16. Using the basic accounting equation, identify the missing item: Assets = 13540, Liabilities = 7845, Equity =? a. 5695 2 C. b. 21385 C. 23835 d. 5965 17. If a company pays a cash dividend of $3,000 to shareholders, what account types will be affected and how? a. Assets increase and Liabilities increase b. Liabilities increase and Equity increases Assets decrease and Equity decrease 18. What type of trial balance is prepared after the closing entries? a. Regular Trial balance b. Adjusted Trial Balance C. Post-closing Trial Balance 19. Company A pays office rent for the month of October in cash, $5,000. What is the appropriate entry for this transaction at month-end? a. Debit Rent Expense $5,000 and Credit Cash $5,000 b. Credit Rent Expense $5,000 and Debit Cash $5,000 C. Debit Rent Expense $5,000 and Debit Cash $5,000 d. Credit Rent Expense $5,000 and Credit Cash $5,000 20. Company B estimates depreciation on its office equipment to be $500 per month. What is the appropriate entry for this transaction at month-end? Debit Depreciation Expense $500 and Credit Accumulated Depreciation $500 b. Credit Depreciation Expense $500 and Credit Accumulated Depreciation $500 C. Credit Depreciation Expense $500 and Debit Accumulated Depreciation $500 d. Debit Depreciation Expense $500 and Debit Accumulated Depreciation $500 21. Company Creceives $2,000 in cash from a customer in advance for a service to be performed next month. How would this transaction be appropriately recorded? a. Credit Sales Revenue $2000 and Debit Cash $2000 b. Debit Cash $2000 and Credit Accounts Receivable $2000 C. Credit Unearned Revenue $2000 and Debit Cash $2000 d. Debit Cash $2000 and Debit Service Revenue $2000 a. 7. Which of the following is not a component of Owner's Equity? a. Revenue b. Common Stock C. Accounts Payable d. Dividends 8. Which of the following account type does Inventory belong to? a. Asset b. Liability c. Revenue d. Expense 9. When an accounts receivable is settled in cash, which account is debited? a. Accounts receivable b. Cash c. Bad debt expense d. Sales returns and allowances 10. When equipment is sold for cash, which account is credited? a. Cash b. Equipment Revenue d. Accounts Receivable 11. When you purchase inventory on credit terms, which of your accounts is debited? C. a. Cash b. Accounts Receivable C. Inventory d. B and C 12. What type of account is the accounts receivable account? a. Expense b. Revenue C. Asset d. Equity 13. What type of account is the loan account? a. Equity b. Liability C. Asset d. Revenue 14. Which side of the trial balance is the Common Stock account normally shown? a. Debit b. Credit 15. Which side of the trial balance is the Allowance for doubtful account normally shown? a. Debit b. Credit 23. A separation of operating and non-operating activities of a company exists in: a. Both a multiple-step and single-step income statement b. A multiple-step but not a single-step income statement C. A single-step but not a multiple-step income statement d. Neither single nor multiple -step income statement 24. On which financial statement must Earnings Per Share be disclosed? a. Income Statement b. Balance Sheet Cash Flows Statement C. 3 25. Gains and losses that bypass net income but affect stockholders' equity are referred to as: a. Other comprehensive income b. Income before tax C. Retained earnings d. Unusual gains and losses 26. Which of the following classifies as Cash Equivalent? a. Non-current investment b. Restricted securities C. Cheque 27. Which of the following items does not belong to the long-term Investments section of the Balance Sheet? Land held for investment b. Debt investments C. Note receivables (long-term) d. Unearned Revenue 28. Which of the following items does not belong to the Intangible Assets section of the Balance Sheet? a. Prepaid Insurance b. Goodwill C. Trademarks d. Patents a. C. a. 30. What is the Present Value of $2,000 to be received in 3 years discounted at 8% compounded annually? a. $0.79383 b. $1,587.66 $3,892.44 31. In calculating the future value of ten $5,000 deposits made at the end of each of the next 20 years, earning interest of 10%, which compound interest table should be used? Future value of 1 b. Present value of 1 Future value of an ordinary annuity of 1 d. Present value of an ordinary annuity of 1 Present value of an annuity due of 1 32. For a 5-year investment fund that earns 10% interest compounded quarterly, what is the number of compounding periods? 4 b. 5 10 C. e. a. c. 4 a. d. 20 33. What is the factor needed to calculate the future value of $20,000 invested for 3 years compounded semiannually at an interest rate of 10%? You can use the appropriate compound interest tables. 1.33823 b. 1.26248 C. 1.19102 d. 1.27628 34. Which statement is correct? Rents in Ordinary Annuity occur at the beginning of each period b. Rents in Annuity Due occur at the beginning of each period C. Rents in Annuity Due occur at the end of each period d. There is no interest in the 1st period in Annuity Due 35. What is the purpose of information presented in notes to financial statements? a. To make the financial report longer b. To provide disclosure required by GAAP C. To address errors from previous periods d. To provide recognition of discontinued operations a