Accounting Questions

1.Ben Dryden, president of Jet Glass, Inc, noticed a $8,000 debit to Accounts Payable in the company's general ledger. This debit could correspond to:

Select one:

a. A $8,000 sale to a customer.

b. A purchase of equipment costing $8,000 on credit.

c. A payment of $8,000 to a supplier to settle a balance due.

d. The failure to pay this month's $8,000 utility bill on time.

2.The Retained Earnings statement is based upon which of the following relationships?

Select one:

a. Retained Earnings - Net Income - Dividends

b. Retained Earnings - Net Income + Dividends

c. Retained Earnings + Net Income + Dividends

d. Retained Earnings + Net Income - Dividends

3.If a company purchases equipment for $65,000 by issuing a note payable:

Select one:

a. Total assets will increase by $65,000.

b. Total assets will decrease by $65,000.

c. Total assets will remain the same.

d. The company's total owners' equity will decrease.

4.The manager of Belle Home Improvements purchased several cash registers for the business on June 10 but does not remember whether he paid cash for the full price or still owes a balance to the vendor. Where is the best place for the manager to get the information about this transaction?

Select one:

a. A trial balance prepared at the end of June.

b. The general journal.

c. A balance sheet prepared at the end of June.

d. The ledger account for equipment.

5.Accounts receivable

Select one:

a. Are usually converted into cash in 30 to 60 days

b. Are relatively liquid assets

c. Usually appear after short-term investments in marketable securities

d. All of the above

6.Each year the accountant for Northeast Real Estate Company adjusts the recorded value of each asset to its market value. Using these market value figures on the balance sheet violates:

Select one:

a. The accounting equation.

b. The stable-dollar assumption.

c. The business entity concept.

d. The cost principle.

7.Which of the following credit terms is the most advantageous to the purchaser of merchandise?

Select one:

a. 1/10, n/30.

b. 5/10, n/60.

c. 2/10, n/30.

d. 5/10, n/20.

8.The journal entry to record a particular business transaction includes a credit to the Cash account. This transaction is most likely also to include:

Select one:

a. Issuance of new capital stock.

b. The purchase of an asset on account.

c. Payment of an outstanding note payable.

d. A credit to Accounts Receivable.

9.The relationship between the income statement and the balance sheet may be described as follows:

Select one:

a. The income statement explains part of the change in owner's equity between two balance sheet dates

b. The balance sheet summarizes the change in net income occurring between successive income statements.

c. The income statement summarizes the changes in cash occurring between two balance sheet dates.

d. The assets shown in a balance sheet include all the revenue shown in the income statement.

10.A balance sheet:

Select one:

a. Provides owners, investors, and other interested parties with all the financial information they need to evaluate the financial strength, profitability, and future prospects of a given business entity.

b. Shows the current market value of the owners' equity in the business at the balance sheet date.

c. Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business combined with those of its owner (or owners).

d. Shows the assets, liabilities, and owners' equity of a business entity, valued in conformity with generally accepted accounting principles