1.Which of these transactions would increase an asset and decrease an asset?

a.Collection of an account receivable

b.Purchasing supplies for cash

c.Purchasing supplies on account

d.Both a and b.

2.Which of these transactions would decrease an asset and decrease a liability?

a.An owners withdrawal of assets

b.Borrowing money by signing a note payable

c.Purchasing supplies on account

d.Paying a debt.

3.If $500 of supplies were used up in business operations, then

a.Total assets decrease and total liabilities increase

b.Total assets increase and total liabilities decrease

c.Total assets decrease and total owners equity decrease

d.Total assets decrease and total owners equity increase.

4.Earning revenue by performing services on account would

a.Increase total assets and decrease total liabilities

b.Decrease total assets and decrease total liabilities

c.Increase total assets and increase total owners equity

d.Decrease total assets and decrease owner's equity.

5.If San Jose Circuits Company bought $10,000 of equipment by paying $3,000 cash and signing a note payable for the balance, then

a.Total assets decrease and total liabilities increase

b.Oneassetincrease and one liability increase

c.One asset increases, one asset decreases and one liability increases.

d.None of the above.

6.When a business pays for a service before the service is actually used, for the business making payment this is called?

a.Unearned revenue

b.Accounts payable

c.Notes receivable

d.Prepaid expenses

7.A payment of liability is not an expense because

a.It causes cash to be decreased

b.An expense would reduce the owners claim instead of the creditors

c.Payment of a liability is a using-up of business resources as part of operation

d.It causes owners capital to be decreased.

8.In a transaction by Tasha Company, assets decrease and owners equity decreases. What could have happened?

a.Either the purchase of an asset or an expense

b.Either an expense or an owners drawing

c.Either payment of a liability or an expense

d.None of the above

9.If the total liabilities of Los Altos Company are $37,000and the owners equity is $22,000, then total asset must be

a.$15,000

b. $22,000

c. $59,000

d. $37,000

10.Humbolt Square Bakery has total debt of $25,000 and owners equity of $50,000. If assets increase by $20,000 and liabilities increase by $15,000, what is the final balance of the owners equity?

a.$50,000

b. $40,000

c. $55,000

d. none of the above

11.Stage 3 of the accounting process, communicate information includes

a.Preparing and interpreting financial reports

b.Recording transaction

c.Analyzing the event

d.All of the above.

12.The people and organizations that use accounting information are often called

a.Internal users

b.External users

c.Creditors

d.Stakeholders

13.For stage 1, analyze the event, we have previously learned to analyze an event in three steps by asking: Are assets affected? Are liabilities affected? Is the owners equity affected? Now we refine out event analysis by analyzing these three essential elements of each step:

a.Classification, valuation, application

b.Classification,valuation, timing

c.Interpretation,valuation, summarization

d.Confirmation, recordation, recognition

14.The most fundamental requirement for ethical behavior is

a.Attitude

b.Independence

c.Technical skills

d.Consistency

15.Being impartial and fair to all parties is which AICPA ethical standard?

a.Due care

b.Integrity

c.Independence

d.Objectivity

16.Anowners investments general classification of the transaction is Exchange (T or F)

17.Generally, a revenue happens the moment that a customer receives the goods or services that were asked for. (T or F)

18.Unearned revenue is an advance payment to a customer before goods or services are provided. (T or F)

19.Astatement of the condition is a picture of the business at any point in time. (T or F)

20.Accountingis a system of activities that analyzes, processes, communicates and interprets financial data about a business or other entity. (T or F)