A statement of financial position is another name for: A. The income statement.

B. The balance sheet.

C. The statement of cash flows.

D. The statement of changes in equity.

2. A statement of profit and loss is another name for: A. The income statement.

B. The balance sheet.

C. The statement of cash flows.

D. The statement of changes in equity.

3. A balance sheet lists:

A. The types and amounts of the revenues and expenses of a business.

B. Only the information about what happened to equity during a specific time period.

C. The types and amounts of assets, liabilities, and equity of a business at a specific date. D. The inflows and outflows of cash during a specific time period.

4. Which of the following statements is true about assets?

A. They are the properties or economic resources owned by the business. B. They are available to provide future benefits to the business.

C. Ownership is shared between creditors and owners.

D. All of these answers are correct.

5. The primary objective of GAAP is to provide accounting information that is: A. Usefulness for decision making.

B. Freedom from bias.

C. Timeliness.

D. Comparability.

6. Welder Company purchases supplies from Plumber Company on account. The entry for this transaction will include a:

A. Debit to Accounts Payable for Welder Company.

B. Debit to Accounts Receivable for Welder Company.

C. Debit to Accounts Receivable for Plumber Company. D. Credit to Accounts Payable for Plumber Company.

7. A summary of the ledger that lists the accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

A. Account balance.

B. Trial balance.

C. Ledger.

D. Chart of accounts.

Page 4 of 12

8. Which of the following statements is true?

A. The trial balance is never used to prepare financial statements. B. The trial balance is a list of all the accounts in the journal.

C. Another name for the trial balance is the "chart of accounts". D. The trial balance is a list of the accounts in the general ledger.

9. While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

A. The Office Supplies account balance will be overstated.

B. The trial balance will not balance.

C. The error will overstate the debits listed in the journal.

D. The total debits in the trial balance will be larger than the total credits.

10. A $15 credit to Sales was posted as a $150 credit. By what amount is Sales out of balance? A. $150 understated.

B. $135 overstated.

C. $150 overstated.

D. $15 understated.

11. If, on a trial balance, the total of the debits is $7,500 and the total of the credits is $7,419, the difference could have been caused by:

A. An error in copying an account balance from the ledger to the trial balance.

B. A transposition error.

C. A sliding error.

D. All of these answers are correct.

12. On March 2, 2015, Lang Company provided snow removal services to a customer for $1,000 cash. What is the impact of this transaction on the net assets of Lang?

A. No impact.

B. Decrease of $1,000.

C. Increase of $1,000. D. Increase of $2,000.

13. What types of account balances are increased by credits? A. Liabilities and expenses.

B. Liabilities and revenues.

C. Revenues and expenses.

D. Owners' equity and expenses.

14. Salaries paid with cash appear on which of the following statement(s)? A. Both an income statement and statement of cash flows.

B. Balance sheet.

C. Income statement.

D. Statement of changes in equity

Page 5 of 12

15. Fees earned by a business in exchange for services provided by the business appear on which of the following statements?

A. Balance sheet.

B. Income statement.

C. Statement of changes in equity. D. Statement of cash flows.

16. The balance sheet equation is:

A. Revenues minus expenses equals net income. B. Debits equal credits.

C. The bookkeeping phase of accounting.

D. Another name for the accounting equation.

17. According to generally accepted accounting principles, a company's balance sheet should show the company's assets at:

A. The cash equivalent value of what was given up or the asset received, whichever is more clearly evident.

B. The market value of the asset received in all cases.

C. The cash outlay only, even if part of the consideration given was something other than cash. D. The best estimate of a certified internal auditor.

18. In which of the following situations would the trial balance not balance?

A. The payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

B. The purchase of office supplies on account for $3,250 was incorrectly recorded in the journal as $2,350.

C. $50 cash receipt for the performance of a service was not recorded.

D. The purchase of office equipment for $1,200 was posted as a debit to Office Supplies.

19. The purchase on credit of a delivery truck for $9,600 was posted to Delivery Trucks as a $9,600 debit and to Rent Expense as a $9,600 debit. What effect would this error have on the trial balance?

A. The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,600. B. The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,600. C. The total of the Debit column of the trial balance will exceed the total of the Credit column by $19,200.

D. The total of the Credit column of the trial balance will exceed the total of the Debit column by $19,200.

20. If the Debit and Credit column totals of a trial balance are equal, then: A. All transactions have been recorded correctly.

B. All entries from the journal have been posted to the ledger correctly. C. All ledger account balances are correct.

D. The total debit entries and total credit entries in the ledger are equal.

Page 6 of 12

21. Of the following errors, which one by itself will cause the trial balance to be out of balance?

A. A $200 salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.

B. A $100 receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.

C. A $75 receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash.

D. A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.

22. A $130 credit to Office Equipment was credited to Sales by mistake. By what amounts are the accounts under- or overstated as a result of this error?

A. Office Equipment, understated $130; Sales, overstated $130.

B. Office Equipment, understated $260; Sales, overstated $130.

C. Office Equipment, overstated $130; Sales, overstated $130. D. Office Equipment, overstated $130; Sales, understated $130.

23. A receipt of $12,600 cash from a customer as a payment on their account was incorrectly credited to Rent Revenue. What is the effect of this error on the financial statements of the company?

A. Assets are understated by $12,600 and owners' equity is understated by $12,600.

B. Assets are overstated by $12,600 and owners' equity is overstated by $12,600.

C. Assets are overstated by $25,200 and owners' equity is overstated by $25,200. D. Assets are understated by $12,600 and liabilities are understated by $12,600.

24. The adoption of international accounting standards is an application of which of the following quality enhancing characteristics of financial information:

A. Verifiability.

B. Understandability.

C. Timeliness.

D. Comparability.

25. If financial information is relevant, this means that:

A. Decision makers can depend on it.

B. It can affect the types of decisions made by users.

C. The information is prepared using the same accounting procedures from one accounting period to the next.

D. Users are able to compare different companies, if all the companies use similar accounting practices.

26. Financial information that is verifiable means that:

A. Information is clear and concise.

B. Knowledgeable users agree that the financial information is faithfully represented.

C. The information is useful to users with reasonable knowledge of accounting as well as business and economic activities.

D. Users are able to compare different companies, if all the companies use similar accounting practices.

Page 7 of 12

27. Bailey Company made the journal entry below on January 9, 2021.

DR Cash $10,000

CR Accounts Payable 10,000

What transaction is represented by the posting?

A. Bailey sold inventory to a customer for $10,000 on credit.

B. Bailey bought supplies on credit from a supplier for $10,000 on credit.

C. Bailey bought supplies from a supplier for $10,000 cash.

D. Bailey paid a supplier $10,000 cash to pay down the amount owing on their account

28. The following is a correct journal entry:

Cash 14,400 Consulting Revenue

14,400

What is this journal entry recording?

A. An increase in an asset and an increase in owners' equity. B. An increase in an asset and a decrease in owners' equity. C. An increase in an asset and an increase in a liability.

D. An increase in owners' equity and a decrease in assets.

29. The process of transferring data from the general journal to the general ledger is called: A. Journalizing.

B. Posting.

C. Analyzing.

D. Recording.

30. A compound journal entry is:

A. A journal entry that has three or more debits and three or more credits. B. A journal entry that affects at least three accounts.

C. A journal entry that affects at least four accounts.

D. A journal entry involving at least two accounting periods.

31. The most flexible type of journal that can be used to record any kind of transaction is called a: A. Ledger.

B. Trial balance.

C. Chart of accounts.

D. General Journal.