AFSP Exam Review Questions with Correct Answers Latest Update 2025
Which of the forms of business organizations is a tax-paying entity? - Answers Corporation
For every debit entry to an account or set of accounts, there is an equal amount of credit to an account
or set of accounts. This system of transaction is known as: - Answers Double-entry accounting system
In the case of a corporation, stockholders have personal obligation for the business debts? T/F - Answers
False
All increases to equity accounts are credit entries while all decreases are debit entries. T/F - Answers
True
Debits are listed before credits in the journal but credits are indented and not debits. T/F - Answers True
Every transaction involves at most two accounts. T/F - Answers False
A farmer borrowed money from the farm credit service. The 2 accounts involved are: - Answers Asset
(cash) and Liability (Notes Payable)
The business records of a sole proprietorship should include the proprietor's finances. T/F - Answers
True
Assets include cash, land, and accounts payable. T/F - Answers False
The two main components of stockholders' equity are paid-in capital and dividends. T/F - Answers False
A limited liability partner and a general partner have unlimited liability. T/F - Answers False
In a partnership, income and losses flow through to __________ - Answers partners
The owners of limited liability companies are known as ___________ - Answers members
In order of preperation, the first financial statement to be prepared is the ________________ - Answers
income statement
____________ is a form of business organization with double taxation. - Answers Corporation
A manual accounting system uses software and computers. T/F - Answers False
________ are items purchased by a farm business that earns money for the farm. - Answers Assets
Non-current asset groups are: - Answers Tangible Assets and Intangible Assets
A financial transaction may cause an increase or decrease in the affected accounts. T/F - Answers True
______________ are documents that provide written evidence of financial transactions. - Answers
Source documents
Which of the forms of business organizations is a tax-paying entity? - Answers Corporation
For every debit entry to an account or set of accounts, there is an equal amount of credit to an account
or set of accounts. This system of transaction is known as: - Answers Double-entry accounting system
In the case of a corporation, stockholders have personal obligation for the business debts? T/F - Answers
False
All increases to equity accounts are credit entries while all decreases are debit entries. T/F - Answers
True
Debits are listed before credits in the journal but credits are indented and not debits. T/F - Answers True
Every transaction involves at most two accounts. T/F - Answers False
A farmer borrowed money from the farm credit service. The 2 accounts involved are: - Answers Asset
(cash) and Liability (Notes Payable)
The business records of a sole proprietorship should include the proprietor's finances. T/F - Answers
True
Assets include cash, land, and accounts payable. T/F - Answers False
The two main components of stockholders' equity are paid-in capital and dividends. T/F - Answers False
A limited liability partner and a general partner have unlimited liability. T/F - Answers False
In a partnership, income and losses flow through to __________ - Answers partners
The owners of limited liability companies are known as ___________ - Answers members
In order of preperation, the first financial statement to be prepared is the ________________ - Answers
income statement
____________ is a form of business organization with double taxation. - Answers Corporation
A manual accounting system uses software and computers. T/F - Answers False
________ are items purchased by a farm business that earns money for the farm. - Answers Assets
Non-current asset groups are: - Answers Tangible Assets and Intangible Assets
A financial transaction may cause an increase or decrease in the affected accounts. T/F - Answers True
______________ are documents that provide written evidence of financial transactions. - Answers
Source documents
