1. In an accrual accounting system,

a. all accounts have normal debit balances.

b. a debit entry is recorded on the left-hand side of an account.

c. liabilities, owner's capital, and dividends all have normal credit balances.

d. revenues are recorded only when cash is received.

2. A common business transaction that would not affect the amount of owners' equity is

a. signing a note payable to purchase equipment.

b. payment of property taxes.

c. billing of customers for services rendered.

d. payment of dividends.

3. Failure to record the expired amount of prepaid rent expense would not

a. understate expense.

b. overstate net income.

c. overstate owners' equity.

d. understate liabilities.

4. On June 30, a company paid $3,600 for insurance premiums for the current year and debited the amount to Prepaid Insurance. At December 31, the bookkeeper forgot to record the amount expired. The omission has the following effect on the financial statements prepared December 31:

a. overstates owners' equity.

b. overstates assets.

c. understates net income.

d. overstates both owners equity and assets.

5. A chart of accounts is a

a. subsidiary ledger.

b. listing of all account titles.

c. general ledger.

d. general journal.

6. Which of the following criteria must be met before an event should be recorded for accounting purposes?

a. The event must be an arm's-length transaction.

b. The event must be repeatable in a future period.

c. The event must be measurable in financial terms.

d. The event must be disclosed in the reported footnotes.

7. Adjusting entries normally involve

a. real accounts only.

b. nominal accounts only.

c. real and nominal accounts.

d. liability accounts only.

8. Which of the following is an item that is reportable in the financial records of an enterprise?

a. The value of goodwill earned through business operations

b. The value of human resources

c. Changes in personnel

d. Changes in inventory costing methods

9. The balance in a deferred revenue account represents an amount that is

Earned Collected

a. Yes Yes

b. Yes No

c. No Yes

d. No No

10. The debit and credit analysis of a transaction normally takes place when the

a. entry is posted to a subsidiary ledger.

b. entry is recorded in a journal.

c. trial balance is prepared.

d. financial statements are prepared.

1. In an accrual accounting system. A. all accounts have nomal debit balances. 6. Which of the following criteria must be met before an event should be recorded for accounting b. a deblt entry is recorded on the left hand side of an account. purposes? c. llablties, owner's cagital, and dividends at have normal credi balances. a. The event must be an amiv-length transaction, d revenues are reconded onty when cash is received. b. The event rmust be repeatable in a future period. 2. A common bushess transaction that would not affect the anount of owners' equily is c. The event must be massurable in financial terms a. slgring a note payable to purchaie equilment d. The event must be disclosed in the reported footnotes. b. payment of property taxes 7. Adjusting entries normaly imvolve ci biling of cuttomers for services rendered. a. real accounts orly. d payment of divilends. b. nominal accounts only. c. real and nomiral accounts. d. liability accounts only. 3. Falure to recond the exphed whount of peepaid rent eapense would not a. underiate ewense. B. Which of the following is an ikem that is reportable in the financial records of an enterprise? b. overstate net income. a. The value of goodwill earned through buiness operations corritate owners equity. b. The value of human resources d understate labecties. c. Changes in persannel 4. Charges in inventory costing methods 4. On June 30, a compary paid $3,600 for insurnce premiums for the currect year and debited the 9. The balanse in a deferind reverue account represents an amount that is amount to Prepaid insurance. A Desember 31, the bockiteper forgot to record the arnount explied. The omision has the following effect on the finmelal staternents prepared December 31 : Earned Colected a overstates ownern' equity. a. Ves Ves b. ovtritates asiets. b. Yes No c. Undentates net income. c. No Yes d. overitates both ownen' equity and awets. d. No No 5. A chart of accounts wa 10. The debit and credit anslysis of a transaction normaly takes place when the a. subsiffery ledgen. a. entry w posted to a subvidary ledger. b. Erong of all account ities. b. entry is recorded in a journal. c. peneral ledger. c. trial balance is prepored. d. gereral jourhal. 1. Erancial statements are prepared