Accounting 2010 Exam 1 (Chapters 1-
4) Multiple Choice Questions with
Answers
A corporation has which of the following set of characteristics? - ANSWER-Easier to
transfer ownership and raise funds, no personal liability
Which of the following is the most appropriate and modern definition of accounting? -
ANSWER-The information system that identifies, records, and communicates the
economic events of an organization to interested users.
The right to receive money in the future is called a(n) - ANSWER-account receivable.
Buying and selling products are examples of - ANSWER-Operating activities
The cost of assets consumed or services used is also known as - ANSWER-an expense
The best definition of assets is the - ANSWER-resources belonging to a company that
have future benefit to the company.
Which of the following is an asset? - ANSWER-Investments
Which of the following is not a liability? - ANSWER-Accounts Receivable
Ending retained earnings for a period is equal to beginning - ANSWER-Retained
earnings + Net income - Dividends.
Dividends paid - ANSWER-decrease retained earnings.
an account consists of three parts.
an account has a title.
an account has a debit and credit side.
an account is a source document. - ANSWER-an account is a source document.
The normal balance of any account is the - ANSWER-side which increases that
account.
In recording an accounting transaction in a double-entry system - ANSWER-the amount
of the debits must equal the amount of the credits.
, For the basic accounting equation to stay in balance, each transaction recorded must -
ANSWER-affect two or more accounts.
A company that receives money in advance of performing a service - ANSWER-debits
Cash and credits Unearned Service Revenue.
When a company performs a service but has not yet received payment, it - ANSWER-
debits Accounts Receivable and credits Service Revenue.
A revenue account - ANSWER-is increased with a credit.
In the first month of operations, the total of the debit entries to the Cash account
amounted to $5740 and the total of the credit entries to the Cash account amounted to
$3280. The Cash account has a - ANSWER-$2460 debit balance.
Total Credits - ANSWER-(Accounts Payable + Notes payable + Common Stock +
Revenue)
Cash Balance - ANSWER-(Beg. Cash + Collected - Disbursements)
Accounts Payable Balance - ANSWER-(Beg. Accounts Payable + Purchases -
Payments)
The usual sequence of steps in the recording process is to - ANSWER-analyze each
transaction, enter the transaction in the journal, and transfer the information to the
ledger accounts.
A ledger - ANSWER-is a collection of the entire group of accounts maintained by a
company.
A journal - ANSWER-provides a chronological record of transactions.
Posting is performed by transferring information from the - ANSWER-journal to the
ledger.
A trial balance is a listing of - ANSWER-general ledger accounts and balances.
The expense recognition principle matches: - ANSWER-expenses with revenues.
A flower shop makes a large sale for $1,000 on November 30. The customer is sent a
statement on December 5 and a check is received on December 10. The flower shop
follows GAAP and applies the revenue recognition principle. When is the $1,000
considered to be recognized? - ANSWER-November 30
Under the cash basis of accounting: - ANSWER-cash must be received before revenue
is recognized.
4) Multiple Choice Questions with
Answers
A corporation has which of the following set of characteristics? - ANSWER-Easier to
transfer ownership and raise funds, no personal liability
Which of the following is the most appropriate and modern definition of accounting? -
ANSWER-The information system that identifies, records, and communicates the
economic events of an organization to interested users.
The right to receive money in the future is called a(n) - ANSWER-account receivable.
Buying and selling products are examples of - ANSWER-Operating activities
The cost of assets consumed or services used is also known as - ANSWER-an expense
The best definition of assets is the - ANSWER-resources belonging to a company that
have future benefit to the company.
Which of the following is an asset? - ANSWER-Investments
Which of the following is not a liability? - ANSWER-Accounts Receivable
Ending retained earnings for a period is equal to beginning - ANSWER-Retained
earnings + Net income - Dividends.
Dividends paid - ANSWER-decrease retained earnings.
an account consists of three parts.
an account has a title.
an account has a debit and credit side.
an account is a source document. - ANSWER-an account is a source document.
The normal balance of any account is the - ANSWER-side which increases that
account.
In recording an accounting transaction in a double-entry system - ANSWER-the amount
of the debits must equal the amount of the credits.
, For the basic accounting equation to stay in balance, each transaction recorded must -
ANSWER-affect two or more accounts.
A company that receives money in advance of performing a service - ANSWER-debits
Cash and credits Unearned Service Revenue.
When a company performs a service but has not yet received payment, it - ANSWER-
debits Accounts Receivable and credits Service Revenue.
A revenue account - ANSWER-is increased with a credit.
In the first month of operations, the total of the debit entries to the Cash account
amounted to $5740 and the total of the credit entries to the Cash account amounted to
$3280. The Cash account has a - ANSWER-$2460 debit balance.
Total Credits - ANSWER-(Accounts Payable + Notes payable + Common Stock +
Revenue)
Cash Balance - ANSWER-(Beg. Cash + Collected - Disbursements)
Accounts Payable Balance - ANSWER-(Beg. Accounts Payable + Purchases -
Payments)
The usual sequence of steps in the recording process is to - ANSWER-analyze each
transaction, enter the transaction in the journal, and transfer the information to the
ledger accounts.
A ledger - ANSWER-is a collection of the entire group of accounts maintained by a
company.
A journal - ANSWER-provides a chronological record of transactions.
Posting is performed by transferring information from the - ANSWER-journal to the
ledger.
A trial balance is a listing of - ANSWER-general ledger accounts and balances.
The expense recognition principle matches: - ANSWER-expenses with revenues.
A flower shop makes a large sale for $1,000 on November 30. The customer is sent a
statement on December 5 and a check is received on December 10. The flower shop
follows GAAP and applies the revenue recognition principle. When is the $1,000
considered to be recognized? - ANSWER-November 30
Under the cash basis of accounting: - ANSWER-cash must be received before revenue
is recognized.
