.
C. Risk is higher if a company has higher assets.
D. The debt ratio is one measure of financial risk.
E. Lower financial leverage involves lower risk.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A2
Topic: Financial Leverage
Topic: Risk

[Question]
93. Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.
A. 38.6%
B. 13.4%
C. 34.9%
D. 25.9%
E. 14.9%
Answer: D
Feedback: $110/$425 = 25.9%

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-A2
Topic: Financial Leverage

[Question]
94. A company has total liabilities of $550 million and total equity of $300 million. Calculate this companys debt ratio.
A. 64.7%
B. 100%
C. 54.5%
D. 1.83 to 1
E. The debt ratio cannot be determined without additional information.
Answer: A
Feedback: $550/($550 + $300) = 64.7%

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A2
Topic: Financial Leverage

[Question]
95. Which of the following statements is false with regard to the debt ratio?
A. It is of use to both internal and external users of accounting information.
B. A relatively high ratio is always desirable.
C. The dividing line for a high and low ratio varies from industry to industry.
D. Many factors such as the companys age, stability, profitability, and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
E. The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-A2
Topic: Debt Ratio

[Question]
96. Rocky Industries received its telephone bill in the amount of $300 and immediately paid it. Rockys journal entry to record this transaction will include a
A. Debit to Telephone Expense for $300.
B. Credit to Accounts Payable for $300.
C. Debit to Cash for $300.
D. Credit to Telephone Expense for $300.
E. Debit to Accounts Payable for $300.
Answer: A

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Cash
Topic: Expenses

[Question]
97. Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for a six-month contract in advance. Management Services journal entry to record this transaction will include a:
A. Debit to Unearned Management Fees for $60,000.
B. Credit to Management Fees Earned for $60,000.
C. Credit to Cash for $60,000.
D. Credit to Unearned Management Fees for $60,000.
E. Debit to Management Fees Earned for $60,000.
Answer: D

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Cash
Topic: Unearned Revenue

[Question]
98. Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include a:
A. Debit to Accounts Payable.
B. Debit to Accounts Receivable.
C. Credit to Cash.
D. Credit to Accounts Payable.
E. Credit to Retained Earnings.
Answer: D

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Accounts Payable
Topic: Accounts Receivable
Topic: Cash
Topic: Retained Earnings

[Question]
99. An asset created by prepayment of an expense is:
A. Recorded as a debit to an unearned revenue account.
B. Recorded as a debit to a prepaid expense account.
C. Recorded as a credit to an unearned revenue account.
D. Recorded as a credit to a prepaid expense account.
E. Not recorded in the accounting records until the earnings process is complete.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Unearned Revenue
Topic: Prepaid Expenses


[Question]

100. Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business, RH Consulting. Which of the following general journal entries will RH Consulting make to record this transaction?
A.
Assets 200,000
Common Stock 200,000

B.
Cash and Land 200,000
Common Stock 200,000

C.
Cash 70,000
Land 130,000
Common Stock 200,000

D.
Common Stock 200,000
Cash 70,000
Land 130,000

E.
Common Stock 200,000
Assets 200,000

Answer: C
Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 2 Medium
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Cash
Topic: Land
Topic: Stock

[Question]
101. A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:
A. Recorded as a debit to an unearned revenue account.
B. Recorded as a debit to a prepaid expense account.
C. Recorded as a credit to an unearned revenue account.
D. Recorded as a credit to a prepaid expense account.
E. Not recorded in the accounting records until the earnings process is complete.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Unearned Revenue
Topic: Prepaid Expenses

[Question]
102. On September 30, the Cash account of Value Company had a normal balance of $5,000. During September, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September?
A. $0 balance
B. $4,300 debit balance
C. $4,300 credit balance
D. $5,700 debit balance
E. $5,700 credit balance
Answer: B
Feedback: Normal balance = debit
Beginning balance +$12,200 $11,500 = $5,000
Beginning balance = $4,300 debit

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Cash

[Question]
103. On October 31, a companys Cash account had a normal balance of $7,000. During October, the account was debited for a total of $4,250 and credited for a total of $5,340. What was the balance in the Cash account at the beginning of October?
A. $0 balance
B. $1,090 debit balance
C. $2,590 credit balance
D. $8,090 debit balance
E. $9,590 credit balance
Answer: D
Feedback: Normal balance = debit
Beginning Balance +$4,250 $5,340 = $7,000
Beginning Balance = $8,090 debit

