Chapter 3: Processing Accounting Information
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
83. The system of accounting in which there are at least two accounts affected in every transaction so that the accounting
equation stays in balance is a(an)
a.
Double-entry system
b.
Debit
c.
Credit
d.
Journalizing
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
84. A file or book which contains a record for all accounts used by a company, including the account balance, is called a
a.
chart of accounts
b.
general journal
c.
general ledger
d.
trial balance
ANSWER:
c
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
85. An abbreviated version of an account which is useful for analyzing the effects of business transactions is the
a.
chart of accounts
b.
double entry system
c.
T account
d.
trial balance
ANSWER:
c
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
86. An entry made to the right side of an account is called a
a.
debit
b.
credit
c.
double-entry system
d.
journal entry
ANSWER:
b
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
87. Debit entries are used to
a.
increase asset accounts.
b.
decrease expense accounts.
c.
increase liability accounts.
d.
increase revenue accounts.
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
88. Credit entries are used to
a.
increase asset accounts.
b.
increase liability accounts.
c.
decrease revenue accounts.
d.
decrease liability accounts.
ANSWER:
b
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
89. Which of the following accounts is increased by a credit entry?
a.
Interest Revenue
b.
Salary Expense
c.
Accounts Receivable
d.
Dividends
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
90. Which of the following accounts is increased by a credit entry?
a.
Cash
b.
Equipment
c.
Accounts receivable
d.
None of these choices.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
91. All of the following accounts have normal debit balances except
a.
Accounts Receivable
b.
Dividends
c.
Office Supplies Expense
d.
Sales
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
92. All of the following accounts have normal credit balances except
a.
Investments
b.
Common Stock (Capital Stock)
c.
Accounts payable
d.
Service Revenue
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
93. Which pair of accounts has the same set of rules for debit and credit entries?
a.
Common Stock (Capital Stock) and Accounts Payable
b.
Salaries Expense and Retained Earnings
c.
Cash and Notes Payable
d.
Sales Revenue and Accounts Receivable
ANSWER:
a
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
94. Which pair of accounts has the same set of rules for debit and credit entries?
a.
Service Revenue and Rent Expense
b.
Dividends and Retained Earnings
c.
Equipment and Salaries Expense
d.
Accounts Receivable and Accounts Payable
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
Chapter 3: Processing Accounting Information
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Copper Corp.
Use the selected accounts for Copper Corp. presented below to answer the following question(s).
CASH
ACCOUNTS RECEIVABLE
8/1 Balance
6,000
8/2
1,800
8/7
900
8/3
500
8/5
400
8/7
900
DEPOSITS RECEIVED IN ADVANCE
(A Liability Account)
SALES
8/3
500
8/2
1,800
8/5
400
95. Read the information for Copper Corp.
On which date did the country club make a credit sale of club memberships?
a.
August 2
b.
August 3
c.
August 5
d.
August 7
ANSWER:
a
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Analyzing
96. Read the information on Copper Corp.
On which date did the company make cash sales for daily golf and swimming fees?
a.
August 2
b.
August 3
c.
August 5
d.
August 7
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
97. Read the information on Copper Corp.
On which date did the country club collect an advance deposit?
a.
August 2
b.
August 3
c.
August 5
d.
August 7
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Analyzing
98. Read the information about Copper Corp.
Which of the following describes the transaction which occurred on August 7?
a.
Sold club memberships on credit.
b.
Cash sales of daily fees.
c.
Collected an advance deposit in cash.
d.
Received cash payments of accounts receivable.
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Analyzing
99. Read the information about Copper Corp.
Assuming that there are no other transactions, how much was owed to the club by the membership on August 8th?
a.
$1,800
b.
$1,300
c.
$ 900
d.
$ 500
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
100. A credit means that
a.
the event has an effect on the left side of an account.
b.
the event is unfavorable.
c.
the event is favorable.
d.
None of these choices.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
101. The correct term for an entry made to the left side of an account is
a.
Double-entry system
b.
Debit
c.
Credit
d.
Journalizing
ANSWER:
b
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
102. What type of account is increased with a debit but is a decrease to retained earnings?
a.
Liability
b.
Asset
c.
Revenue
d.
Expense
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
103. Which of the following statements is true?
a.
If a debit entry is made to an account in the general journal, the same account will receive a credit entry when
the amount is posted to the general ledger.
b.
If all transactions are correctly posted to the general ledger, the sum of the accounts with debit balances should
be equal to the sum of the accounts with credit balances.
c.
