Q1: Every adjustment entry affects:

a. at least one permanent account and one temporary account

b. only a permanent account

c. only a temporay account

d. only a revenue account

Q2: the owner of a corporation is called a:

a. partner

b. stockholder

c. director

d. manager

Q3: when a corporation is owned by a few persons or family, it is called a:

a. closely held corporation

b. publicly held corporation

c. partnership

d. sole proprietorship

Q4: A distribution of cash to stockholders of a publicly held corporation is called:

a. net profit

b. dividend

c. revenue

d. interest

Q5: The process of preparing and closing the accounts of an organization for an accounting period is called an:

a. journal entry

b. posting entry

c. adjusting entry

d. closing entry

Q6: The adjusting entry for supplies should be:

a. debit supplies expenses, credit supplies

b. debit supplies, credit supplies expenses

c. debit sales, credit prepaid insurance

d. debit supplies, credit expenses

Q7: The second part of stockholder equity is called:

a. retained earnings

b. revenue

c. net loss

d. net capital

Q8: How many financial statements do corporations prepare?

a. four

b. five

c. two

d. three

Q9: The income statement of a merchandising business has:

a. five sections

b. four sections

c. two sections

d. three sections

Q10: The operationg income is an excess of:

a. gross profit over operating expenses

b. gross loss over operting expenses

c. gross profit over cost of merchandise sold

d. operating expenses over gross profit

Q11: An analysis that reports each dollar amount in a financial statemnet as a percentage of another amount is:

a. vertical analysis

b. horizontal analysis

c. percentage analysis

d. financial statement analysis

Q12: A statement that reports the changes in the retained earning s accounts during an accounting period is called the:

a. statement of changes in owners equity

b. statement of retained earnings

c. statement of income

d. statement of stockholders account

Q13: Which statement classifies activites as operating, investing, or financing?

a. income statement

b. cash flow statement

c. statement of retained earning

d. statement of stockholders

Q14: Which account should you debit to close the net loss of a merchandise business?

a. retained earnings account

b. operating income account

c. stockholders account

d. income statement account

Q15: The maximum number of shares a corporation may issue is called:

a. authorised capital stock

b. preferred stock

c. equity stock

d. issued stock

Match the terms:

1. comparability

2. horizontal anaysis

3. vertical analsis

4. base period

5. preferred stock

6. authorized capital stock

7. earnings distributions

8. proxy

9. statements of stockholders equity

10. cost of goods sold

a. legal form to transfer voting rights

b. comparison of the same items for two or more accounting periods

c. accounting information to be compared between two fiscal periods

d. preference over common stock

e. the maximum number of shares a corporation may issue

f. changes in all stockholders equity rights

g. period used for comparison

h. cost of goods sold

i. dividends

j. relationship of items from one period to another