ASU ACC 231 EXAM 1 -USES OF ACCOUNTING
INFORMATION I |ACTUAL QUESTIONS AND
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Liability accounts are increased
a. By debits
b.By credits
c.On the left side
d.Below the balance line
CORRECT ANSWER
b.By credits
Question 2
A company's retained earnings balance would decrease by
a.The declaration and payment of dividends
b.Sales
c.Investments by owners
d.Net income
CORRECT ANSWER
a.The declaration and payment of dividends
Question 3
1
@THE STUDY VAULT
,Christopher Company purchased $20,000 of equipment for cash. The correct entry to
record the purchase of equipment is
a.Cash 20,000 Equipment 20,000
b.Equipment 20,000 Accounts Payable 20,000
c.Equipment 20,000 Cash 20,000
d.Accounts Payable 20,000 Equipment 20,000
CORRECT ANSWER
c.Equipment 20,000 Cash 20,000
Question 4
Owners' equity accounts are decreased with
a.Debit entries
b.Credit entries
c.Liabilities
d.Assets
CORRECT ANSWER
a.Debit entries
Question 5
Revenues
a.Decrease assets
b.Decrease owners' equity
c.Increase liabilities
d.Increase owners' equity
CORRECT ANSWER
d.Increase owners' equity
2
@THE STUDY VAULT
, Question 6
A system of accounting in which revenues and expenses are recorded as they are earned
and incurred, is called
a.Revenue recognition accounting
b.Accrual-basis accounting
c.Realization accounting
d.Cash-basis accounting
CORRECT ANSWER
b.Accrual-basis accounting
Question 7
A system of accounting in which revenues and expenses are recorded only when cash is
received or paid, is called
a. Revenue recognition accounting
b.Accrual-basis accounting
c.Realization accounting
d.Cash-basis accounting
CORRECT ANSWER
d.Cash-basis accounting
Question 8
Which of the following statements about adjusting entries is NOT true?
a.They are recorded on a daily basis as transactions occur.
b.They are posted at the end of an accounting period.
3
@THE STUDY VAULT
INFORMATION I |ACTUAL QUESTIONS AND
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Liability accounts are increased
a. By debits
b.By credits
c.On the left side
d.Below the balance line
CORRECT ANSWER
b.By credits
Question 2
A company's retained earnings balance would decrease by
a.The declaration and payment of dividends
b.Sales
c.Investments by owners
d.Net income
CORRECT ANSWER
a.The declaration and payment of dividends
Question 3
1
@THE STUDY VAULT
,Christopher Company purchased $20,000 of equipment for cash. The correct entry to
record the purchase of equipment is
a.Cash 20,000 Equipment 20,000
b.Equipment 20,000 Accounts Payable 20,000
c.Equipment 20,000 Cash 20,000
d.Accounts Payable 20,000 Equipment 20,000
CORRECT ANSWER
c.Equipment 20,000 Cash 20,000
Question 4
Owners' equity accounts are decreased with
a.Debit entries
b.Credit entries
c.Liabilities
d.Assets
CORRECT ANSWER
a.Debit entries
Question 5
Revenues
a.Decrease assets
b.Decrease owners' equity
c.Increase liabilities
d.Increase owners' equity
CORRECT ANSWER
d.Increase owners' equity
2
@THE STUDY VAULT
, Question 6
A system of accounting in which revenues and expenses are recorded as they are earned
and incurred, is called
a.Revenue recognition accounting
b.Accrual-basis accounting
c.Realization accounting
d.Cash-basis accounting
CORRECT ANSWER
b.Accrual-basis accounting
Question 7
A system of accounting in which revenues and expenses are recorded only when cash is
received or paid, is called
a. Revenue recognition accounting
b.Accrual-basis accounting
c.Realization accounting
d.Cash-basis accounting
CORRECT ANSWER
d.Cash-basis accounting
Question 8
Which of the following statements about adjusting entries is NOT true?
a.They are recorded on a daily basis as transactions occur.
b.They are posted at the end of an accounting period.
3
@THE STUDY VAULT