Posting occurs when numbers in the general ledger accounts are transferred to the general journal.
d.
If the sum of the debit balances equals the sum of the credit balances then there were no mistakes made in the
posting process.
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Understanding
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
104. Which of the following statements is true?
a.
An entry in a general ledger account can be traced to the trial balance by referring to the page listed in the
posting reference column of that ledger account.
b.
The posting of an amount recorded in the general journal can be verified by referring to the account number
listed in the posting reference column on that line in the general journal.
c.
Business transactions are recorded first in the general ledger; then that information is transferred to the general
journal.
d.
No explanation is needed for each entry in the general journal.
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Understanding
105. Sunnyside Vacations has a $1,200 account receivable from the John Smith. On September 18, the John makes a
partial payment of $1,100 to Sunnyside. The journal entry made on September 18 by Sunnyside to record this transaction
includes:
a.
A debit to the Cash account of $1,150.
b.
A debit to the Accounts Receivable account of $1,150.
c.
A credit to the accounts receivable account of $1,100.
d.
A credit to the Accounts Receivable account of $1,050.
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
106. Squidly Products sold and delivered modems to Detail Solutions for $6,600 to be paid by Detail Solutions in three
equal installments over the next three months. The journal entry made by Squidly to record this transaction will include:
a.
A credit to Cash for $6,600.
b.
A debit to Accounts Receivable for $6,600.
c.
A debit to Accounts Receivable for $2,200.
d.
A debit to Sales Revenue for $6,600.
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
107. The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to
pay the balance within 60 days is recorded by:
a.
A debit of $3,600 to Office Equipment, a credit of $1,000 to cash, and a credit of $2,600 to Accounts Payable.
b.
A debit of $2,600 to Accounts Receivable, a debit of $1,000 to Cash, and a credit of $3,600 to Office
Equipment.
c.
A debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts
Receivable.
d.
None of these choices
ANSWER:
a
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
108. The record in which transactions are initially recorded in chronological order as they occur is a(an)
a.
General journal
b.
Account of events
c.
General Ledger
d.
Chart of Accounts
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Understanding
109. The correct term for the process of transferring amounts from a book of original entry to specific assets, liabilities,
revenues, expenses, and stockholders’ equity items is
a.
Double-entry system
b.
Recording
c.
Credit
d.
Posting
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
110. The correct term for the process of recording the economic effects of business transactions in a book of original entry
is
a.
Double-entry system
b.
Debit
c.
Credit
d.
None of these choices.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Remembering
111. When the amount for a debit entry in a journal is transferred to a specific account in the general ledger, it must be
recorded
a.
as a debit to that account in the general ledger.
b.
as a credit to that account in the general ledger.
c.
in sum only, without any regard for debit or credit, since the general ledger accounts do not have spaces for
debit and credit entries.
d.
cannot be determined without further information.
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Understanding
112. Transactions are recorded in the general journal in:
a.
Alphabetical order.
b.
Account number order.
c.
Chronological order.
d.
Financial statement order.
ANSWER:
c
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Understanding
Chapter 3: Processing Accounting Information
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Monaco & Associates
Use the following five transactions for Monaco & Associates, Inc. to answer the question(s).
October 1
Bills are sent to clients for services provided in September in the amount of $800.
9
Dravo Co. delivers office furniture ($1,060) and office supplies ($160) to Monaco leaving
an invoice for $1,220.
15
Payment is made to Dravo Co. for the furniture and office supplies delivered on October
9.
23
A bill for $430 for electricity for the month of September is received and will be paid on
its due date in November.
31
Salaries of $850 are paid to employees.
113. See the transactions to Monaco & Associates.
The journal entry to record the October 1 transaction will include a debit of $800 to
a.
Sales Revenue
b.
Accounts Receivable
c.
Cash
d.
Retained Earnings
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
114. See the transactions to Monaco & Associates.
The journal entry to record the October 9 transaction will include a credit of $1,220 to
a.
Furniture and Supplies
b.
Cash
c.
Accounts Payable
d.
Administrative Expenses
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
115. See the transactions to Monaco & Associates.
The journal entry to record the October 15 transaction will include a debit of $1,220 to
a.
Salaries Expense
b.
Salaries Payable
c.
Prepaid Expenses
d.
Accounts Payable
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
116. See the transactions to Monaco & Associates.
The journal entry to record the October 23 transaction will include a credit of $430 to
a.
Salaries Expense
b.
Cash
c.
Prepaid Expenses
d.
