Section B

Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement or answers the question. (3 points each)

1. The assets of a business may consist of a number of items, such as (A) accounts payable; (B) cash; (C) delivery fees; (D) drawing; (E) none of these.

2.Totals on the debit and credit sides to determine the balance of an account are known as (A) footings; (B) credits; (C) debits; (D) rulings; (E) revenues.

3.The normal balance is a debit in a (A) liability account; (B) revenue account; (C) debt account; (D) capital account; (E) drawing account.

4.When a loan is paid, a(n) (A) liability account is debited; (B) expense account is debited; (C) asset account is debited; (D) revenue account is credited; (E) drawing account is debited.

5.Investment of cash in a business (A) increases revenue; (B) decreases capital; (C) increases drawing; (D) increases cash; (E) decreases drawing

6.The financial statement prepared first is the (A) Statement of Financial Condition; (B) Statement of Owners Equity; (C)Income Statement; (D) Balance Sheet; (E) any one of these statements can be prepared first.

7.Cash received on account affects (A) cash and accounts payable; (B) cash and accounts receivable; (C) accounts receivable and revenue; (D) accounts receivable and accounts payable; (E) cash and owners equity.

8.Payment of office rent represents an increase in (A) revenues; (B) cash; (C) a liability account; (D) drawing; (E) expenses.

9.The trial balance is (A) a list of revenues showing the title and balance of each account; (B) used as an aid in preparing the balance sheet; (C) reported to the federal government; (D) a formal state or report; (E) all of these.

10.After the Statement of Owners Equity is prepared, which of the following is carried over to the Balance Sheet? (A) Net Income; (B) Ending Drawing Balance; (C) Ending Capital Balance; (D) Total Assets; (E) none of these.