Regionals--Accounting 1 True/False Indicate whether the sentence or statement is true or false. ____
1. The sum of the assets and liabilities of a business always equals the investment of the business owner.
2. The capital account is an owner's equity account.
3. When cash is paid on account, a liability is increased.
4. A proprietorship is also known as a sole proprietorship.
5. A transaction for the sale of goods or services results in an increase in owner's equity.
6. Recording an expense transaction in an accounting equation increases liabilities.
7. Regardless of when payment is made or when services are rendered, the revenue should be recorded at the time of the sale.
8. Three transactions that affect owner's equity are receiving cash on account, paying expenses, and paying for supplies bought on account.
9. Increases in revenue accounts are recorded as debits because they increase the owner's capital account.
____ 10. Advertising Expense is increased with a debit. ____ 11. The source document number is a cross reference from the journal to the source document. ____ 12. A general journal page is complete when there is insufficient space to record any more entries. ____ 13. Each general journal entry requires at least two lines. ____ 14. In accounting, money is usually referred to as cash. ____ 15. Blank endorsements should be used when sending checks through the mail. ____ 16. Banks deduct service charges from customers' checking accounts without requiring customers to write a check for the amount. ____ 17. A memorandum is the source document for the entry to record establishing a petty cash fund. ____ 18. All fiscal periods are one year long. ____ 19. All fiscal periods must begin on January 1. ____ 20. The adjustment for prepaid insurance is a debit to Prepaid Insurance and a credit to Insurance Expense. ____ 21. The two accounts affected by the adjustment for supplies are Supplies and Supplies Expense. ____ 22. The owner's capital amount reported on a balance sheet is calculated as: capital account balance plus drawing account balance less net income. ____ 23. Adjusting entries are recorded on the next journal page following the page on which the last daily transactions for the month are recorded.
____ 24. The ending account balances of permanent accounts for one fiscal period are the beginning account balances for the next fiscal period. ____ 25. When a business keeps its accounting records on the assumption that it will make money and continue in business indefinitely, it is applying the Consistent Reporting accounting concept. ____ 26. A purchase invoice dated August 3 is received on August 5 and terms of sale are 20 days. Payment must be made by August 25. ____ 27. A sales invoice is also referred to as a sales ticket or a sales slip. ____ 28. The source document for receiving cash on account is a receipt. ____ 29. The heading of the balance column of an account in the accounts payable ledger is titled Debit Balance. ____ 30. Entries in a sales journal affect account balances in both the accounts receivable ledger and the general ledger. ____ 31. All businesses base their salary payments on the same length of time. ____ 32. The total amount earned by all employees for a pay period is a payroll. ____ 33. A payroll ledger is a business form used to record payroll information. ____ 34. The tax base for Medicare tax is usually the same as the tax base for social security tax. ____ 35. All employers must deposit payments for withheld employees' federal income tax and social security and Medicare taxes either monthly or semiweekly. ____ 36. A business summarizes financial information at least once each fiscal period. ____ 37. A net income amount is extended to the Balance Sheet Debit column. ____ 38. A net loss amount is extended to the Balance Sheet Credit column. ____ 39. The data for the revenue section of the income statement are obtained from the work sheet's Income Statement Credit column. ____ 40. Data needed to prepare the liabilities section of a balance sheet are obtained from a work sheet's Balance Sheet Debit column. ____ 41. The income summary account is a temporary account and must begin each fiscal period with a zero balance. ____ 42. An organization with the legal rights of a person and which may be owned by many persons is a corporation. ____ 43. A corporation can own property but cannot incur liabilities in its own name. ____ 44. A journal with two amount columns in which all kinds of entries can be recorded is a general journal. ____ 45. All transactions recorded in a purchases journal increase the balance of the purchases account. ____ 46. The monthly total of the General Debit column of a cash payments journal is posted to the general ledger. ____ 47. Correcting entries always affect at least one general ledger account. ____ 48. Because Sales Discount is a contra account to Sales, it has a normal credit balance. ____ 49. The account Allowance for Uncollectible Accounts is increased by a debit.