Accounts Payable
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
117. See the transactions to Monaco & Associates.
The journal entry to record the October 31 transaction will include a credit to
a.
Salaries Expense
b.
Salaries Payable
c.
Prepaid Salaries
d.
Cash
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
118. See the transactions for Monaco & Associates.
Based only on these transactions, what is the total amount of expenses that should appear on the income statement for the
month of October?
a.
$ 430
b.
$ 850
c.
$ 1,280
d.
$ 1,440
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Analyzing
119. A list of all accounts and their balances which is used to prove the equality of debits and credits as of a specific date
is a(an)
a.
Account
b.
General Journal
c.
Trial Balance
d.
Chart of Accounts
ANSWER:
c
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Remembering
120. A trial balance is a(an)
a.
optional financial statement used only by accountants.
b.
financial statement which can be used in place of a balance sheet.
c.
list of accounts and their balances taken from the chart of accounts.
d.
document used to prove the equality of debits and credits in the general ledger.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Remembering
121. If the sum of the debits and credits in a trial balance is not equal, then
a.
there is no concern because the two amounts are not meant to be equal.
b.
the chart of accounts also does not balance.
c.
it is safe to proceed with the preparation of financial statements.
d.
most likely an error was made in posting journal entries to the general ledger or in preparing the trial balance.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Understanding
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
122. Which of the following will not cause a trial balance to be out of balance?
a.
The balance for an account is incorrectly computed.
b.
A debit entry is posted as a credit.
c.
A credit entry is posted to the wrong account as a credit.
d.
An account is accidentally omitted from the trial balance.
ANSWER:
c
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Understanding
Wolfe Inc.
Wolfe Inc. reports these account balances at January 1, 2016:
Retained Earnings
$ 49,000
Accounts Receivable
20,000
Accounts Payable
24,000
Capital Stock
185,000
Land
153,000
Cash
13,000
Equipment
20,000
Notes Payable
28,000
Buildings
80,000
123. See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. In Wolfe’s trial
balance prepared on January 1, 2016, the total of the credit column is:
a.
$182,000
b.
$286,000
c.
$196,000
d.
$166,000
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
124. See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. In Wolfe’s trial
balance prepared on January 31, 2016, the total of the credit column is:
a.
$297,000
b.
$287,000
c.
$286,000
d.
$275,000
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Analyzing
125. See the account balances for Wolfe Inc.
On January 31, Wolfe collected $12,000 of its accounts receivable and paid $11,000 on its note payable. On January 31,
2016, the total liabilities are:
a.
$0
b.
$56,000
c.
$41,000
d.
$30,000
ANSWER:
c
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Analyzing
126. Unfortunately, the bookkeeper notices that two transactions for Patio Publications were not reflected in the balances
of the trial balance: one to record $800 of accrued wages and salaries to be paid in the next period, and the other was the
use of $560 of office supplies from the supplies on hand. If the Trial Balance column totals are $15,380 prior to
discovering these mistakes, what are the totals of the Trial Balance columns after the corrections are made?
a.
$15,860
b.
$15,140
c.
$16,740
d.
$16,180
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Analyzing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
127. A cash register tape would be a source document for which of the following?
a.
recording a purchase of inventory on credit
b.
recognizing a cash sale
c.
recording an invoice
d.
recording payroll
ANSWER:
b
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-02 – LO: 03-02
KEYWORDS:
Bloom’s: Understanding
128. A cancelled check would be a source document for which of the following?
a.
recording a purchase of inventory on credit
b.
recording cash received on an customer account
c.
recording accrued payroll
d.
recording a cash payment to a creditor
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-02 – LO: 03-02
KEYWORDS:
Bloom’s: Understanding
129. Which one of the following best defines an external event in terms of accounting?
a.
A measured event that must be recognized.
b.
An event recognized in a set of financial statements.
c.
A happening of consequence to an entity.
d.
An interaction between an entity and its environment.
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.01-01 – LO: 01-01
KEYWORDS:
Bloom’s: Understanding
130. Which one of the following best defines an internal event in terms of accounting?
a.
Every type of transaction is an internal event.
b.
An event recognized in a set of financial statements.
c.
A happening of consequence to an entity.
d.
An event occurring entirely within an entity.
ANSWER:
d
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.01-01 – LO: 01-01
KEYWORDS:
Bloom’s: Understanding
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
131. Debit and credit would best be described as _______ terms.
a.
abnormal
b.
increasing/decreasing
c.
quantitative
d.
locational
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
132. The term “chronological order” is best associated with:
a.
a journal.
b.
a trial balance.
c.
credit entries.
d.
capital stock.