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Cash

[Question]
104. On April 30, Holden Company had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The Accounts Receivable balance was $13,000 on May 31. What was the amount of credit sales during May?
A. $5,000
B. $47,000
C. $52,000
D. $57,000
E. $32,000
Answer: B
Feedback: Normal balance = debit
$18,000 $52,000 + credit sales = $13,000
Credit sales = $47,000

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Accounts Receivable

[Question]

105. On November 30, a company had an Accounts Receivable balance of $5,100. During the month of December, total credits to Accounts Receivable were $76,000 from customer payments. The 31 Accounts Receivable balance was $43,000 on December 31. What was the amount of credit sales during December?
A. $8,100
B. $27,900
C. $70,900
D. $76,000
E. $113,900
Answer: E

Feedback: Normal balance = debit
$5,100 $76,000 + credit sales = $43,000
Credit sales = $113,900

Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic Transaction Analysis
Topic: Accounts Receivable

[Question]
106. The Fireside Country Inn is a very popular destination for tourists. The Inn requires guests to make reservations at least two months in advance of their stay. A 20 percent down payment is required at the time the reservation is made. When should this inn recognize room rental revenue?
A. On the date the reservation is received.
B. On the date the money for the reservation is received.
C. On the date the guests stay in the inn.
D. On the date the guests pay the remaining 80 percent due.
E. Once all cash has been received.
Answer: C

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic Transaction Analysis
Topic: Revenue Recognition Principle


[Question]
107. Jones Hardware, Inc. paid a cash dividend of $6,000. What is the necessary entry to record this transaction?
A. Debit Cash, credit Retained Earnings.
B. Debit Dividends, credit Cash.
C. Debit Common Stock, credit Cash.
D. Debit Cash, credit Common Stock.
E. Debit Cash, credit Dividend Income.
Answer: B

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Debit
Topic: Credit
Topic: Transaction Analysis
Topic: Dividends

[Question]
108. The process of transferring general journal information to the ledger is:
A. Double-entry accounting.
B. Posting.
C. Balancing an account.
D. Journalizing.
E. Not required unless debits do not equal credits.
Answer: B

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Posting
Topic: Debit
Topic: Credit

[Question]
109. A column in journal and ledger accounts used to cross reference journal and ledger entries is the:
A. Account balance column
B. Debit column
C. Posting reference column
D. Credit column
E. Description column
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Posting

[Question]
110. The record in which business transactions are first recorded is the:
A. Account balance
B. Ledger
C. General journal
D. Trial balance
E. Cash account
Answer: C

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Journal

[Question]
111. What is another name for the general journal?
A. The book.
B. The ledger.
C. The book of original entry.
D. The record.
E. The account book.
Answer: C
Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Journal

[Question]
112. A balance column account is:
A. An account entered on the balance sheet.
B. An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted.
C. An alternate name for the retained earnings account.
D. An account used to record the transfers of assets from a business to its stockholders.
E. A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.
Answer: B

Blooms Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Balance Column Account
Topic: Debit
Topic: Credit

[Question]
113. A general journal is:
A. A ledger in which amounts are posted from a balance column account.
B. Not required if T-accounts are used.
C. A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts.
D. Not necessary in electronic accounting systems.
E. A book of final entry because financial statements are prepared from it.
Answer: C

Blooms Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 1 Easy
Learning Objective: 02-P1
Topic: Ledger

[Question]
114. Listed below are two pieces of information. Where is the best place to locate this information, in the journal or the ledger?
1. Details of a transaction that took place on October 3.
2. All of the sales activity that took place during the current month.
A. 1. Journal 2. Journal
B. 1. Journal 2. Ledger
C. 1. Ledger 2. Ledger
D. 1. Ledger 2. Journal
E. This information is only available on the financial statements.
Answer: B
Blooms Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: 3 Hard
Learning Objective: 02-P1
Topic: Journal
Topic: Ledger

[Question]
115. Which of the following is the appropriate journal entry if a company performs a service and then bills the customer?
A. Debit to Cash, debit to Service Revenue.
B. Debit to Cash, credit to Service Revenue.
C. Debit to Accounts Receivable, credit to Cash.
D. Debit to Service Revenue, credit to Accounts Receivable.
E. Debit to Accounts Receivable, credit to Service Revenue.
Answer: E

Blooms Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting

Write a review

Your Name:


Your Review: Note: HTML is not translated!

Rating: Bad           Good

Enter the code in the box below:



Welcome to Test bank Fan

 

Once the order is placed, the order will be delivered to your email less than 24 hours, mostly within 4 hours. 

If you have questions, you can contact us here