____ 50. When a journal entry is made to cancel the customer account in the general ledger account Accounts Receivable, the entry also cancels the customer account in the accounts receivable ledger. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 51. When a transaction changes both sides of the accounting equation, ____. a. an increase on the right side must offset a decrease on the left side b. an increase on the left side must equal an increase on the right side c. neither side of the equation changes d. none of the above ____ 52. Two transactions that decrease owner's equity are ____. a. expenses and withdrawals c. withdrawals and liabilities b. expenses and investments d. liabilities and expenses ____ 53. When cash is received from sales, ____. a. assets increase; owner's equity decreases b. assets increase; owner's equity increases c. assets decrease; owner's equity decreases d. none of the above ____ 54. When cash is received from sales, the change in the owner's equity is usually ____. a. recorded in a separate revenue account b. recorded directly in the owner's capital account c. recorded as interest revenue d. always recorded on the debit side ____ 55. The normal balance side of any revenue account is ____. a. the debit side c. the left side b. the credit side d. none of the above ____ 56. The recording of debit and credit parts of a transaction is ____. a. double-entry accounting c. accounting b. single-entry accounting d. none of the above ____ 57. Preparing a source document for each transaction is an application of the accounting concept ____. a. Business Entity c. Objective Evidence b. Unit of Measurement d. Going Concern ____ 58. Each time cash or checks are placed in a bank account, the customer prepares ____. a. a signature card c. a check b. a deposit slip d. none of the above ____ 59. A lost check with a blank endorsement on it can be cashed by ____. a. anyone who has the check b. only the person whose name follows the words "Pay to the order of" c. only the person who endorsed the check d. no one ____ 60. An endorsement on the back of a check consisting of the words "Pay to the order of" and a new check owner's name is a ____. a. blank endorsement c. restrictive endorsement b. special endorsement d. signature endorsement
____ 61. If a check is endorsed on the back with the words "For deposit only," the check can be cashed by ____. a. anyone who has the check b. the person whose name follows "Pay to the order of" c. only the person who signed the check d. no one - it must be deposited ____ 62. The entry to establish a $200.00 petty cash fund is ____. a. debit Cash, $200.00; credit Petty Cash, $200.00 b. debit Miscellaneous Expense, $200.00; credit Cash, $200.00 c. debit Petty Cash, $200.00; credit Cash, $200.00 d. debit Petty Cash, $200.00; credit Miscellaneous Expense, $200.00 ____ 63. When total revenue is greater than total expenses, the difference is ____. a. a net income c. a debit balance b. a net loss d. none of the above ____ 64. The formula for calculating the net income component percentage is ____. a. net income divided by total sales equals net income component percentage b. total sales divided by total expenses equals net income component percentage c. total sales minus total expenses divided by net income equals total net income percentage d. none of the above ____ 65. Information needed to prepare a balance sheet assets section is obtained from a work sheet's Account Title column and ____. a. Income Statement Debit column c. Balance Sheet Debit column b. Income Statement Credit column d. Balance Sheet Credit column ____ 66. A business expecting to make money and continue in business indefinitely is applying the accounting concept ____. a. Business Entity c. Objective Evidence b. Going Concern d. Historical Cost ____ 67. A cash payments journal is used to journalize _____. a. all petty cash transactions b. all cash payments transactions c. all cash payments on account transactions d. adjusting entries ____ 68. Supplies bought for use in a business are recorded in the ____. a. supplies expense account c. supplies account b. purchases account d. cash account ____ 69. The entry to journalize buying supplies for cash is ____. a. debit Supplies; credit Cash c. debit Purchases; credit Cash b. debit Accounts Payable; credit