Multiple Choice Questions

1. The purchase of an asset (like Equipment) on account will la increase total liabilities and decrease total assets. P. have no effect on total assets or total liabilities increase total assets and increase total liabilities. increase total assets and increase owner's equity increase total assets and decrease owner's equity. 2. Which of the following equations is the fundamental accounting equation? 2. Assets - Liabilities = Owner's Equity . Assets = Liabilities + Owner's Equity is. Assets + Liabilities = Owner's Equity a. Assets - Owner's Equity Liabilities eAssets + Owner's Equity Liabilities 3. Amounts owed by a business are referred to as a assets. equities. 1. liabilities capital e expenses 4. When an owner withdraws cash from the business, it results in a decrease in: a. Cash and Accounts Receivable . Cash and Contingent Liabilities Is. Cash and Capital Cash and Accounts Payable. 12. Cash and Long-term Liabilities. 5. Which of the following is not considered an account? a. Equipment . Revenues Accounts Payable d. Cash e Accounts Receivable 6. If an owner invests his or her computer, printer, and cash in the business, there is an increase in: 1. Cash and Accounts Payable. 5. Computer Equipment, Accounts Payable, and Drawing 12. Cash and Drawing Computer Equipment and Expenses. Computer Equipment, Cash, and Capital 7. The owner of a business invested $5,000 in the business. What are the effects on the fundamental accounting equation? 1. Assets increase $5,000; liabilities, no effect; owner's equity increases $5,000 Assets increase $5,000; liabilities decrease $5,000, owner's equity increases $5,000 is. Assets increase $5,000: liabilities increase $5.000: owner's equity, no effect Id Assets increase $5,000; liabilities, no effect: owner's equity decreases $5.000 e. Assets decrease $5,000; liabilities, no effect owner's equity increases $5.000 8. The purchase of an asset for cash will increase total assets and decrease total liabilities. .have no effect on total assets or total liabilities. increase total assets and increase total liabilities. Increase total assets and increase total owner's equity. I. increase total assets and decrease total owner's equity. 9. Over a period of time, if total assets increase by $27,000 and total liabilities increase by $7,000, then owner's equity will be increased by 12.57.000 . $34.000 $27,000 $20,000 Phone of these. 10. When the rent for the business is paid with a check, a. Cash is decreased and Rent Expense is decreased. . Cash is decreased and Rent Income is increased. Cash is decreased and Rent Expense is increased a. Cash is decreased and Accounts Payable is decreased 2. Cash is increased and Rent Expense is decreased. 11. Which of the following is a form of revenue ? 2. A check paying a mortgage . Acredit purchase invoice Credit sales to charge customers b. A cash purchase invoice A check paying utilities 12. Which of the following transactions does not include an increase to expenses? la Received and paid the phone bill Paid monthly rent c. Received cash for services performed la Paid the week's wages . Bought advertising for cash 13. The plus side of a T account represents the: la normal balance of that account double balance of that account. c. trial balance of that account footings balance of that account. e standard balance of that account 14. When a T account has several items on both sides, the balance of the account is written 12. on the side with the greatest number of Items. . on the side with the least number of items Is on the side with the larger total d. on the side with the smaller total. Jen none of these locations 15. Which of the following accounts decrease when they are debited? Assets and Drawing Prawing and Capital 1. Expenses and Assets Capital and Liabilities e. Liabilities and Expenses 16. A debit may result in a. an increase in an expense account . an increase in an asset account. 12. a decrease in a liability account. d. a decrease in a revenue account. le fall of these 17. A credit may result in 1. an increase in a liability account. an increase in a revenue account. a decrease in an asset account. an increase in the Capital account. e all of these. 18. Which of the following classifications of accounts has/have a normal credit balance? I. Prawing . Revenues Liabilities Revenues and Jiabilities le. All of these 19. Which of the following describes the classification and normal balance of H. Gale, Capital? a. Asset, debit . Revenue, credit 16. Owner's equity, debit Expense, debit e. None of these 20. The second step in the analytical phase of accounting is a. ho determine whether there is an increase or a decrease in the accounts. ho determine which accounts are involved. c. to formulate the entry as a debit to one account and as a credit to another account. d. to identify the classification of the accounts involved. e none of these 21. If a $47 cash purchase of supplies is recorded as a $57 debit to Supplies Expense and a $57 credit to Cash, the result will be that la. the trial balance will be out of balance. the Supplies Expense account will be understated. c. the Cash account will be overstated. 1. Supplies Expense will be overstated and Supplies will be understated. e none of these will be true. 22. A purchase of supplies on account should be recorded as |. a debit to Supplies and a credit to Cash. Pa debit to Accounts Payable and a credit to Supplies. c. a debit to Supplies and a credit to Accounts Payable. 10 a debit to Supplies Expense and a credit to Accounts Receivable. le none of these 23. Which of the following is/are not true about a proper journal entry? An explanation is needed immediately after each debit and immediately after each . All credits are indented. Ic. A debit is never indented, even if a liability or owner's equity account is involved. d. All debits are listed before the first credit. credit. e. In a compound entry, the largest amounts are listed first. 24. An accountant wanting to know the balance of a particular account would refer to the 11a. ledger p.chart of accounts. Ic. book of original entry. Id source document. lle. Journal 25. The process of subtotaling both sides of an account and recording the amount on that side is known as a. footing. Ib. taking a trial balance. c. posting. d. palancing the Jaccounts. Ile journalizing