CHOOSE THE CORRECT ANSWER

1.What is the normal balance of the sales returns account?

debit

credit

zero

none of these

2.Which of the following statements is correct?

.Of the five major types of accounts, only two have normal debit balances.

All accounts are increased by a debit and decreased by a credit.

A contra asset account is increased through debit.

A debit and a debit result to a credit.

3.In accounting, recording a transaction in a debit-credit form is called

journalinging.

posting.

identifying and analyzing.

journalizing.

4.You are an accountant. You obtained the source documents for the business transactions your company has entered into during the day and started inspecting the documents. What step of the accounting cycle are you performing?

Reading

Identifying and analyzing

Journalizing

Posting

5.Your business sells goods to a credit customer. Which of the following accounts is increased?

Accounts receivable

Cost of sales

Sales

All of these

6.Real accounts are presented in what formal report?

Income statement

Balance sheet

Unadjusted trial balance

Worksheet

7.The amounts shown on this trial balance represent the beginning balances of accounts in the next accounting period.

Unadjusted trial balance

Adjusted trial balance

Post-closing trial balance

Carry-over trial balance

8.Entity A started operations on November 1, 20x1. The following were the transactions during the month:

Nov. 1, 20x1 The business owner provides 2,000,000 cash as investment to the business.

Nov. 5, 20x1 Entity A obtains a 500,000 loan and issues a promissory note.

Nov. 8, 20x1 Entity A acquires land costing 1,000,000 on cash basis.

Nov. 16, 20x1 Entity A renders services worth 1,200,000 on account.

Nov. 30, 20x1 Entity A pays salaries expense of 280,000.

How much is the total assets at the end of the period? (Hint: use the basic accounting equation)

4,320,000

3,840,000

3,420,000

2,980,000

9.Entity A started operations on November 1, 20x1. The following were the transactions during the month:

Nov. 1, 20x1 The business owner provides 2,000,000 cash as investment to the business.

Nov. 5, 20x1 Entity A obtains a 500,000 loan and issues a promissory note.

Nov. 8, 20x1 Entity A acquires land costing 1,000,000 on cash basis.

Nov. 16, 20x1 Entity A renders services worth 1,200,000 on account.

Nov. 30, 20x1 Entity A pays salaries expense of 280,000.

How much is the total liabilities at the end of the period?

500,000

520,000

580,000

680,000

10.Entity A started operations on November 1, 20x1. The following were the transactions during the month:

Nov. 1, 20x1 The business owner provides 2,000,000 cash as investment to the business.

Nov. 5, 20x1 Entity A obtains a 500,000 loan and issues a promissory note.

Nov. 8, 20x1 Entity A acquires land costing 1,000,000 on cash basis.

Nov. 16, 20x1 Entity A renders services worth 1,200,000 on account.

Nov. 30, 20x1 Entity A pays salaries expense of 280,000.

How much is the equity at the end of the period after taking into account income and expenses?

2,920,000

2,980,000

3,120,000

3,280,000

11.In a worksheet, which of the following is prepared after the unadjusted trial balance?

Adjusted trial balance columns

Income statement columns

Adjusting entries columns

Balance sheet columns

12.If total debits exceed total credits in the balance sheet columns of a worksheet, there is

profit.

loss.

owner's drawings.

an error.

13.Accounts are listed in the trial balance in this sequence.

Asset, Liabilities, Equity, Expense, and Income

Asset, Equity, Liabilities, Expense, and Income

Asset, Liabilities, Equity, Income, and Expense

Asset, Expense, Liabilities, Equity, and Income

14.Adding amounts horizontally in a worksheet is called

footing.

cross-footing.

cross-legging.

horizontaling.

15.In accounting parlance, an account that has no balance is called a

closed account.

dead account.

ghost account.

blocked account.

16.This trial balance contains only real accounts.

Unadjusted trial balance

Adjusted trial balance

Post-closing trial balance

Permanent trial balance

17.It is a journal entry that is the exact opposite of a previous adjusting entry.

inside-out entry

closing entry

gnitsujda entry

reversing entry

18.It is an account used temporarily to store discrepancies in the accounts pending their analysis and permanent classification.

Suspense account

Horror account

Thriller account

Romantic comedy account

19.The first step in the accounting cycle is

posting to the ledger.

journalizing.

preparing the adjusting entries.

analyzing events.

20.Credit is on which side of an account?

Right

Left

Top

Bottom

21.A debit may signify an increase in

liability account.

asset account.

revenue account.

liability and revenue account.

22.Debit and debit result to

liability account.

asset account.

revenue account.

liability and revenue account.

23.Owner's cash investment to the business.

DEBIT Cash CREDIT Owner's capital

DEBIT Cash CREDIT Owner's drawings

DEBIT Owner's capital CREDIT Cash

DEBIT Cash CREDIT Sales

24.Acquisition of equipment on cash basis.

DEBIT Cash CREDIT Equipment

DEBIT Expense CREDIT Cash

DEBIT Equipment CREDIT Cash

DEBIT Equipment CREDIT Owner's capital