QUESTION 5 Which of the following statements BEST defines financial statements? A. Financial statements are plans and forecasts for future time periods. B. Financial statements are the verbal statements made to business news organizations by chief financial officers. C. Financial statements are documents that report on a business in monetary terms, providing information to help people make informed business decisions. D. Financial statements are the information systems that record and measure business transactions.

QUESTION 6 Which of the following statements is true of a trial balance? A. A trial balance has the same format as a balance sheet. B. A trial balance presents data in debit and credit format. C. A trial balance shows total amounts of assets, liabilities, but not equity. D. A trial balance is prepared after the balance sheet.

QUESTION 7 There are relatively few types of revenue. Which of the following in NOT a type of revenue? A. Sales B. Service C. Interest D. Unearned Revenue

QUESTION 8 The financial statements should be prepared in what order? A. Income statement, statement of owner's equity, balance sheet, statement of cash flows B. Balance sheet, statement of owner's equity, income statement, statement of cash flows C. Statement of owner's equity, balance sheet, income statement, statement of cash flows D. Balance sheet, income statement, statement of owner's equity, statement of cash flows

QUESTION 9 Which of the following journal entries would be recorded if a business makes a cash payment to a supplier of $600 "on account" (the business had purchased supplies on account in the previous month)? A. Accounts payable 600 Cash 600 B. Accounts payable 600 Supplies 600 C. Cash 600 Supplies 600 D. Cash 600 Accounts payable 600

QUESTION 10 Which of the following statements about revenue is CORRECT? A. Revenues increase owner's equity, so a revenue account's normal balance is a credit balance. B. Revenues decrease owner's equity, so a revenue account's normal balance is a debit balance. C. Revenues increase owner's equity, so a revenue account's normal balance is a debit balance. D. Revenues decrease owner's equity, so a revenue account's normal balance is a credit balance.

QUESTION 11 From a legal perspective, a proprietorship is: A. not a distinct entity from its proprietor. B. authorized under state charter. C. an entity separate from its proprietor. D. subject to regulation by the SEC.

QUESTION 12 Sharon Samson starts a plumbing service named Reliable Waterworks. Selected transactions are described as follows: A) Sharon deposits $7,000 into a new checking account for the business, recording the capital contribution. B) Reliable pays $4,000 cash for equipment to be used for plumbing repairs. C) Reliable borrows $15,000 from a local bank and deposits the money in the checking account. D) Reliable pays $600 rent for the first month. E) Reliable pays $400 cash for plumbing supplies to be used on various jobs in the future. F) Reliable completes a plumbing repair project for a local lawyer and receives $1,300 cash. G) Sharon takes a cash withdrawal of $2,500. After all of the transactions, what is the amount of total assets? A. $25,700 B. $20,200 C. $24,200 D. $5,200

QUESTION 13 The Accounts Payable account is a(n) ________ account and carries a ________ normal balance. A. liability; debit B. asset; debit C. liability; credit D. asset; credit

QUESTION 14 The following are the ending month's balances for Toys Galore. Accounts payable $6,790 Revenue $8,680 Cash $4,500 Expenses $1,050 Furniture $8,370 Accounts receivable $ 7,710 Capital $930 Notes payable $5,230 What is the total amount of credits for the trial balance? A. $30,310 B. $16,400 C. $21,630 D. $20,580

QUESTION 15 The Sarbanes-Oxley Act ("SOX") made it a criminal offense to: A. steal shareholders' money. B. default on loans from creditors. C. declare bankruptcy. D. falsify financial information.

