The financial statement that reports the revenues and expenses for a period of time such as a year or a month

is:

A) Cash Flow Statement.

B) Balance Sheet Statement.

C) Income Statement

D) General Ledger Statement.

1.2 The type of account with a normal credit balance is:

A) An asset.

B) Stockholders’ equity (dividend).

C) A revenue.

D) An expense.

1.3 A debit balance in which of the following accounts would indicate a likely error?

A) Accounts Receivable

B) Cash

C) Fees Earned

D) Miscellaneous Expense

1.4 The receipt of cash from customers in payment of their accounts would be recorded by:

A) A debit to Cash and a credit to Accounts Receivable.

B) A debit to Accounts Receivable and a credit to Cash.

C) A debit to Cash and a credit to Accounts Payable.

D) A debit to Accounts Payable and a credit to Cash.

1.5 The form listing the titles and balances of the accounts in the ledger on a given date is the:

A) Income statement.

B) Balance sheet.

C) Retained earnings statement.

D) Trial balance.

2

1.6 If merchandise purchased on account is returned, the buyer may inform the seller of the details by issuing a (n):

A) Debit memo.

B) Credit memo.

C) Invoice.

D) Bill.

1.7 If merchandise is sold on account to a customer for R1,000, terms FOB shipping point, 1/10, n/30, and the seller

prepays R50 in freight, the amount of the discount for early payment would be:

A) R0.

B) R.00.

C) R10.00.

D) R10.50.

1.8 The income statement in which the total of all expenses is deducted from the total of all revenues is termed the:

A) Multiple-step form.

B) Single-step form.

C) Account form.

D) Report form

1.9 On a multiple-step income statement, the excess of net sales over the cost of goods sold is called:

A) Operating income.

B) Income from operations.

C) Gross profit.

D) Net income.

1.10 Which of the following expenses would normally be classified as other expense on a multiple-step income

statement?

A) Depreciation expense office equipment

B) Sales salaries expense

C) Insurance expense

D) Interest expense