$1.$ The best way to make money grow is toa. Keep it safe at homec. Use it for a business venture.b$.$ Use it to buy a card. Save it by opening a bank account. $2.$ Your wealth or net worth will deteriorate if you:a$.$ Borrow to pay your debtsc. Live beyond your meansb. Overspendd. All the above $3.$ Effect of profit if you put up a business.a$.$ Assets will increase so will net worthc. Assets, liabilities, and net worth will increase.b$.$ Assets will increase so will liabilitiesd. Debts can be paid but net worth will decrease. $4.$ The rule that helps accounting information be reliable is called:a$.$ The objectivity principlesc. The materiality principlesb. The going concern principlesd. The consistency principles $5.$ Which of the following statements is true?a$.$ Service companies do not need to prepare financial statements.b$.$ Manufacturing companies maintain the simplest accounting records.c$.$ Merchandising companies purchase goods that are ready for sale and then sell them to customers.d$.$ A drugstore is an example of a service company. $6.$ The underlying principles that assets purchased by a business are to be recorded at their purchased price is called:a$.$ The cost principlesc. The business entity conceptb. The objectivity conceptd. The going concern concept. $7.$ A company that makes toys and sells them to a retailer is aa$.$ Partnershipc. Manufacturing companyb. Service companyd. Merchandising company $8.$ Accounting reports are useful in:a$.$ Making investment decisionsc. Making lending decisionsb. Controlling business operationsd. All the given $9.$ Net income will result during a period when:a$.$ Assets exceed liabilitiesc. Assets exceed revenues.b$.$ Expenses exceed revenued. Revenues exceed expenses. $10.$ Assets are:a$.$ Things of value that are owned.b$.$ Economic resources that are ownedc. Desired because of the future benefits they are expected to yield.d$.$ All of the above $11.$ Which of the following equations cannot be derived from the basic accounting equation $($asset $=$ liabilities $+$ Capital$)?$a$.$ Asset$-$Liabilities$=$Capitalc. Capital$=$Liabilities$-$Assetsb. Liabilities$=$Assets$-$Capitald. Assets$-$capital$=$Liabilities $12.$ Which of the items below would be accounted for as an expense?a$.$ Payment of current periods rentc. Withdrawal of assets by the ownerb. Repayment of bank loand. Purchase of land for cash $13.$ Which of the following is incorrect? Assets Liabilities Capitala. P $19,625$P $3,125$ P$16,500$b$.20,5007,00013,500$c$.23,8702,87520,500$d$.16,3502,80013,55014.$ The properties owned by a business enterprise are called:a$.$ Assetsb. Liabilitiesc. Accounts receivabled. Capital $15.$ Which of the following is not an asset?a$.$ Suppliesc. Loan to Marcel Rakiab. Furniture & fixturesd. Loan from Jailyn Jimenez $16.$ A revenue is:a$.$ An intangible assetb. A property or economic resource owned by an individual or enterprise.c$.$ An inflow of assets, not necessarily cash, in exchange for goods or services sold.d$.$ A debt owed. $17.$ The basic accounting equation can be expressed correctly as:a$.$ Income $=$ Revenues Expensesc. Assets $=$ Liabilitiesb. Assets $=$ Liabilities $+$ Owners equityd. Owners equity $=$ Liabilities Assets $18.$ The inflow of assets that occurs when a business performs a service is called.a$.$ An expensec. A revenueb. An investmentd. An owners equity $19.$ A credit is used to record:a$.$ An increase in assetc. A decrease in liabilityb. An increase in owners equityd. None of the above $20.$ Which of the following accounts has a normal credit balance?a$.$ Prepaid insurancec. David, drawingsb. Service incomed. Advertising expense