QUESTION 16 Which of the following is the order of steps to journalize an entry? A. Record the transaction, identify each account affected, determine increase or decrease in each account. B. Identify each account affected, determine increase or decrease in each account, record the transaction. C. Identify each account affected, record the transaction, determine increase or decrease in each account. D. Determine increase or decrease in each account, identify each account affected, record the transaction

QUESTION 17 Mitchell Florists had the following total assets, liabilities, and equity as of December 31. Assets $450,000 Liabilities 135,000 Equity 315,000 What is Mitchell's debt ratio as of December 31? A. 30% B. 70% C. 100% D. 43%

QUESTION 18 Which of the following financial statements reports revenues? A. Statement of cash flows B. Income statement C. Statement of owner's equity D. Balance sheet

QUESTION 19 Following is a list of account balances (except for owner's capital) of Wilson Mowing Service as of December 31 of the first year of operation: Accounts receivable $2,500 Accounts payable $3,500 Salary expense $4,500 Repairs expense $800 Truck $8,500 Equipment $6,300 Notes payable $8,200 Cash $6,800 Supplies expense $1,600 Service revenue $31,900 Gasoline expense $3,800 Salary payable $200 The proprietor, J.D. Wilson, contributed $3,000 at the beginning of the year; during the year, the proprietor took $12,000 in drawings. At the end of the year, what is net income? A. $11,900 B. $21,200 C. $24,100 D. $12,200

QUESTION 20 Which of the following is an asset account? A. Salaries Expense B. Accounts Payable C. Service Revenue D. Prepaid Expense

QUESTION 21 A journal entry for a $75 payment for Rent expense was posted as a debit to Salary expense and a credit to Cash. This error will cause which of the following conditions on the trial balance? A. The sum of the credits will equal the sum of the debits. B. The sum of the debits will exceed the sum of the credits by $75. C. The sum of the credits will exceed the sum of the debits by $150. D. The sum of the debits will exceed the sum of the credits by $150.

QUESTION 22 The business receives cash from a customer that is owed to the company "on account," based on services rendered to the customer previously. How does the collection of the cash affect the accounting equation? A. Assets increase; owner's equity increases. B. Assets increase; liabilities increase. C. Assets decrease; owner's equity decreases. D. One asset increases; one asset decreases

QUESTION 23 A business completes service to a client and sends out a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be TRUE at the time when the invoice is sent out? A. Total assets will decrease. B. Net income will increase. C. Owner's equity will decrease. D. Total liabilities will increase.

QUESTION 24 Which of the following accounts increases with a debit? A. Cash B. Interest Payable C. Accounts Payable D. Smith, Capital

QUESTION 25 The Accounts Receivable account of Nuptials Inc. is shown below. Accounts Receivable Dr Cr 26,000 3,500 5,000 Calculate the ending balance of the account. A. $33,500 debit B. $31,000, debit C. $3,500, credit D. $27,500, debit

QUESTION 26 The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 Martinez invested $9,000 cash in his new design services business. Mar. 2 Paid the first month's rent of $800. Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for $5,000. Mar. 4 Purchased office supplies for $750 cash. Mar. 5 Billed a client for $10,000 of design services completed. Mar. 6 Received $8,000 on account for the services previously recorded. What is the balance in Cash? A. $13,250 B. $12,450 C. $15,450 D. $14,000

QUESTION 27 Which of the following sequences states the order in which a trial balance lists accounts? A. Equity Assets Liabilities B. Liabilities Assets Equity C. Assets Equity Liabilities D. Assets Liabilities Equity

QUESTION 28 Which of the following statements is FALSE? A. A trial balance shows total amounts for assets, liabilities, and equity. B. A trial balance is created before the balance sheet is prepared. C. A trial balance presents data in debit and credit format, but a balance sheet does not. D. A trial balance shows total debits and total credits.

QUESTION 29 A promise received from a business's customers to pay for goods and services that they received from the business is called a(n): A. revenue. B. account receivable. C. account payable. D. expense.

QUESTION 30 You can evaluate the economic resources, debt, and overall financial position of a company in which of the following financial statements? A. Income statement B. Balance sheet C. Statement of owner's equity D. Statement of cash flows

QUESTION 31 A book holding all of the accounts is called the: A. income statement. B. journal. C. ledger. D. balance sheet.

QUESTION 32 Which of the following groups of accounts BOTH normally have a debit balance? A. Assets and Liabilities B. Liabilities and Owner's equity C. Revenues and Expenses D. Assets and Expenses

QUESTION 33 A business buys $500 of supplies on account. Which account is debited? A. Supplies B. Cash C. Service revenue D. Accounts payable