MULTIPLE CHOICE Select the best answer for each question and fill in the appropriate letter on the answer sheet provided. 1. The fundamental accounting equation is expressed as: a) Assets Liabilities - Owner's Equity b) Assets + Liabilities = Owner's Equity c) Assets + Owner's Equity = Liabilities d) Assets Liabilities + Owner's Equity 2. Which of the following errors would be detected when a trial balance was prepared? a) A transaction that was posted twice. b) A transaction that was not posted at all. c) A transaction for $500 was posted as a debit of $50 and a credit of $50. d) The debit portion of a transaction was not posted. 3. Which of the following accounts would not appear on a Balance Sheet? a) Accounts Receivable b) Accumulated Depreciation: Truck c) Bank Loan d) Depreciation Expense: Truck 4. A Balance Sheet is: a) A listing of the account balances in a ledger. b) A statement showing the causes for the difference between the bank balance in the general ledger and the bank balance on the bank statement. c) A financial statement that summarizes the items of revenue and expense, and shows the net income or net loss of a business for a given period of time. d) A statement showing the financial position of a person, business or other organization. 5. Assets are recorded on the Balance Sheet at: a) Resale value b) Factual Cost c) Market value d) Depreciated value 6. The Owner's Equity of a business could be best defined as: a) The difference between assets and liabilities b) The true net worth of any business. c) The owner's investment less drawings. d) All of the above. 7. Liquidity is defined as: a) The quickness with which accounts receivable can be collected. b) The order of placing assets first on a balance sheet. c) Whether the bank balance is greater than the bank loan. d) The order in which assets can be converted to cash. 8. Which of the following types of businesses best describes a business that buys goods and resells them? a) The service business b) The manufacturing business c) The merchandising business d) The non-profit business 9. External users of financial information include all of the following except: a) Customers b) Shareholders c) Managers d) Suppliers 10. If the CR balance in the HST charged on sales is greater than the DR balance in the HST paid on purchases: a) The company can avoid paying HST. b) The company must charge extra HST. c) The company will receive a HST rebate from Revenue Canada. d) The company must pay the difference to Revenue Canada. 11. In which order are the financial statements prepared? a) Balance sheet, trial balance, income statement b) Trial balance, balance sheet, income statement c) Trial balance, income statement, balance sheet d) Income statement, trial balance, balance sheet 12. The three accounting professional designations in Canada are: a) CGA, CPA, CFP b) CFP, CPA, CA c) CGA, CMA, CA d) CMA, CJA, CA 13. The word debit, in accounting theory, means: a) Left side. b) Increase c) Decrease d) Right side 14. Which of the following accounts is not a permanent account? a) Salaries expense b) Cash. c) Accounts payable d) Capital 15. A trial balance for a business is: a) A check on the bank account balance. b) A statement showing profit for the fiscal year. c) A listing of account balances to see if debits equal credits. d) A list of account numbers and names. 16. A ledger account with the number 420 would most likely be a(n): a) Asset account b) Liability account c) Owner's Equity account d) Revenue account e) Expense Account 17. An Income Statement for a business shows: a) The financial position on a given day. b) The true net worth of the business. c) The operating results for the fiscal period. d) The working capital of the business. 18. Depreciation can be thought as: a) Allocating part of an asset as an expense for each accounting period during which business uses that asset. b) A way of selling an asset back to yourself through the company. c) A way of building a reserve fund to replace the asset. d) None of the above. 19. Before the Income Summary account is closed, a credit balance would represent: a) Net loss for the accounting period. b) Net Income for the accounting period. c) Total expenses for the accounting period. d) Total drawings for the accounting period. 20. The appearance of which of the following accounts on a Post-Closing Trial Balance would indicate an error had been made? a) Accumulated Depreciation - building b) Merchandise Inventory c) Drawings d) Prepaid Insurance 21. Which of the following is not a current asset? a) Marketable securities b) Inventory c) Furniture d) Accounts Receivable 22. The owner of a business withdraws $500 worth of office supplies from the business for personal use. The entry required to record the transaction would be: a) debit office supplies and credit office supplies expense. b) credit office supplies and debit capital. c) credit cash and debit drawings. d) credit office supplies and debit drawings. 23. A sales invoice was issued on Nov. 12 in the amount of $190.85 and terms of 2/10, n/30. On Nov. 15 a credit invoice was issued in the amount of $32.00 and the credit period adjusted to that date. The amount of payment required if the invoice was paid on November 23. a) $158.85 b) $155.67 c) $155.00 d) $190.85 24. A sale on account to a customer would create a source document called: a) a purchase invoice b) a sales slip c) a sales invoice d) a cash register slip 25. Which of the following would increase assets and liabilities? a) Received payment from a customer for services rendered. b) Borrowed money to purchase a piece of equipment. c) Received cash as additional investment by stockholders. d) Received a utility bill for the month but have not paid it. 26. The Income Statement gives an indication of: a) The company's cash position b) The management's performance c) The company's obligations d) Forecasted sales 27. The book value of an asset is: a) The market value of the asset. b) The portion of the asset's cost that has not yet been depreciated. c) The purchase cost shown in the asset account less the estimated salvage value. d) The replacement cost of the asset. 28. The period of time over which business earnings are measured is known as: a) Calendar year b) Accounting cycle c) Fiscal year d) None of the above 29. Debits: a) Increase both assets and liabilities. b) Decrease both assets and liabilities. c) Decrease assets and increase liabilities. d) Increase assets and decrease liabilities. 30. Which of the following is NOT an example of a Contra account? a) Accumulated depreciation b) GST Charged on Sales c) GST Paid on Purchases d) Drawings 31. The "Matching principle" states that: a) Debits and credits should be matched in each journal entry. b) Revenue and expenses should be matched to the time period in which they were incurred. c) Current assets and fixed assets match the value of total equity. d) Cash account balances should match bank account balances