Accounting I Semester Exam Review

An entry level job performing one or two accounting tasks is called a(n)

a. accounting clerkb. entrepreneur c. internshipd. staff accountant

5

An entry level job performing one or two accounting tasks is called a(n)

a. accounting clerkb. entrepreneur c. internshipd. staff accountant

5

To find information about a career in accounting

a. look for information on accounting careers in the library

b. research career information on the internetc. talk to someone who works in the accounting

fieldd. all of the above

3

To find information about a career in accounting

a. look for information on accounting careers in the library

b. research career information on the internetc. talk to someone who works in the accounting

fieldd. all of the above

3

• The most common form of business organization is a

a. corporationb. lemonade stand c. partnershipd. sole proprietorship

10

• The most common form of business organization is a

a. corporationb. lemonade stand c. partnershipd. sole proprietorship

10

A merchandising business

a. buys raw materials and transforms them into finished products

b. buys finished products and resells themc. provides a service for a feed. all of the above

6

A merchandising business

a. buys raw materials and transforms them into finished products

b. buys finished products and resells themc. provides a service for a feed. all of the above

6

A business that operates to support a cause or interest is known as a

a. career goal b. not-for-profit organizationc. private entityd. sports franchise

4

A business that operates to support a cause or interest is known as a

a. career goal b. not-for-profit organizationc. private entityd. sports franchise

4

A corporation is a business organization that is recognized by law to

a. have a life of its ownb. have an active social lifec. have at least 3 ownersd. pay no tax

8

A corporation is a business organization that is recognized by law to

a. have a life of its ownb. have an active social lifec. have at least 3 ownersd. pay no tax

8

Accounting is often called the "language of business" because

a. accountants in many companies share financial information

b. all business owners have a good understanding of accounting principles

c. it is easy to understand d. it is fundamental to the communication of

financial information

15

Accounting is often called the "language of business" because

a. accountants in many companies share financial information

b. all business owners have a good understanding of accounting principles

c. it is easy to understand d. it is fundamental to the communication of

financial information

15

Money supplied by investors, banks, or owners of a business is called

a. capitalb. incurred expensesc. secondary alignmentd. pin money

7

Money supplied by investors, banks, or owners of a business is called

a. capitalb. incurred expensesc. secondary alignmentd. pin money

7

The amount of money earned after the costs of operating a business are paid is _______.

a. capitalb. expensec. profitd. revenue

1

The amount of money earned after the costs of operating a business are paid is _______.

a. capitalb. expensec. profitd. revenue

1

A free enterprise system allows businesses toa. have their government choose their

productsb. produce the goods and services they

choosec. buy goods at a discountd. operate at a profit

9

A free enterprise system allows businesses toa. have their government choose their

productsb. produce the goods and services they

choosec. buy goods at a discountd. operate at a profit

9

Those who transform ideas for products or services into real-world businesses are known as

a. accountants b. entrepreneursc. organizersd. profit takers

11

Those who transform ideas for products or services into real-world businesses are known as

a. accountants b. entrepreneursc. organizersd. profit takers

11

One of the disadvantages of a sole proprietorship is

a. all the profits go to the ownerb. it is easy to set upc. the owner has all the risksd. there are few regulations to follow

13

One of the disadvantages of a sole proprietorship is

a. all the profits go to the ownerb. it is easy to set upc. the owner has all the risksd. there are few regulations to follow

13

One example of an accounting assumption is

a. business entityb. financial accountingc. financial reportsd. management accounting

17

One example of an accounting assumption is

a. business entityb. financial accountingc. financial reportsd. management accounting

17

A business owned by two or more people is called

a. a corporationb. a partnership c. looking for troubled. venture capital

12

A business owned by two or more people is called

a. a corporationb. a partnership c. looking for troubled. venture capital

12

The total revenue for the period is $25,496, the total expenses are $13,387, and the withdrawals account has an ending balance of $2,500. The capital account increased by ____________.

a. $9,609b.$12,109c. $14,609d.$27,996

23

The total revenue for the period is $25,496, the total expenses are $13,387, and the withdrawals account has an ending balance of $2,500. The capital account increased by ____________.

a. $9,609b.$12,109c. $14,609d.$27,996

23

Closing entries close the net income or net loss into the .

a. revenue accountb. expense accountc. capital accountd. cash in bank account

20

Closing entries close the net income or net loss into the .

a. revenue accountb. expense accountc. capital accountd. cash in bank account

20

GAAP stands for

a. a clothing store b. generally accepted accounting periodc. generally accepted accounting principlesd. generally allowed accounting principles

16.

GAAP stands for

a. a clothing store b. generally accepted accounting periodc. generally accepted accounting principlesd. generally allowed accounting principles

16.

When accounting information is processed by hand it is called

a. a financial reporting system b. a manual accounting system c. an in-house systemd. open accounting

14.

When accounting information is processed by hand it is called

a. a financial reporting system b. a manual accounting system c. an in-house systemd. open accounting

14.

The source of information for the closing entries is the ________.

a. balance sheetb. income statementc. work sheetd. all the above

22.

The source of information for the closing entries is the ________.

a. balance sheetb. income statementc. work sheetd. all the above

22.