d. debit Purchases; credit Supplies Supplies ____ 70. A sale for which cash will be received at a later date is a ____. a. cash sale c. delayed-payment sale b. credit card sale d. sale on account ____ 71. A sale on account transaction ____. a. increases the balance of the Accounts Payable account b. increases the amount to be collected later from a customer c. decreases the amount to be collected later from a customer d. decreases the balance of the Accounts Receivable account
____ 72. The journal entry for a cash receipt on account is ____. a. debit Cash; credit Accounts Receivable b. debit Cash; credit Accounts Payable c. debit Accounts Payable; credit Cash d. debit Accounts Payable; credit Accounts Receivable ____ 73. Daily general ledger account balances are ____. a. usually not necessary b. necessary to do monthly financial statements c. posted to the accounts receivable ledger daily d. needed if the dollar amounts are large ____ 74. When a debit is posted to the accounts payable ledger, ____. a. the debit amount is written in the Debit column of the account b. the cash account increases c. the controlling account is increased by the entry d. all of the above ____ 75. The withholding allowances of an employee affect ____. a. social security tax withheld c. federal unemployment tax owed b. federal income tax withheld d. state unemployment tax owed ____ 76. Each employee name is listed in a payroll register along with ____. a. employee number c. withholding allowances b. marital status d. all of the above ____ 77. The total earnings paid to an employee after payroll taxes and other deductions is recorded in the payroll register ____. a. Gross Pay column c. Net Pay column b. Total Earnings column d. Total Deductions column ____ 78. All the payroll information needed to prepare a payroll and tax reports are found on ____. a. Form W-4 and the employee earnings record b. Form W-4 and the payroll register c. the payroll register and the employee earnings record d. Form W-4 ____ 79. Each employer must file a federal tax return showing the federal income tax and social security and Medicare taxes due the government on a Form ____. a. W-2 c. 940 b. W-3 d. 941 ____ 80. Employers are required to furnish each employee an annual statement of earnings and withholdings before ____. a. December31 of the current year c. January15 of the following year b. January1 of the following year d. January31 of the following year ____ 81. In the entry to journalize paying the liability for the first quarter federal unemployment tax, the account credited would be ____. a. Salary Expense c. Payroll Taxes Expense b. Unemployment Tax Payable-Federal d. Cash ____ 82. The payroll journal entry is based on the totals of ____. a. Earnings Total column, each deduction column, and Net Pay column b. Earnings Total column, Earnings Regular and Overtime Earnings, and Deductions Total columns c. Earnings Regular, Earnings Overtime, and Deductions Total columns d. Earnings Total column, Earnings Regular and Earnings Overtime Total columns
____ 83. A federal tax used for state and federal administrative expenses of the unemployment program is ____. a. social security tax c. federal unemployment tax b. Medicare tax d. state unemployment tax ____ 84. When a work sheet is completed, a net loss will appear in the ____. a. Income Statement Debit and Balance Sheet Credit columns b. Income Statement Credit and Balance Sheet Debit columns c. Income Statement Debit and Income Statement Credit columns d. Balance Sheet Debit and Balance Sheet Credit columns ____ 85. Preparing financial statements that provide information about a business's financial condition, changes in this financial condition, and the progress of operations is an application of the accounting concept _____. a. Consistent Reporting c. Historical Cost b. Adequate Disclosure d. Matching Expenses with Revenue ____ 86. An income statement has three main sections for _____. a. assets, liabilities, and owner's equity b. revenue, expenses, and inventory c. revenue, cost of merchandise sold, and expenses d. owner's equity, share of net income, and drawing ____ 87. Recording the total original price of all merchandise sold as the cost of merchandise sold is an application of the accounting concept _____. a. Consistent Reporting