Question

1.An obligation of a business that represents the claims of others against the assets of he business is called a(n) *

A.asset

B.liability

C.expense

D.revenue

E.equity

2.The general journal provides a place for recording *

A.the amount of each debit and credit

B.an explanation of the transaction

C.the transaction date

D.the names of the accounts involved

E.All of these

3.An exchange of economic consideration between two parties that causes a change in assets, liabilities or equity is called *

A.prepaid expenses

B.external transactions

C.liabilities.

D.business transaction

E.source documents

4.A balance column ledger account is *

A.Another name for the withdrawals account

B.An account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted

C.An account entered on the balance sheet

D.A simple form of account that is widely used in accounting education to illustrate the debits and credits required in recording a transaction

E.An account used to record the transfers of assets from a business to its owner

5.Reversing entries are *

A.Dated the first day of the next accounting period

B.Optional

C.Linked to accrued assets and liabilities that were created by adjusting entries at the end of the previous accounting period

D.All of these

E.Used to simplify a company's record keeping

6.Current Liabilities *

A.Are listed in order of liquidity

B.Are closed at the end of the accounting period to current assets

C.Are listed in the order in which they are to be paid, with the first one listed to be paid first

D.Are due to be settled after one year or the operating cycle

E.Are due to be settled within the shorter of one year or the operating cycle

7.Cash investments by owners are listed on which of the following statement(s)? *

A.Both a statement of changes in equity and statement of cash flows

B.Statement of changes in equity

C.Income statement

D.Balance sheet

E.Statement of cash flows

8.The remaining balance in Prepaid Insurance on December 31, 2021 of $12,600 was for a six-month insurance policy purchased for $16,800 and in effect on July 1, 2020. What is the required adjustment amount on December 31st? *

A.$8,750

B.$5,000

C.$2,800

D.$4,750

E.$4,500

9.Which statement is true about liquidity? Prepaid Rent is *

A.Less liquid that inventories

B.Less liquid than rent revenue

C.More liquid than cash

D.Less liquid than land

E.More liquid than inventories

10.A column in journals and accounts used to cross reference journal and ledger entries is called the *

A.account balance

B.debit

C.posting reference

D.credit

E.description

11.The normal order for the asset section of a classified balance sheet is *

A.Long-term investments, current assets, property, plant and equipment, intangible assets

B.Current assets, prepaid expenses, long-term investments, intangible assets

C.Current assets, long-term investments, property, plant and equipment, intangible assets

D.Property, plant and equipment, intangible assets, long-term investments, current assets

E.Intangible assets, current assets, long-term investments, property, plant and equipment

12.A financial statement providing information that helps users understand a company's financial status at a specific date, is called a(n) *

A.statement of cash flows

B.statement of changes in equity

C.bank statement

D.income statement

E.balance sheet

13.A book of original entry is *

A.Another name for the cash account

B.A book in which amounts are posted from a journal

C.Also called a ledger

D.Another name for the general journal

E.Sometimes called a book of final entry

14.The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures revenue as the amount of cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services is called the *

A.business entity principle

B.currency principle

C.historical cost principle

D.going concern principle

E.recognition principle

15.Which of the following is not considered a basic type of adjusting entry? *

A.An entry to accrue uncollected revenue

B.An entry to convert an asset to a liability

C.An entry to convert a liability to a revenue

D.An entry to convert an asset to an expense

E.An entry to accrue unpaid expenses

16.If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on January 5 would include *

A.No entry would be necessary on January 5

B.A debit to Cash and a credit to Salaries Payable

C.A debit to Cash and a credit to Prepaid Salaries

D.A debit to Salaries Payable and a credit to Cash

E.A debit to Salaries Payable and a credit to Salaries Expense

17.Salaries paid with cash appear on which of the following statement(s)? *

A.Statement of changes in equity

B.Balance sheet

C.Both an income statement and statement of cash flows

D.Income statement

E.Statement of cash flow.

18.A journal in which transactions are first recorded is *

A.a revenue account

B.a book of original entry

C.a book of final entry

D.the cash ledger

E.a ledger

19.A ledger is *

A.A journal in which transactions are first recorded

B.A book of original entry

C.A book in which a complete record of transactions is recorded and from which transaction amounts are posted to the accounts

D.Another name for the bank account

E.A book of final entry

20.The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is *

A.Debit Salaries Expense and credit Salaries Payable

B.Debit Salaries Expense and credit Cash

C.Debit Unpaid Salaries and credit Salaries Payable

D.Debit Salaries Payable and credit Salaries Expense

E.Debit Cash and credit Salaries Expense

21.A classified balance sheet *

A.Organizes assets and liabilities into important subgroups

B.Shows the effect of profit and withdrawals on owner's capital

C.Shows operating, investing, and financing activities

D.Presents revenues, expenses and profit

E.Measures a company's ability to pay its bills on time

22.The current ratio *

A.Helps to assess a company's ability to pay its debts in the near future

B.Suggests there may be problems in a business if it is less than 1

C.Is a measure of a company's liquidity

D.All of these

E.Is current assets divided by current liabilities

23.Payments of cash by a corporation to its shareholders are called *

A.expenses

B.withdrawals

C.dividends

D.cheques

E.shareholder's equity

24.In January, Denton Mabrey College received $120,000 in Unearned Tuition Revenue from its students for the spring semester, which lasts four months. On January 31, the college should recognize which amount for tuition revenue? *

