1. The primary purpose of an expense is to generate revenue.

a. True

b. Fa

2. An adjusting entry was made on the last day of the previous fiscal year debiting Wages Expense and crediting Wages Payable. If a reversing entry has been made, then at the time of payment

a. the accountant will debit Wages Payable and Wages Expense, and credit Cash.

b. the accountant will debit Cash and credit Wages Expense.

c. the accountant needs to find out how much of the payment applies to the current period and how much applies to the previous period.

d. the accountant will debit Wages Expense and credit Cash.

3. Which of the following accounts is increased with a credit?

a. Land

b. Prepaid Insurance

c. Office Supplies

d. Unearned Revenue

4. The account 'Wages Payable' would appear on the income statement.

a. True

b. Fals

5. Which of the following might be motivation for fraudulently covering up a financial weakness?

a. to obtain a loan

b. to obtain bonus compensation

c. to meet stockholder expectations

d. all of these are possible motivations

6. An important purpose of closing entries is to

a. set permanent account balances to zero to begin the next period.

b. help achieve the goals of the matching principle.

c. transfer net income or net loss to the owner's Capital account.

d. update the nominal accounts at year end.

7. Which of the following is not one of the conditions for recognition of an expense?

a. The goods or services are used to produce revenue.

b. A price has been established or can be determined.

c. The goods will be delivered or the services will be provided within the accounting cycle.

d. There is an agreement to purchase goods or services.

8. For a T account, an account balance is the difference in total dollars between total debit footings and total credit footings.

a. True

b. False

9. The matching rule relates the least to

a. revenues and expenses.

b. a direct relationship between expenses and revenues.

c. the cash basis of accounting.

d. income measurement.

10. The heading of a work sheet might contain the line "As of February 28, 20x5."

a. True

b. False

11. All decreases in owner's equity are a result of expenses.

a. True

b. False

12. Failure to record depreciation at year end will result in all of the following except

a. understatement of total liabilities.

b. overstatement of total assets.

c. overstatement of owner's equity.

d. overstatement of net income.

13. Which of the following transactions results in an increase in revenues?

a. Receipt of accounts receivable.

b. Receipt of principal from a bank loan.

c. Delivery of a service in exchange for future payment.

d. Purchase of inventory.

14. Which of the following accounts would not be closed?

a. Design Revenue

b. Accumulated Depreciation - Equipment

c. Interest Income

d. Interest Expense

15. Accounting periods should be of equal length to facilitate comparisons between periods.

a. True
b. False