1.Financial accounting information should help users evaluate

a.make versus buy decisions.

b.various opportunities to purchase equipment.

c.future cash flows.

decisions made by the Human Resources Department.

2.The usual ordering of accounts in the general ledger is

a.liabilities, assets, shareholders' equity, revenues, and expenses

b.shareholders' equity, assets, liabilities, expenses, and revenues.

c.assets, liabilities, shareholders' equity, revenues, and expenses.

d.assets, liabilities, shareholders' equity, expenses, and revenues.

3.Financial reporting objectives do not include providing information

a.to determine market values, assess profit potential, and evaluate management.

b.to make rational investment, credit, and similar decisions.

c.about resources, obligations, and changes.

d.to assess the amounts and timing of prospective cash receipts.

4.Adjusting entries are needed because an entity

a.uses the cash basis of accounting rather than the accrual basis.

b.has expenses.

c.has earned revenue during the period by selling products from its central operations.

d.uses the accrual basis of accounting.

5.Dunbar Corporation was incorporated on July 1, 2018. Dunbar Corporation issued shares to each of the six owners who paid a total of $3,000 cash. On the basis of transaction analysis, the following entry should be recorded in the accounts (dr = debit and cr = credit)

a.cash (cr), $3,000; shareholders' equity (dr), $3,000.

b.cash (dr), $3,000; share capital (cr), $3,000.

c.cash (cr), $3,000; share capital (dr), $3,000.

d.cash (dr), $3,000; revenue (cr), $3,000.

6.Which is the correct order of the steps in the accounting cycle during the accounting period?

a.Transaction analysis, journal entries, trial balance.

b.Transaction analysis, journal entries, posting to the accounts.

c.Transaction analysis, posting to the accounts, journal entries.

d.Transaction analysis, posting to the accounts, adjusting the accounts.

7.On March 1, 2009, the premium on a two-year insurance policy on equipment was paid amounting to $1,800.How would the financial position as of December 31, 2009 (the end of the accounting period) be affected if the accountant did not record the adjusting entry?

a.Assets overstated by $750; Liabilities unaffected; Owners' equity overstated by $750.

b.Assets understated by $1,500; Liabilities unaffected; Owners' equity understated by $750.

c.Assets understated by $750; Liabilities unaffected; Owners' equity understated by $750.

d.No accounts will be affected.