1. Which of the following best describes accounting?

A. Is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.

B. Is an information system that provides reports to users regarding economic activities and condition of a business

C. Records economic data but does not communicate the data to users according to any specific rules.

D. Is of no use by individual outside of the business.

2. Earning revenue journal entry is recorded as:

A. Increases assets, decreases stockholders liabilities

B. Decreases assets, increases liabilities

C. Increases assets, increases stockholders equity

D. Increases one asset, decrease another assets

3. A chart of accounts is:

A. usually listed in the order in which they appear in financial statement.

B. Usually a listing of accounts in alphabetical order

C. The same as a balance sheet

D. One of the four financial statements.

4. Which group of accounts is comprised of only assets?

A. Unearned Revenues, Prepaid Expenses, Cash

B. Accounts Receivable, Revenue, Cash

C. Prepaid Expenses, Buildings, Patents

D. Cash, Accounts Payable, Buildings.

5. Which of the following entries records the acquisition of office supplies on account?

A. Office Supplies, debit; Cash, credit

B. Office Supplies, debit; Accounts Payable, credit

C. Accounts Receivable, debit; Office Supplies, credit

D. Cash, debit; Office Supplies, credit

6. Randomly listed below are the steps for preparing a trial balance:

(1). Verify that the total of the Debit column equals the total of the credit column

(2). List the accounts from the ledger and enter their debit or credit balance in the debit or credit column of the trial balance.

(3). List the name of the company, the title of the trial balance, and the date the trial balance is prepared.

(4). Total the Debit and Credit columns of the trial balance.

A. (3), (2), (1), (4)

B. (3), (2), (4), (1)

C. (4), (3), (2), (1)

D. (2), (3), (4), (1)

7. The statement of owners equity shows

A. Only net income, beginning capital, and withdrawals

B. All of the changes in the owners capital as a result of net income, net loss, additional investments, and withdrawals

C. Only total assets, beginning and ending capital

D. Only net income, beginning and ending capital

8. Sales to customers who use bank credit cards, such as MasterCard and Visa, are generally treated as

A. Sales when the credit card company remits the cash

B. Sales returns

C. Cash sales

D. Sales on account

9. Isaac Co. sells merchandise on credit to Sonar Co in the amount of $5,700. The invoice is dated on April 1 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount? (3 points)

A. $57, April 16

B. $114, April 15

C. $57, April 15

D. $114, April 16

10. The Corbit Corp. sold merchandise $10,000 for cash. The cost of the merchandise sold was $7,590. The journal entry(s) to record this transaction would be: (3 points)

A. Cash 10,000

Merchandise Inventory 10,000

Cost of goods Sold 7,590

Sales 7,590

B. Cash 10,000

Sales 10,000

Cost of goods Sold 7,590

Merchandise Inventory 7,590

C. Cash 7,590

Merchandise Inventory 7,590

Cost of goods Sold 7,590

Sales 7,590

D. Cash 10,000

Merchandise Inventory 10,000

Cost of goods Sold 10,000

Sales 10,000

11. If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:

A. Periodic

B. Average

C. LIFO

D. FIFO

12. When a firm uses internal auditors, it is adhering to which one of the following internal control elements?

A. Monitoring

B. Risk Assessment

C. Proof and securities measure

D. Separating responsibilities for related operations