1- Identify the statement below that is true.

A) A trial balance can replace the need for financial statements.

B) If the debit and credit columns of a trial balance are equal, one can be assured that there were no recording errors during the period.

C) Another name for the trial balance is the chart of accounts.

D) The trial balance is a list of all ledger accounts and their balances at a point in time.

E) The trial balance is another name for the balance sheet as long as debits balance with credits.

2- A debit is used to record which of the following?

A) A decrease in an asset account.

B) A decrease in an expense account.

C) An increase in a revenue account.

D) An increase in a liability account.

E) A decrease to an unearned revenue account.

3- Which of the following statements is incorrect?

A) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.

B) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.

C) Adjusting entries can be used to record both accrued expenses and accrued revenues.

D) Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.

E) Adjusting entries affect only balance sheet accounts.

4- On January 1, a company purchased new furniture at a cost of $16,000. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation. What is the book value (or net amount) of the furniture on December 31 of the second year?

A) $16,000

B) $15,000

C) $12,500

D) $11,000

E) $13,333

5- A company paid $27,000 in dividends during the current year. The entry needed to close the dividends account is:

A) Debit Income Summary and credit Dividends for $27,000.

B) Debit Income Summary and credit Cash for $27,000.

C) Debit Retained Earnings and credit Dividends for $27,000.

D) Debit Dividends and credit Retained Earnings for $27,000.

E) Debit Dividends and credit Cash for $27,000