Multiple choice Questions (5 marks) 1.An overstatement of ending inventory will cause A. An overstatement of assets and equity on the balance sheet B. An understatement of assets and equity on the balance sheet C. An overstatement of assets and an understatement of equity on the balance sheet D. An understatement of assets and an overstatement of equity on E. No effect on the balance sheet 2. From The primary objective of financial accounting is A. To serve the decison-making noeds of internal users B. To provide financial statements to help external users analyze and interpret an organization's activities C. To monitor and control company activities D. To provide information on both the costs and benefits of managing products and on the balance sheet E. To know what, when and how much to produce 3. Which accounting assumption assumes that all accounting information is reported monthly or yearly? A. Business entity assumption B. Monetary unit assumption C. Value assumption D. Cost assumption E. Time period assumption 4. Assets Liabilities+Equity is known as the: A. Income statement equation B. Cost principle C. Objectivity principle D. Accounting equation E. Transaction principle 5. The account used to record the transfers of assets from a business to its stockholders is: A. A revenue account B. The retained camings account C. Common stock account D. An expense account E. A liability account 6. A written promise to pay a definite sum of money on a specific future date is aln): A. Unearmed revenue B. Prepaid expense C. Credit account D. Note payable E. Account receivable 7. A list of all accounts used by a company and the identification number assigned to each account is called a: A. Ledger B. Journal C. Trial balance D. Chart of accounts E. General Journal 8. Profit margin A. Revenues divided by net sales B. Net sales divided by assets C. Net income divided by net sales D. Net income divided by assets E. Assets divided by net sales is defined as