Question 1
What is the Purpose of a balance sheet
ANSWER
To determine the financial health of an organization at a point in time.
Question 2
Financial elements on the income statement:
ANSWER
Expenses, Revenue
Question 3
Financial elements on the balance sheet:
ANSWER
Assets, Capital, and Liabilities
Question 4
Accounts that increase with debit
ANSWER
Cash, equipment, assets, expenses, and dividends
1
,Question 5
Accounts that increase with credit
ANSWER
Contra-Asset : Accumulated Depreciation, Account Payable, common stock, equity,
revenue and liability
Question 6
Lou has a landscaping company. He received a $10,000 payment for a landscaping job that
he completed for the Rose family. How would you record this transaction?
ANSWER
Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
Question 7
Definition of a debit in double-entry accounting
ANSWER
An increase in assets/expenses and a decrease in liabilities/owner's equity and revenue.
Question 8
General Ledger
ANSWER
The debits and credits posted to the company's line of credit during the last 6 months
2
,Question 9
Transaction Journal
ANSWER
The debits and credits recorded for a rental equipment expense
Question 10
income statement (profit and loss statement)
ANSWER
Report of all revenue and expenses for the month
Question 11
Is the ending balance for the inventory on Balance Sheet?
ANSWER
Yes, Ending balance for the inventory
Question 12
Reasons for making adjusting journal entries (Choose 3)
ANSWER
a. To record expiration of prepaid insurance. b. To record depreciation. c. To recognize
unpaid salaries for the current period.
Question 13
3
, Economic Entity Assumption
ANSWER
The business is a separate entity, so the activities of a business must be kept separate from
any other financial activities of its business owners.
Question 14
Reliability Assumption
ANSWER
Makes mandatory for companies to record only accounting transactions that can be
verified through invoices, billing statements and bank statements.
Question 15
Full Disclosure Principle
ANSWER
All information that is relative to the business and is important to a lender or investor has
to be provided in financial statements or in the notes of the statements.
Question 16
Conservatism Assumption
ANSWER
When bookkeepers are uncertain and need to determine how to report an item, this
guides them to choose the option that shows less income or asset benefit.
Question 17
4
What is the Purpose of a balance sheet
ANSWER
To determine the financial health of an organization at a point in time.
Question 2
Financial elements on the income statement:
ANSWER
Expenses, Revenue
Question 3
Financial elements on the balance sheet:
ANSWER
Assets, Capital, and Liabilities
Question 4
Accounts that increase with debit
ANSWER
Cash, equipment, assets, expenses, and dividends
1
,Question 5
Accounts that increase with credit
ANSWER
Contra-Asset : Accumulated Depreciation, Account Payable, common stock, equity,
revenue and liability
Question 6
Lou has a landscaping company. He received a $10,000 payment for a landscaping job that
he completed for the Rose family. How would you record this transaction?
ANSWER
Debit $10,000 to Cash; Credit $10,000 to Service Revenue - Landscaping
Question 7
Definition of a debit in double-entry accounting
ANSWER
An increase in assets/expenses and a decrease in liabilities/owner's equity and revenue.
Question 8
General Ledger
ANSWER
The debits and credits posted to the company's line of credit during the last 6 months
2
,Question 9
Transaction Journal
ANSWER
The debits and credits recorded for a rental equipment expense
Question 10
income statement (profit and loss statement)
ANSWER
Report of all revenue and expenses for the month
Question 11
Is the ending balance for the inventory on Balance Sheet?
ANSWER
Yes, Ending balance for the inventory
Question 12
Reasons for making adjusting journal entries (Choose 3)
ANSWER
a. To record expiration of prepaid insurance. b. To record depreciation. c. To recognize
unpaid salaries for the current period.
Question 13
3
, Economic Entity Assumption
ANSWER
The business is a separate entity, so the activities of a business must be kept separate from
any other financial activities of its business owners.
Question 14
Reliability Assumption
ANSWER
Makes mandatory for companies to record only accounting transactions that can be
verified through invoices, billing statements and bank statements.
Question 15
Full Disclosure Principle
ANSWER
All information that is relative to the business and is important to a lender or investor has
to be provided in financial statements or in the notes of the statements.
Question 16
Conservatism Assumption
ANSWER
When bookkeepers are uncertain and need to determine how to report an item, this
guides them to choose the option that shows less income or asset benefit.
Question 17
4