A.$60,000

B.$30,000

C.$80,000

D.$90,000

E.$120,000

25.Costs incurred or the using up of assets as a result of the main operations of a business are called *

A.net losses

B.equity

C.expenses

D.revenues

E.liabilities

26.A compound journal entry is *

A.A journal entry that has three or more debits and three or more credits

B.A journal entry that affects at least three account

C.A journal entry involving at least two accounting periods

D.A journal entry involving only two ledger accounts

E.A journal entry that affects at least four accounts

27.Welder Company purchases supplies from Plumber Company on account. The entry for this transaction will include a *

A.Credit to Accounts Payable for Plumber Company

B.Debit to Accounts Receivable for Welder Company

C.Credit to Accounts Receivable for Welder Company

D.Debit to Accounts Receivable for Plumber Company

E.Debit to Accounts Payable for Welder Company

28.Which of the following is the final step in the accounting cycle? *

A.Preparing a post-closing trial balance

B.Preparing the statements

C.Preparing a work sheet

D.Preparing an adjusted trial balance

E.Journalizing

29.Which financial statement shows whether the business earned a profit or loss, and also lists the types and amounts of the revenues and expenses? *

A.Balance sheet

B.Statement of cash flow

C.Income statement.

D.Statement of financial position

E.Statement of changes in equity

30.Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are called *

A.Prepaid expenses

B.Operating expense

C.Accrued expenses

D.Accounts payable

E.Unearned expense

31.HCF, a finance company, lends Able Business $12,000 at 5% on December 1, 2020. HCF's adjusting entry on December 31, 2020, should include *

A.A debit to Interest Expense for $600

B.A credit to Interest Earned for $50

C.A debit to Cash for $600

D.A credit to Interest Receivable for $50

E.A debit to Interest Earned for $50

32.Profit appears on which of the following statement(s)? *

A.Income statement

B.Balance sheet

C.Statement of changes in equity

D.Statement of cash flows

E.Both an income statement and statement of changes in equity

33.The ending balance of owner's capital is calculated as *

A.Owner's capital account balance minus loss plus the withdrawals account balance

B.Owner's capital account balance plus profit minus the withdrawals account balance

C.None of these answers is correct.

D.Profit minus the withdrawals account balance

E.Assets plus liabilities

34.The asset section of a classified balance sheet includes *

A.Current liabilities, long-term investments, property, plant and equipment, and intangible assets.

B.Current assets, long-term investments, property, plant and equipment, and intangible assets.

C.Current assets, liabilities, property, plant and equipment, and intangible assets.

D.Current assets, non-current assets, equity, and intangible assets.

E.Current assets, long-term investments, property, plant and equipment, and withdrawals.

35.The process of copying journal information to the ledger is called *

A.double-entering

B.an external business transaction

C.journalizing

D.an internal business transaction

E.posting

36.Current liabilities become due *

A.All of these

B.A or B, whichever is longer

C.When bills have to be paid

D.Within the operating cycle of a business

E.Within one year

37.On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. The $2,400 payment was recorded on December 1 with a debit to the income statement account Insurance Expense and a credit to the current asset Cash. Your company prepares monthly financial statements at the end of each calendar month. The entry to be made at the December 31 month end to adjust the accounts is *

A.Debit Insurance Expense 2400; Credit Prepaid Insurance 2400

B.Debit Insurance Expense 2200; Credit Prepaid Insurance 2200

C.Debit Prepaid insurance 2200; Credit Insurance Expense 2200

D.Debit Insurance Expense 200; Credit Prepaid Insurance 200

E.Debit Prepaid Insurance 200; Credit Insurance Expense 200

38.Accrued revenues *

A.Are also called unearned revenues

B.Are paid in advance

C.At the end of one accounting period often result in cash payments in the next period

D.Are listed on the balance sheet as liabilities

E.At the end of one accounting period often result in cash receipts from customers in the next period

39.A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday. If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the adjusting entry to record the salaries earned but unpaid is *

A.Debit Office Salaries Expense $240 and credit Salaries Payable $240

B.Debit Unpaid Salaries $120 and credit Salaries Payable $120

C.Debit Office Salaries Expense $120 and credit Salaries Payable $120

D.Debit Salaries Payable $240 and credit Office Salaries Expense $240

E.Debit Salaries Expense $240 and credit Cash $240

40.The most flexible type of journal that can be used to record any kind of transaction is called a *

A.Balance column account

B.Trial balance

C.Chart of accounts

D.Ledger

E.General Journal

Answer 1

First 4 questions are being answered here:

1. Option (B) is correct

A liability is the obligation that represents the claims of others against assets of the business.

2. Option (E) is correct

A general Journal is a place for recording amount for each debit and credit, transaction date, explanation and names of the account involved. So, all the options are correct.

3. Option (D) is correct

An exchange of economic consideration between two parties that cause a change in assets, liabilities or equity is called a business transaction.

4. Option (B) is correct

A balance column ledger account is an account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted.