Question 1

Transactions are recorded in alphabetical order in a journal.

Accepted Answer

A) True 
 B)False

Question 2

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

Accepted Answer

A)  debit to Notes Payable.
B)  credit to Cash.
C)  credit to Notes Receivable.
D)  credit to Equipment.

Question 3

On March 1, 2017, Freeze Company hires a new employee who will start to work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

Accepted Answer

A)  Yes, the company is now obligated to pay the employee, thus that event must be recorded.
B)  No, hiring an employee is an important event; however it is not an economic event that should be recorded.
C)  Yes, failure to record the event would cause the financial statements to be misleading.
D)  No, the financial position of the company has been changed, however, the dollar amount of the transaction is not yet known.

Question 4

When a corporation distributes a dividend the

Accepted Answer

A)  most common form of distribution is a cash dividend.
B)  Dividends account will be increased with a credit.
C)  Retained Earnings account will be directly increased with a debit.
D)  Dividends account will be decreased with a debit.

Question 5

Which account below is not a subdivision of stockholders' equity?

Accepted Answer

A)  Dividends
B)  Revenues
C)  Expenses
D)  Liabilities

Question 6

A trial balance is prepared at the beginning of an accounting period.

Accepted Answer

A) True 
 B)False

Question 7

The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

A revenue generally

Accepted Answer

A)  increases assets and liabilities.
B)  increases assets and stockholders' equity.
C)  increases assets and decreases stockholders' equity.
D)  leaves total assets unchanged.

Question 9

Customarily, a trial balance is prepared

Accepted Answer

A)  at the end of each day.
B)  after each journal entry is posted.
C)  at the end of an accounting period.
D)  only at the inception of the business.

Question 10

Collection on an account receivable will increase both cash and accounts receivable.

Accepted Answer

A) True 
 B)False

Question 11

Debits

Accepted Answer

A)  increase both assets and liabilities.
B)  decrease both assets and liabilities.
C)  increase assets and decrease liabilities.
D)  decrease assets and increase liabilities.

Question 12

Liabilities are increased with debits and decreased with credits.

Accepted Answer

A) True 
 B)False

Question 13

An accounting record that includes a list of accounts and their balances at a given time is called a

Accepted Answer

A)  trial balance.
B)  general journal.
C)  general ledger.
D)  chart of accounts.

Question 14

Unearned Service Revenue is classified as a liability on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

Which statement about an account is true?

Accepted Answer

A)  In its simplest form, an account consists of two parts.
B)  An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.
C)  There are separate account for specific assets and liabilities but only one account for stockholders' equity items.
D)  The left side of an account is the credit or decrease side.

Question 16

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

Accepted Answer

A)  credit to Notes Payable.
B)  debit to Cash.
C)  credit to Notes Receivable.
D)  credit to Equipment.

Question 17

On June 1, 2017, England Inc. reported a cash balance of $42,000. During June, England made deposits of $16,000 and made disbursements totaling $48,000. What is the cash balance at the end of June?

Accepted Answer

A)  $10,000 credit balance
B)  $58,000 debit balance
C)  $10,000 debit balance
D)  $6,000 credit balance

Question 18

The basic format of a journal would not include a(n)

Accepted Answer

A)  brief explanation.
B)  account title column.
C)  T-account.
D)  date column.

Question 19

Posting

Accepted Answer

A)  transfers journal entries to ledger accounts.
B)  transfers ledger transaction data to the journal.
C)  involves transferring all debits and credits on a journal page to the trial balance.
D)  provides a chronological record of transactions.

Question 20

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be

Accepted Answer

A)  $0.
B)  $6,800 credit.
C)  $4,800 credit.
D)  $2,000 debit.

Exam 3: The Accounting Information System

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be

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When a corporation distributes a dividend the

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A revenue generally

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The basic format of a journal would not include a(n)

Correct AnswerverifiedShow Answer

Which statement about an account is true?

Correct AnswerverifiedShow Answer

On March 1, 2017, Freeze Company hires a new employee who will start to work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

Correct AnswerverifiedShow Answer

Liabilities are increased with debits and decreased with credits.

Correct AnswerverifiedShow Answer

Transactions are recorded in alphabetical order in a journal.

Correct AnswerverifiedShow Answer

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

Correct AnswerverifiedShow Answer

Debits

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The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.

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Which account below is not a subdivision of stockholders' equity?

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A trial balance is prepared at the beginning of an accounting period.

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An accounting record that includes a list of accounts and their balances at a given time is called a

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Posting

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On June 1, 2017, England Inc. reported a cash balance of $42,000. During June, England made deposits of $16,000 and made disbursements totaling $48,000. What is the cash balance at the end of June?

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Unearned Service Revenue is classified as a liability on the balance sheet.

Correct AnswerverifiedShow Answer

Customarily, a trial balance is prepared

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Collection on an account receivable will increase both cash and accounts receivable.

Correct AnswerverifiedShow Answer

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

Correct AnswerverifiedShow Answer

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