$1.$ B The accounting equation may be expressed as

A$.$ Assets $+$ Liabilities $=$ Owner's Equity

B$.$ Assets $$ Liabilities $=$ Owner's Equity

C$.$ Assets $=$ Revenues $$ Liabilities

D$.$ Assets $=$ Equities $$ Liabilities

$2.$ B Which of the following is not an asset?

A$.$ cash

B$.$ wages payable

C$.$ inventory

D$.$ investments

$3.$ A The assets and liabilities of the company are $$128,000$ and $$84,000,$ respectively. Owner's equity should equal

A$.44,000$

B$.84,000$

C$.128,000$

D$.212,000$

$4.$ A A business paid $$7,000$ to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

A$.$ decrease an asset, decrease a liability

B$.$ increase an asset, increase owner's equity

C$.$ increase an asset, increase a liability

D$.$ increase an asset, decrease another asset

$5.$ A If total liabilities decreased by $$46,000$ during a period of time and owner's equity increased by $$60,000$ during the same period, the amount and direction $($increase or decrease$)$ of the period's change in total assets is

A$.14,000$ increase

B$.106,000$ decrease

C$.14,000$ decrease

D$.106,000$ increase

Questions $6-10$ relate to CSO $1\mathrm{.}2,1\mathrm{.}3,1\mathrm{.}4$

Objective $1\mathrm{.}2$: Prepare two$-$column journal entries

Objective $1\mathrm{.}3$: Prepare and utilize t$-$accounts for journal entries and decision making

Objective $1\mathrm{.}4$: Prepare a trial balance in good form

$6.$ D Which of the following is true about T accounts?

A$.$ The left side of a T account is called the credit side.

B$.$ Transactions are first recorded in T accounts and then posted to the journal.

C$.$ The right side of a T account is called the debit side.

D$.$ The left side of a T account is called the debit side.

$7.$ B The balance of an account is determined by

A$.$ always subtracting the debits from the credits

B$.$ adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum

C$.$ always subtracting the credits from the debits

D$.$ adding all of the debits to all of the credits

$8.$ D The accounts in the ledger of Monroe Entertainment Co$.$ are listed below. All accounts have normal balances.

Accounts payable $1,500$ Fees earned $3,600$

Accounts receivable $1,800$ Insurance expense $1,300$

Prepaid insurance $2,000$ Land $3,000$

Cash $3,200$ Wages expense $1,400$

Drawing $1,200$ Capital $8,800$

Total assets are

A$.8,000$

B$.9,800$

C$.9,700$

D$.10,000$

$9.$ B Which of the following entries records the payment of an account payable?

A$.$ debit Accounts Receivable; credit Cash

B$.$ debit Accounts Payable; credit Cash

C$.$ debit Cash; credit Supplies Expense

D$.$ debit Cash; credit Accounts Payable

$10.$ D The accounts in the ledger of Monroe Entertainment Co$.$ are listed below. All accounts have normal balances.

Accounts Payable $1,500$ Fees Earned $3,600$

Accounts Receivable $1,800$ Insurance Expense $1,300$

Prepaid Insurance $2,000$ Land $3,000$

Cash $3,200$ Wages Expense $1,400$

Drawing $1,200$ Capital $8,800$

Prepare a trial balance. The total of the debits is

A$.11,200$

B$.9,700$

C$.12,700$

D$.13,900$

Questions $11-15$ relate to CSO $1\mathrm{.}5,1\mathrm{.}6$

Objective $1\mathrm{.}5$: Identify the elements of the income statement, statement of owners$$ equity $($retained earnings$),$ and balance sheet

Objective $1\mathrm{.}6$: Prepare an income statement, statement of owner$$s equity $($retained earnings$),$ and balance sheet in good form

$11.$ C When preparing the statement of owner's equity, the beginning capital balance can always be found

A$.$ in the statement of cash flows

B$.$ in the Balance Sheet columns of the work sheet

C$.$ in the general ledger

D$.$ in the Income Statement columns of the work sheet