1) If there is a controlling account, there is probably a subsidiary ledger. TRUE /FALSE

2) If the terms of sale are 1/10, n/30, the buyer has ten days after the date of the invoice to take advantage of the cash discount.TRUE /FALSE

3)Land is not subject to depreciation.TRUE /FALSE

4)Withdrawals are considered as expenses of the business.TRUE /FALSE

5)Owner's equity generally means total assets of a company. TRUE /FALSE

6) An annual accounting period is called a fiscal year. TRUE /FALSE

7) Entries required to clear the balances of the temporary accounts at the end of the year are called closing entries. TRUE /FALSE

8) Net pay less one or more deductions equals gross pay. TRUE /FALSE

9) There is a ceiling on the total earnings for each employee that are subject to federal income tax. TRUE /FALSE

10) Employees' individual earnings records are not needed for salaried employees. TRUE /FALSE

11) On a bank statement, an NSF check is frequently listed as a debit memorandum. TRUE /FALSE

12) A credit memorandum on a bank statement indicates an addition to the bank balance.TRUE /FALSE

13) Each petty cash payment is recorded separately in the journal. TRUE /FALSE

14)When the petty cash fund is reimbursed, the Petty Cash account is debited for the amount paid out of the fund. TRUE /FALSE

15) FOB Destination means that the buyer has the title to the merchandise and pays for the freight charges. TRUE /FALSE

Table 1: The accounts and their balances as of Dec. 31 of this year for MMD Company are:Accounts Payable = $32,400; Accounts Receivable = 4,200; Advertising Expense = $960; Cash = $11,100; Equipment = $51,000; Income from services = $19,200; Insurance Expense = $480; Owner's Capital = $33,480; Owner, Drawing = $4,800; Rent Expense= $2,850; Supplies = $3,120; Utilities Expense = $1,770; Wages Expense = $4,800.

16) Using Table 1, the amount of the Total Liabilities is ______________.

17) Using Table 1, the amount of Net Income is _____________.

18) Using Table 1, the amount of Total Owner's Equity as of Dec. 31 is ______________.

19) A business company purchased Land for investment on account. What will be the effect of this transaction on the accounts?

Debit a liability account and credit an asset account

Debit an asset account and credit an expense account

Debit an expense account and credit an asset account

Debit an asset account and credit a liability account

Debit an asset account and credit a revenue account

20) A company had purchases of inventory for $96,000. Purchases Returns and Allowances were $2,000 and Freight In was $4,000. If the beginning inventory was $50,000 and the ending inventory was $40,000, the cost of merchandise sold is

$108,000

$88,000

$128,000

$112,000

None of the above

21) A business company purchased an office equipment on Jan. 1 of this year for $3,800. The equipment is estimated to have a useful life of 8 yrs. and a trade-in value of $200 at the end of its life. Using the straight-line method, the amount of depreciation expense for the first year is:

$500

$450

$475

$400

none of the above

22) If an accountant fails to make an adjusting entry at the end of the accounting period to record expired insurance, the omission will cause

total revenue to be understated

total expenses to be understated

total assets to be understated

total liabilities to be understated

none of the above

23) Which of the following items is not listed on the bank reconciliation?

Outstanding Checks

Deposits in Transit

Petty Cash Fund

NSF Checks

Bank service charge

24) A withdrawal of cash by the owner may be considered

an increase in a liability and a decrease in Cash

an increase in an expense and a decrease in Cash

a decrease in owner's equity and a decrease in Cash

a decrease in liability and a decrease in Cash

none of the above

25) A purchase of supplies on account should be recorded as

An increase in Supplies and an increase in Cash

An increase in Liabilities and a decrease in Supplies

An increase in Supplies and a decrease in Liabilities

An increase in Cash and a decrease in Supplies

An increase in Supplies and an increase in Liabilities