The word equities refers to claims against the assets of a business by .

a. creditors onlyb. owners onlyc. customers onlyd. both creditors and owners

25

The word equities refers to claims against the assets of a business by .

a. creditors onlyb. owners onlyc. customers onlyd. both creditors and owners

25

If the trial balance section of the work sheet is out of balance, the first thing you should do is .

a. check the ledger accounts against the work sheet

b. add the columns againc. recopy the accounts and balances to a new

work sheetd. look in the ledger for the amount of the

difference19.

If the trial balance section of the work sheet is out of balance, the first thing you should do is .

a. check the ledger accounts against the work sheet

b. add the columns againc. recopy the accounts and balances to a new

work sheetd. look in the ledger for the amount of the

difference19.

Each of the following is a business expense except a payment for _____ .

a. advertisingb. equipmentc. monthly rent d. utilities bills

24

Each of the following is a business expense except a payment for _____ .

a. advertisingb. equipmentc. monthly rent d. utilities bills

24

Accounting is often called the "language of business" because

a. asset accountsb. liability accountsc. permanent accountsd. temporary accounts

18

Accounting is often called the "language of business" because

a. asset accountsb. liability accountsc. permanent accountsd. temporary accounts

18

A business that operates to earn money for its owners is called a(n)

a.careerb.for-profit businessc. owner financed businessd.professional organization

2

A business that operates to earn money for its owners is called a(n)

a.careerb.for-profit businessc. owner financed businessd.professional organization

2

When closing the withdrawals account, transfer the balance in this account to the __________ account.

a. capital b. expense c. income summary d. revenue

21

When closing the withdrawals account, transfer the balance in this account to the __________ account.

a. capital b. expense c. income summary d. revenue

21

True or False

Corporations often start out as sole proprietorship or partnerships.

True or False

Corporations often start out as sole proprietorship or partnerships.

True or False

Accounts Receivable is a liability account.

True or False

Accounts Receivable is a liability account.

True or False

The corporation is the easiest form of business to organize.

True or False

The corporation is the easiest form of business to organize.

True or False

Every transaction affects two or more accounts and is recorded by equal amounts of debits and credits.

True or False

Every transaction affects two or more accounts and is recorded by equal amounts of debits and credits.

True or False

An owner’s equity account is increased on the debit side and normally has a debit balance.

True or False

An owner’s equity account is increased on the debit side and normally has a debit balance.

True or False

An increase in revenue is recorded as a credit.

True or False

An increase in revenue is recorded as a credit.

True or False

A credit to an account always increases it; a debit to an account always decreases it.

True or False

A credit to an account always increases it; a debit to an account always decreases it.

True or False

The debit and credit parts of an entry must be equal for the accounting equation to remain in balance.

True or False

The debit and credit parts of an entry must be equal for the accounting equation to remain in balance.

True or False

Only businesses that earn a profit will have the economic resources to continue to operate.

True or False

Only businesses that earn a profit will have the economic resources to continue to operate.

True or False

When revenue accounts are closed, the Income Summary account is debited.

True or False

When revenue accounts are closed, the Income Summary account is debited.

True or False

Withdrawals is a permanent account.

True or False

Withdrawals is a permanent account.

True or False

Increases in expenses are recorded as debits.

True or False

Increases in expenses are recorded as debits.

True or False

The balance sheet should be prepared before the statement of changes in owner’s equity.

True or False

The balance sheet should be prepared before the statement of changes in owner’s equity.

True or False

A work sheet is normally prepared in pencil on standard multicolumn accounting paper.

True or False

A work sheet is normally prepared in pencil on standard multicolumn accounting paper.

True or False

A net loss occurs when the revenue is greater than the expenses.

True or False

A net loss occurs when the revenue is greater than the expenses.

True or False

After each transaction, the basic accounting equation should remain in balance.

True or False

After each transaction, the basic accounting equation should remain in balance.

True or False

Assets + Liabilities = Owner’s Equity is another way to express the basic accounting equation.

True or False

Assets + Liabilities = Owner’s Equity is another way to express the basic accounting equation.

True or False

The difference between the debit and credit amounts in an account is the account balance.

True or False

The difference between the debit and credit amounts in an account is the account balance.

True or False

Temporary capital accounts are extensions of the owner’s capital account.

True or False

Temporary capital accounts are extensions of the owner’s capital account.

True or False

A journal is like a diary of a business because it is the only place where complete details of a transaction are recorded.

True or False

A journal is like a diary of a business because it is the only place where complete details of a transaction are recorded.

True or False

A creditor has a financial claim to the assets of a business.

True or False

A creditor has a financial claim to the assets of a business.

True or False

The total financial claims do not have to equal the total cost of the property.

True or False

The total financial claims do not have to equal the total cost of the property.

True or False

Expenses decrease owner’s equity and are recorded as debits.

True or False

Expenses decrease owner’s equity and are recorded as debits.

True or False

A fiscal period may be one month, three months, six months, or even one year, but usually it is one year.

True or False

A fiscal period may be one month, three months, six months, or even one year, but usually it is one year.

True or False

A trial balance is prepared after posting is completed.

True or False

A trial balance is prepared after posting is completed.

True or False