ACC231 Chapter 3 Question and
answers already passed 2025/2026
The two functions of financial accounting are to measure business activities and prepare tax returns. -
correct answer ✔False
Which of the following accounts is not reported on a balance sheet? - correct answer ✔revenues
Which of the following accounts is not reported on an income statement? - correct answer ✔assets
The two roles of financial accounting are to:
Multiple select question.
- communicate information to external parties for decision making purposes.
- measure business activities of the company.
- measure and report results to taxing authorities.
- report cost accounting information for internal decisions. - correct answer ✔- communicate
information to external parties for decision making purposes.
- measure business activities of the company.
Which of the following instances would cause the preliminary balance sheet not to balance? - correct
answer ✔Increase assets; increase expenses
- An increase in expenses decreases net income, which decreases both retained earnings and
stockholders' equity. With an increase in assets and decrease in stockholders' equity, the accounting
equation does not balance.
An income statement includes which of the following accounts?
, Multiple select question.
- revenues
- assets
- expenses
- stockholders' equity
- liabilities - correct answer ✔revenues and expenses
Which of the following is on the right side of an account?
Multiple choice question.
It depends on whether the account is being increased or decreased.
Debit
Credit - correct answer ✔credit
Accounts on the left side of the accounting equation (assets) are increased with a(n) ______, to the
account, whereas accounts on the right side of the accounting equation are increased with a(n) _____ -
correct answer ✔debit, credit
The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the right side of the
equal sign in this equation are increased with
Multiple choice question.
- credits.
- both debits and credits depending on the account.
- debits - correct answer ✔credits
Expenses Blank______ retained earnings; therefore, to increase any expense, one would Blank______
the expense account.
Multiple choice question.
answers already passed 2025/2026
The two functions of financial accounting are to measure business activities and prepare tax returns. -
correct answer ✔False
Which of the following accounts is not reported on a balance sheet? - correct answer ✔revenues
Which of the following accounts is not reported on an income statement? - correct answer ✔assets
The two roles of financial accounting are to:
Multiple select question.
- communicate information to external parties for decision making purposes.
- measure business activities of the company.
- measure and report results to taxing authorities.
- report cost accounting information for internal decisions. - correct answer ✔- communicate
information to external parties for decision making purposes.
- measure business activities of the company.
Which of the following instances would cause the preliminary balance sheet not to balance? - correct
answer ✔Increase assets; increase expenses
- An increase in expenses decreases net income, which decreases both retained earnings and
stockholders' equity. With an increase in assets and decrease in stockholders' equity, the accounting
equation does not balance.
An income statement includes which of the following accounts?
, Multiple select question.
- revenues
- assets
- expenses
- stockholders' equity
- liabilities - correct answer ✔revenues and expenses
Which of the following is on the right side of an account?
Multiple choice question.
It depends on whether the account is being increased or decreased.
Debit
Credit - correct answer ✔credit
Accounts on the left side of the accounting equation (assets) are increased with a(n) ______, to the
account, whereas accounts on the right side of the accounting equation are increased with a(n) _____ -
correct answer ✔debit, credit
The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the right side of the
equal sign in this equation are increased with
Multiple choice question.
- credits.
- both debits and credits depending on the account.
- debits - correct answer ✔credits
Expenses Blank______ retained earnings; therefore, to increase any expense, one would Blank______
the expense account.
Multiple choice question.
