ACC 101 Exam queries and answers
graded 100%
1. The primary objective of financial accounting is to provide general-purpose financial statements to
help external users analyze and interpret an organization's activities. - ANS✅✅TRUE
2. The business entity assumption requires that a business be accounted for separately from other
business entities, including its owner or owners. - ANS✅✅TRUE
3. Financial statements include: the balance sheet, income statement, and statement of cash flows. -
ANS✅✅True
4. A balance sheet covers a period of time, such as a month or year. - ANS✅✅FALSE
5. The income statement shows the financial position of a business on a specific date. -
ANS✅✅False
6. An account is a record of increases and decreases in a specific asset, liability, equity, revenue or
expense item. - ANS✅✅True
7. Debit means the right-hand side of any account. - ANS✅✅False
8. In a double-entry accounting system, total amount debited must always equal total amount
credited. - ANS✅✅True
9. A debit entry is always favorable. - ANS✅✅False
10. Posting is the transfer of the information from each journal entry to the ledger. - ANS✅✅TRUE
11. The principles of internal control include: establish responsibilities, maintain adequate records,
insure assets, separate recordkeeping from custody of assets and perform regular and independent
reviews. - ANS✅✅True
, 12. Cash equivalents are short-term highly liquid investment assets that are easily converted to cash.
- ANS✅✅False
13. Liquidity refers to a company's ability to pay its short-term obligations. - ANS✅✅False
14. A bank reconciliation explains any differences between the balance of a checking account on the
depositor's records and the balance reported on the bank statement - ANS✅✅TRUE
15. A promissory note is a written promise to pay a specified amount of money either on
demand or at a definite future date. - ANS✅✅True
16. The matching principle requires use of the direct write-off method of accounting for bad debts. -
ANS✅✅False
17. The accounts receivable method to estimate bad debts obtains the estimated balance in the
Allowance for Doubtful Accounts in one of two ways: (1) the percent uncollectible from the total
accounts receivable or (2) aging accounts receivable. - ANS✅✅True
18. The aging method of determining bad debts expense is based on the knowledge that the longer a
receivable is past due, the lower the likelihood of collection. - ANS✅✅True
19. In accounting, depreciation measures the actual decline in market value of an asset. -
ANS✅✅False
20. Accumulated depreciation represents funds set aside to buy new assets when the assets
currently owned are replaced. - ANS✅✅FALSE
21. An assets' cost includes all normal and reasonable expenditures necessary to get the asset in
place and ready for its intended use. - ANS✅✅TRUE
22. An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore. Assume 70,000
tons are mined and sold this year. The depletion expense for the this year is $35,000. -
ANS✅✅True
graded 100%
1. The primary objective of financial accounting is to provide general-purpose financial statements to
help external users analyze and interpret an organization's activities. - ANS✅✅TRUE
2. The business entity assumption requires that a business be accounted for separately from other
business entities, including its owner or owners. - ANS✅✅TRUE
3. Financial statements include: the balance sheet, income statement, and statement of cash flows. -
ANS✅✅True
4. A balance sheet covers a period of time, such as a month or year. - ANS✅✅FALSE
5. The income statement shows the financial position of a business on a specific date. -
ANS✅✅False
6. An account is a record of increases and decreases in a specific asset, liability, equity, revenue or
expense item. - ANS✅✅True
7. Debit means the right-hand side of any account. - ANS✅✅False
8. In a double-entry accounting system, total amount debited must always equal total amount
credited. - ANS✅✅True
9. A debit entry is always favorable. - ANS✅✅False
10. Posting is the transfer of the information from each journal entry to the ledger. - ANS✅✅TRUE
11. The principles of internal control include: establish responsibilities, maintain adequate records,
insure assets, separate recordkeeping from custody of assets and perform regular and independent
reviews. - ANS✅✅True
, 12. Cash equivalents are short-term highly liquid investment assets that are easily converted to cash.
- ANS✅✅False
13. Liquidity refers to a company's ability to pay its short-term obligations. - ANS✅✅False
14. A bank reconciliation explains any differences between the balance of a checking account on the
depositor's records and the balance reported on the bank statement - ANS✅✅TRUE
15. A promissory note is a written promise to pay a specified amount of money either on
demand or at a definite future date. - ANS✅✅True
16. The matching principle requires use of the direct write-off method of accounting for bad debts. -
ANS✅✅False
17. The accounts receivable method to estimate bad debts obtains the estimated balance in the
Allowance for Doubtful Accounts in one of two ways: (1) the percent uncollectible from the total
accounts receivable or (2) aging accounts receivable. - ANS✅✅True
18. The aging method of determining bad debts expense is based on the knowledge that the longer a
receivable is past due, the lower the likelihood of collection. - ANS✅✅True
19. In accounting, depreciation measures the actual decline in market value of an asset. -
ANS✅✅False
20. Accumulated depreciation represents funds set aside to buy new assets when the assets
currently owned are replaced. - ANS✅✅FALSE
21. An assets' cost includes all normal and reasonable expenditures necessary to get the asset in
place and ready for its intended use. - ANS✅✅TRUE
22. An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore. Assume 70,000
tons are mined and sold this year. The depletion expense for the this year is $35,000. -
ANS✅✅True