c. Historical Cost b. Adequate Disclosure d. Matching Expenses with Revenue ____ 88. Cost of merchandise sold is found by taking the amount of beginning merchandise inventory _____. a. less purchases plus ending inventory c. less expenses b. plus gross profit on sales d. plus purchases less ending inventory ____ 89. Some businesses include the owners' equity statement information as part of the _____. a. trial balance c. balance sheet b. income statement d. distribution of net income statement ____ 90. If the component percentage for gross profit on sales is 35.3 percent, _____. a. the business is not earning enough profit b. 35.3 cents out of every dollar of sales is gross profit c. 35.3 cents out of every dollar of sales is shared by the partners d. none of the above ____ 91. Recording closing entries to prepare temporary accounts for the next fiscal period is an application of the accounting concept ____. a. Matching Expenses with Revenue c. Accounting Period Cycle b. Adequate Disclosure d. Consistent Reporting ____ 92. To close the sales account, ____. a. debit Sales; credit Cash c. debit Income Summary; credit Sales b. debit Sales; credit Income Summary d. debit Cash; credit Sales ____ 93. To close the Income Summary account when there is a net loss, ____. a. debit Cash; credit Income Summary b. debit the partners' capital accounts; credit Income Summary c. debit Income Summary; credit the partners' capital accounts d. debit the partners' capital accounts; credit the partners' drawing accounts
____ 94. To replenish a $300.00 petty cash fund, if the petty cash custodian had receipts totaling $224.00 and cash of $74.00 in the petty cash box, one part of the journal entry is a ____. a. debit to Cash Short and Over for $2.00 c. debit to Petty Cash for $224.00 b. credit to Cash for $224.00 d. credit to Cash Short and Over for $2.00 ____ 95. Merchandise returned by a customer for credit is ____. a. a purchases discount c. a purchases allowance b. a purchases return d. none of the above ____ 96. Credit terms of 2/10, n/30 mean that if the account is paid in ____. a. 2 days, a 10 percent discount will be allowed b. 10 days, a 2 percent discount will be allowed c. 10 days, a 30 percent discount will be allowed d. 30 days, a 2 percent discount will be allowed ____ 97. A receipt signed by the authorized agent of a transportation company for merchandise received that also serves as a contract for the delivery of the merchandise is a ____. a. bill of lading c. commercial invoice b. letter of credit d. draft ____ 98. Allowance for Uncollectible Accounts is a contra account to ____. a. Accounts Payable c. Uncollectible Accounts Expense b. Sales d. Accounts Receivable ____ 99. The entry to journalize the uncollectible accounts expense adjusting entry is debit Uncollectible Accounts Expense and credit ____. a. Accounts Receivable c. Allowance for Uncollectible Accounts b. Cash d. none of the above ____100. The journal entry to record receipt of cash for an account previously written off is debit Cash and credit ____. a. Accounts Receivable c. Uncollectible Accounts Expense b. Allowance for Uncollectible Accounts d. none of the above
Regionals--Accounting 1 Answer Section TRUE/FALSE 1. ANS: 2. ANS: 3. ANS: 4. ANS: 5. ANS: 6. ANS: 7. ANS: 8. ANS: 9. ANS: 10. ANS: 11. ANS: 12. ANS: 13. ANS: 14. ANS: 15. ANS: 16. ANS: 17. ANS: 18. ANS: 19. ANS: 20. ANS: 21. ANS: 22. ANS: 23. ANS: 24. ANS: 25. ANS: 26. ANS: 27. ANS: 28. ANS: 29. ANS: 30. ANS: 31. ANS: 32. ANS: 33. ANS:
F T F T T F T F F T T T T T F T T F F F T F T T F F T T F T F T F
34. ANS: 35. ANS: 36. ANS: 37. ANS: 38. ANS: 39. ANS: 40. ANS: 41. ANS: 42. ANS: 43. ANS: 44. ANS: 45. ANS: 46. ANS: 47. ANS: 48. ANS: 49. ANS: 50. ANS:
F F T F F F F T T F T T F F F F T
MULTIPLE CHOICE 51. ANS: 52. ANS: 53. ANS: 54. ANS: 55. ANS: 56. ANS: 57. ANS: 58. ANS: 59. ANS: 60. ANS: 61. ANS: 62. ANS: 63. ANS: 64. ANS: 65. ANS:
B A B A B A C B A B D C A A C
66. ANS: 67. ANS: 68. ANS: 69. ANS: 70. ANS: 71. ANS: 72. ANS: 73. ANS: 74. ANS: 75. ANS: 76. ANS: 77. ANS: 78. ANS: 79. ANS: 80. ANS: 81. ANS: 82. ANS: 83. ANS: 84. ANS: 85. ANS: 86. ANS: 87. ANS: 88. ANS: 89. ANS: 90. ANS: 91. ANS: 92. ANS: 93. ANS: 94. ANS: 95. ANS: 96. ANS: 97. ANS: 98. ANS: 99. ANS: 100.ANS:
B B C A D B A A A B D C C D D D A C B B C C D C B A B B A D B A D C A