1) In a financial statement a double line indicates a total. * 1 point True False 2. Profit increases drawings. * 2 points True False 3. Expenses are recorded as costs of doing business whether cash was paid or not. * 1 point True False 4. Revenue is an asset * 1 point True False 5. The parties that have claims against the assets of the business are called creditors and owners * 1 point True False 6. Salaries Expense appears on the balance sheet * 2 points True False 7. A transaction that involves more than one credit or more than one debit is called a compound entry * 1 point True False 8. Accounts Receivable indicates amounts owed to us by our clients or customers. * 1 point True False Option 3 9. A debit in accounting is always an increase to an account * 2 points True False 10. If information is journalized or posted incorrectly, the trial balance will still be correct. * 1 point True False 11. Interim reports are usually prepared once a year * 1 point True False Option 3 12. Adjusting is the process of bringing accounts up to date at the end of the accounting period * 1 point True False 13. Depreciation Expense is debited when recording the depreciation for the period * 2 points True False 14. Accounts in the accounts receivable subsidiary ledger are listed in order of how much is owed. * 1 point True False 15. Terms of 2/10, n/30 means that a customer is allowed a 10% discount in 30 days. * 2 points True False 16. Petty Cash could be used to purchase a box of paper clips if required * 1 point True False Option 3 17. Like EI, CPP has a maximum deduction per year. * 1 point True False 18. Workers' Compensation insurance is paid for by the employees of a business. * 1 point True False 19. The seller's sales invoice is the buyer's purchase invoice * 1 point True False 20. All provinces use the same rates for Income Taxes * 1 point True False . Write your answer in the space provided or on a separate sheet of paper. 1) Indicate whether each of the following represents (1) Asset, (2) Liability, or (3) Owner's Equity: 1. ________ Merchandise Inventory 2. ________ Accounts Payable 3. ________ Capital 4. ________ Cash 5. ________ Withdrawal 6. ________ Land 7. ________ Accounts Receivable 8. ________ Expense 9. ________ Equipment 10. ________ Revenue * 10 points 1) Indicate which Financial Report each the following would be reported on (1) Income Statement, (2) Statement of Owner's Equity, or (3) Balance Sheet: 1. ________ Merchandise Inventory 2. ________ Accounts Payable 3. ________ Additional Investments 4. ________ Cash 5. ________ Withdrawal 6. ________ Land 7. ________ Accounts Receivable 8. ________ Expense 9. ________ Equipment 10. ________ Revenue * 10 points 1) Below is a chart of accounts. Following is a series of transactions. Indicate for each transaction the accounts that should be debited and credited by inserting the proper account number in the space provided. 111 Cash 312 R. Andrews, Withdrawals 112 Accounts Receivable 411 Service Fees Revenue 121 Office Equipment 511 Salaries Expense 211 Accounts Payable 512 Rent Expense 311 R. Andrews, Capital 513 Advertising Expense Debit Credit Transaction ________ ________ 1. Purchased office equipment on account. ________ ________ 2. Paid salaries for the week. ________ ________ 3. Invested additional cash in the business. ________ ________ 4. Received cash for services performed. ________ ________ 5. Billed a client on account for services performed. ________ ________ 6. Paid accounts payable. ________ ________ 7. Collected accounts receivable. ________ ________ 8. Withdrew cash for personal use. ________ ________ 9. Paid advertising expense. ________ ________ 10. Paid rent expense for the month. * 10 points 4) In the first space below, indicate whether each account is a real or nominal account using (R) Real Account and (N) Nominal Account. In the second space below, indicate by an (X) if the account should be closed. N X 0. Advertising Expense ______X__ ________ 1. Prepaid Insurance ________ ________ 2. Service Fees ________ ________ 3. Depreciation Expense ________ ________ 4. Accumulated Depreciation ________ ________ 5. Salaries Payable ________ ________ 6. Prepaid Rent ________ ________ 7. Income Summary ________ ________ 8. Insurance Expense * 5 points