MULTIPLE CHOICE EXAM QUESTIONS.
1. Which of the following statements are false concerning the primary financial statements?
a. The Statement of Financial Position is another name for the Balance Sheet.
b. A Balance Sheet prepared after six months in business would be dated "For the Six Months Ending."
c. The Statement of Activity is another name for the Income Statement
d. The Statement of Cash Flows is dated "For the Six Months Ending.."
2. Which of these statements is false?
a. Supplies are usually carried on the Balance Sheet at historical cost even if their market value is less.
b. Sales are recorded when the work is done and they have been billed even if the customer has not yet paid us.
c. If Land is listed on the Balance Sheet for $15,000 that means it would probably sell for $15,000.
d. Assets less Owner's Equity equals Liabilities.
3. Which of the following is an accurate statement about Supplies Expense on the year end income statement?
a. The supplies expense represents the amount paid in cash for supplies this year.
b. The supplies expense represents the total amount of supplies purchased during the year.
c. The supplies expense represents the cost of the supplies used up during the year.
d. The supplies expense represents market value of the supplies left at year end.
4. Which of the following account titles would be an asset?
a. Interest Payable
b. Interest Revenue
c. Supplies Expense
d. Equipment
5. Which of the following accounts would have a normal credit balance?
a. Supplies Expense
b. Supplies
c. Interest Payable
d. Withdrawals
6. Which of the following accounts would record its increases with a debit?
a. Legal Expense
b. Accounts Payable
c. Capital
d. Revenues
7. Which of the following accounts would not appear on the income statement?
a. Legal Expense
b. Sales Revenue
c. Fees Earned
d. Withdrawals
8. Jason orders and receives $5000 worth of supplies. He pays $3000 on the bill for the supplies. What is the resulting balance in Accounts Payable?
a. A $3000 credit balance
b. A $2000 credit balance
c. A $3000 debit balance
d. A 2000 debit balance
9. All of the following accounts have a normal credit balance except for which one?
a. Accumulated Depreciation
b. Revenues
c. Supplies Expense
d. Salaries Payable
10. Jason orders $5000 worth of supplies. He pays for $4000, but still owes $1000 at the end of the year. The inventory of supplies shows that $1200 of supplies are still on hand at the end of the year. What is the correct amount of supplies expense at the end of the year?
a. $4000
b. $3800
c. $2800
d. $5000
11. Which of the following are the correct names of the sections on the Statement of Cash Flows?
a. Cash flows from Income Activities, Selling Activities, and Investing Activities
b. Cash flows from Operating Activities, Purchasing Activities, and Investing Activities
c. Cash flows from Operating Activities, Investing Activities, and Financing Activities
d. Cash flows from Revenues, Expenses, and Financing
12. When the owner takes $1000 out of the business for personal uses, an entry should be made which includes which of the following?
a. A credit to Withdrawals for $1000
b. A credit to Capital for $1000
c. A debit to Expense for $1000
d. A debit to Withdrawals for $1000
13. When Jane does $5000 of work for a client and sends them a bill, the entry should include
a. A debit of $5000 to Accounts Payable
b. A debit to Cash for $5000
c. A debit to Accounts Receivable for $5000
d. A debit to Revenue for $5000
14. Which of the following situations will be least likely to trigger an adjusting entry at the end of the period?
a. The company has ordered but not received merchandise.
b. The company uses equipment.
c. The company buys supplies.
d. The company has employees that are paid weekly.
15. Which of the following accounts would be zeroed out in the closing process?
a. Capital
b. Land
c. Withdrawals
d. Accumulated Depreciation
16. Which of the following accounts would not be zeroed out in the closing process?
a. Fees Earned
b. Interest Payable
c. Interest Revenue
d. Depreciation Expense
17. Which of the following statements is false?
a. Posting is the process of recording entries in the Journal.
b. The General Journal is a plan of the debits and credits.
c. Sometimes it is not a good idea to close the books at the end of the period.
d. Financial statements can be prepared even without closing the books.
18. Which of the following has a normal account balance that is different from the others listed?
a. Cash
b. Accounts Receivable
c. Withdrawals
d. Revenues
19. If a company has a beginning cash balance of $10,000. During the period the company buys equipment worth $5000 on credit, purchases supplies for $4000 in cash, $1000 of supplies are used up, the owner withdraws of $3000, and bills are sent to customers for $6000. The company collects $3000 from the customers. What is the ending cash balance?
a. $12,000
b. $8,000
c. $6,000
d. $1,000
20. See number 19. above. If depreciation of $1000 and the supplies mentioned above are the only items requiring adjusting entries, what is the net income at the end of the period?
a. $1,000 net income
b. $1,000 net loss
c. $4,000 net income
d. $2,000 net loss