ANSWER:
a
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Understanding
133. Which of the following best describes a trial balance?
a.
It is a required financial statement.
b.
It is a financial statement that can be used in place of the income statement.
c.
It is a numerical list of all accounts used by a company.
d.
It is a tool used to prove the equality of debits and credits in the general ledger.
ANSWER:
d
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Remembering
Completion
134. A purchase of raw materials from a supplier is a(n) ____________________ event.
ANSWER:
external
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-01 – LO: 03-01
KEYWORDS:
Bloom’s: Remembering
135. An internal or external event must be ____________________ to be recognized.
ANSWER:
measureable
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-01 – LO: 03-01
KEYWORDS:
Bloom’s: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
136. _________________________ provides the proof needed in an accounting system to record a transaction.
ANSWER:
Source documents
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-02 – LO: 03-02
KEYWORDS:
Bloom’s: Remembering
137. The issuance of common stock increases both ____________________ and stockholders’ equity.
ANSWER:
assets
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
138. The acquisition of a computer for $1,200, with a down payment of $200 cash and the signing of a $1,000 note
payable for the balance increases both assets and ____________________.
ANSWER:
liabilities
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
139. If an accounting firm provides services on account, both ____________________ and stockholders’ equity increase.
ANSWER:
assets
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
140. The payment of salaries and wages decreases cash and increases a(n) ____________________.
ANSWER:
expense
DIFFICULTY:
Moderate
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
141. Dividends are not a(n) __________________ but a direct reduction of retained earnings.
ANSWER:
expense
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
142. The ____________________ principle says that, with a few exceptions, assets are not carried at market values, but
at their original cost.
ANSWER:
cost
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
143. Various transactions may change the amount and composition of the assets and liabilities, but the
____________________________ must balance after each transaction.
ANSWER:
balance sheet
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
144. _______________________ are a distribution of net income for the period, not a determinant of net income as are
expenses.
ANSWER:
Dividends
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-03 – LO: 03-03
KEYWORDS:
Bloom’s: Remembering
145. A(n) ________________________________ is a numerical list of all of the accounts used by an entity.
ANSWER:
chart of accounts
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
146. The _________________________ is the file or book that contains all of a company’s accounts.
ANSWER:
general ledger
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
147. The totaling of each side of a T account is known as ____________________.
ANSWER:
footing
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
148. The left or debit side of a liability account is used to record ____________________.
ANSWER:
decreases
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
149. Assets and expenses are ____________________ by credits.
ANSWER:
decreased
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
150. Liabilities and stockholders’ equity are ____________________ by debits.
ANSWER:
decreased
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
151. Credits are always on the _____________________ side of the T account.
ANSWER:
right
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
152. The normal balance of revenue is a(n) ____________________.
ANSWER:
credit
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-05 – LO: 03-05
KEYWORDS:
Bloom’s: Remembering
153. A(n) ____________________ is a chronological record of all transactions entered into by a business.
ANSWER:
journal
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-06 – LO: 03-06
KEYWORDS:
Bloom’s: Remembering
154. A(n) ________________________ is a list of each account and its balance at a specific point in time.
ANSWER:
trial balance
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-07 – LO: 03-07
KEYWORDS:
Bloom’s: Remembering
Matching
Identify which of the following would be recorded as external events, recorded as internal events, or not recorded.
a.
Internal event
b.
External event
c.
Not recorded
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-01 – LO: 03-01
KEYWORDS:
Bloom’s: Understanding
155. The company hires a new secretary.
ANSWER:
c
Balance sheet account
b.
Income statement account
DIFFICULTY:
Easy
LEARNING OBJECTIVES:
FACC.PONO.13.03-04 – LO: 03-04
KEYWORDS:
Bloom’s: Remembering
162. Prepaid Insurance
ANSWER:
a
163. Cash
ANSWER:
a
164. Sales Revenue
ANSWER:
b
ANSWER:
a
166. Income Taxes Expense
ANSWER:
b
167. Accounts Receivable
ANSWER:
a
ANSWER:
a
156. A customer pays its open account.
ANSWER:
b
157. A vendor for a company’s supplies is paid an amount owed on account.
ANSWER:
b
158. The company transfers work in process to finished goods inventory.
ANSWER:
a
159. The company hires a new marketing firm for their new product
ANSWER:
c
160. The company takes a count of the raw materials inventory.
ANSWER:
a
161. The company signs a contract with the marketing firm and pays a retainer.
ANSWER:
b