1.

Question 1

Which of the following is known as the fundamental accounting equation?

a).Assets = Liabilities + Shareholders Equity

b).Debits = Credits

c).Net Income = Revenues - Expenses

d).Assets + Liabilities = Shareholders Equity

Question 2

Which of the following would not be considered an account?

a).Bonds Payable

b).Accounts Receivable

c).Sales Revenue

d).Shareholders Equity

Question 3

What effect does a credit have on a liability account?

a).A credit could either increase or decrease the balance in a liability account, depending on the account.

b).A credit has no effect on the balance in a liability account.

c).A credit decreases the balance in a liability account.

d).A credit increases the balance in a liability account.

Question 4

Company XYZ purchases equipment from Vendor A on account. Which of the following accounts should be debited in this transaction?

a).Cash

b).Accounts Payable

c).Equipment

d).Equipment Expense

5.

Question 5

Which of the following explains how expenses differ from many other shareholders equity accounts?

a).Expenses create the one exception in recording journal entries: debits do not always equal credits.

b).Expense accounts are increased with a debit because they decrease the retained earnings account.

c).Expense accounts are the only class of accounts that can be recognized as either a shareholders equity account or a liability account.

d).Expense accounts do not differ in any significant way from other shareholders equity accounts.

Question 6

Company X receives payment for services rendered earlier in the month. Which of the following correctly accounts for this transaction?

Answer Choice	Debit	Credit
A	Accounts Receivable	Service Revenue
B	Cash	Unearned Revenue
C	Service Revenue	Accounts Receivable
D	Cash	Accounts Receivable

A. Debit/Accounts Receivable; Credit/Service Revenue

B. Debit/Cash; Credit/Unearned Revenue

C. Debit/Service Revenue; Credit/Accounts Receivable

D. Debit/Cash; Credit/Accounts Receivable

.

Question 7

Which account is always listed first in a journal entry?

a).The account that is increased is always listed first.

b).The asset account is always listed first.

c).The account that is credited is always listed first.

d).The account that is debited is always listed first.

Question 8

What is the process of copying journal entries to accounts in the ledger in order to calculate account balances?

a).Journalizing

b).Balancing

c).Adjusting

d).Posting

.

Question 9

Company X purchases $1,000 of inventory on account on January 1. On January 15, Company X sells inventory purchased on January 1 for $1,500 cash. Which of the following will be the cash balance in the ledger at the end of January?

a).$500 credit

b).$2,500 debit

c).$1,500 debit

d).$500 debit

Question 10

Which of the following will be true if a trial balance is prepared correctly?

a).Total revenues will be greater than total expenses.

b).Total debits will be equal to total credits.

c).The final balance in all accounts will be zero.

d).Total assets and total liabilities will be equal