Business Accounting and You 061520RR

1. The matching principle in accounting requires the matching of revenue earned with the

A. assets used to produce the revenue.

B. liabilities used to produce the revenue.

C. expenses incurred to produce the revenue.

D. assets used less the liabilities incurred.

2. Rick lists his building at current replacement value, rather than the price he paid for the building. Which

principle is Rick violating?

A. Entity

B. Cost

C. Reliability

D. Going concern

3. Office equipment was purchased for $2,400 on account to Business Furniture Company. The journal entry would include a

A. debit to Office Equipment and a credit to Cash.

B. debit to Office Equipment and a credit to Accounts Payable.

C. debit to Accounts Payable and a credit to Cash.

D. credit to Cash and a debit to Office Equipment Expense.

4. Which concept would not be considered if you were to compare the price of a Camaro in 1979 with the price of a Camaro in 2009?

A. Reliability of the price in 1979

B. Market price in 1979

C. Objectivity of the price in 1979

D. Current cost in 2009

5. The income statement is used to report

A. the financial position on a specific date.

B. results of operations for a specific date.

C. results of operations for a specific period.

D. the financial position for a specific period.

6. Items such as wages and interest that have been incurred, but not yet paid, are called accrued

A. revenues.

B. notes.

C. liabilities.

D. assets.

7. A T-account has a $509 debit balance. This account is most likely not

A. advertising expense.

B. land.

C. common stock.

D. dividends.

8. Which financial statement illustrates the accounting equation?

A. Statement of retained earnings

B. Balance sheet

C. Statement of cash flows

D. Income statement

9. The total revenues of $6,500, total expenses of $3,500, and dividends of $500 were recorded in the closing entries. The net change in retained earnings for the month was

A. $3,500.

B. $2,500.

C. $3,000.

D. $6,000.

10. The closing entries show a debit to retained earnings of $350 and a credit to retained earnings of $750.

There was also a credit to dividends payable of $100. This company had a

A. net loss of $400.

B. net income of $500.

C. net loss of $500

D. net income of $400.

11. On the trial balance, which of the following should have the balances listed in the debit column?

A. Liabilities, revenues, and dividends

B. Liabilities, revenues, and common stock

C. Assets, revenues, and dividends

D. Assets, dividends, and expenses

12. Rick owns a sporting goods store. In his initial accounting records, he included his personal computer and all of his personal sporting gear. Rick is violating which principle of accounting?

A. Cost

B. Reliability

C. Entity

D. Going concern

13. A 20-month insurance policy was purchased for $1,500 on May 1. How much insurance will be expensed on December 31?

A. $75

B. $1,500

C. $300

D. $600

14. The adjusted trial balance for supplies was $333. The unadjusted trial balance for supplies was $509. The amount of supplies expense would be a

A. $176 debit.

B. $509 debit.

C. $333 debit.

D. $176 credit.

15. Beginning retained earnings are $65,000; sales are $29,500; expenses are $33,000; and dividends paid are $3,500. How much is the net income or loss for the company?

A. ($7,000)

B. ($3,500)

C. $26,000

D. $0

16. Interest revenue would be an example of a/an

A. accrued expense.

B. deferred expense.

C. deferred revenue.

D. accrued revenue.

17. Which account would not appear on a post-closing trial balance?

A. Sales tax payable

B. Accounts receivable

C. Dividends

D. Common stock

18. Accounts payable, taxes payable, and notes payable

A. decrease on the debit side, increase on the credit side, and are revenues.

B. increase on the debit side, decrease on the credit side, and are expenses.

C. decrease on the debit side, increase on the credit side, and are liabilities.

D. increase on the debit side, decrease on the credit side, and are assets.

19. Which of the following is a disadvantage of the corporate form of business?

A. Ease of raising capital

B. Double taxation

C. Limited liability

D. Limited resources

20. By definition, which type of organization has stockholders?

A. Sole proprietorships

B. Partnerships

C. Limited liability companies

D. Corporations