QUESTION 1

1. Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

   True

   False

QUESTION 2

1. We use the accounting equation to identify what a company owns and owes. The accounting equation is:

   		Assets = Liabilities + Equity
   		Assets = Liabilities Equity
   		Assets = Liabilities + Revenues
   		Equity = Liabilities + Revenues

QUESTION 3

1. ______ are beliefs that distinguish right from wrong. These beliefs are accepted standards of gauging good and dishonest behavior.

   		Accounting Standards
   		Ethics
   		Generally Accepted Accounting Principles
   		FASB

QUESTION 4

1. The _____ is a collection of all accounts within a companys accounting system.

   		General Journal
   		Chart of Accounts
   		General Ledger
   		Balance Sheet

QUESTION 5

1. We use the accounting equation to identify what a company owns and owes. _____ are resources a company owns or controls, _____ are claims creditors have against a companys assets, and _____ is the owners claim on a companys assets.

QUESTION 6

1. In double entry accounting a credit to an asset account will represent an increase in the asset account balance; and a debit will represent a decrease in the asset account balance.

   True

   False

QUESTION 7

1. The purchase of supplies on credit will ____ assets and ____ liabilities.

   		Increase, decrease
   		Decrease, increase
   		Decrease, decrease
   		Increase, increase

QUESTION 8

1. During the accounting cycle, we analyze transactions to prepare statements.

   True

   False

QUESTION 9

1. The supplies account for a company has a $1,000 debit balance at the beginning of the year. Supplies of $2,000 were purchased during the year and debited to the Supplies account. A December 31 physical count shows $500 of supplies remaining at the end of the year. Assume no other adjusting entries are made during the year. Using the 3-step process for creating adjusting entries, calculate the adjustment amount for supplies (no journal entry is required).

   		$1,000 adjustment
   		$2,000 adjustment
   		$2,500 adjustment
   		$3,000 adjustment

QUESTION 10

1. During the accounting cycle, to complete step 7 you would:

   		Prepare post-closing trial balance--Test clerical accuracy of the closing procedures.
   		Prepare adjusted trial balance--Summarize adjusted ledger accounts and amounts.
   		Prepare statements--Use adjusted trial balance to prepare financial statements.
   		Close--Journalize and post entries to close temporary accounts.