True/False

1. The number of accounts on the chart of accounts is strictly limited.

2. Every account on the chart of accounts must be identified by one of the accounting elements

3. An account on the chart of accounts could be both a liability and a revenue.

4. The term prepaid is usually associated with an asset account.

5. Unearned revenue would usually be listed in the asset section of a chart of accounts.

6. The FASB dictates to companies what their chart of accounts must look like.

7. The accounting equation stays in balance except when dealing with dividends.

8. Gains and losses are listed under retained earnings because they change the amount of retained earnings.

9. Paying cash for prepaid insurance will not change retained earnings.

10. Using electricity in June and receiving a bill from the electric company in June will result in an increase in assets during June.

11. Selling inventory for a price more than what was paid will increase retained earnings.

12. Amounts to be reported on the financial statement come from the accounting equation worksheet.

13. Accounts receivable at the end of 2020 would become the beginning balance for accounts receivable in 2021.

14. Cost of Goods Sold for the year 2020 would become the beginning balance for Cost of Goods Sold in 2021.

15. Every total from the accounting equation worksheet will have a place to go on the financial statements.

16. When unearned revenue is earned, liabilities are decreased.

17. For revenue recognition the transaction price is adjusted for discounts and rebates that are most likely to take place.

18. Allocating the transaction price to the performance obligations is not necessary if there is only one performance obligation.

Multiple Choice

19. Which of the following would most likely be found in the expenses section of a chart of accounts?

a. Utilities

b. Accounts receivable

c. Capital stock

d. Salaries payable

20. When looking at the names of accounts and determining where they belong, the term deferred is usually used to show:

a. An amount owed for services received now.

b. Only amounts associated with stockholders equity.

c. Something that is used to be received or earned later.

d. The same as the term accrued.

21. Cash invested by stockholders in the company in return for stock will have the following effect:

a. Increase current assets

b. Increase expenses

c. Decrease current liabilities

d. Increase revenue

22. Which of the following is NOT a way that assets change on the accounting equation?

a. An asset is earned by providing goods or services to customers.

b. An asset is exchanged for another asset.

c. One asset is exchanged for another asset.

d. All of the above are examples of how assets can change.

23. Using cash to pay off a loan that is due in 10 years will have the following effect on the accounting equation:

a. An increase in current assets

b. A decrease in long term liabilities

c. An increase in long term assets.

d. A decrease in revenues.

24. Interest Earned would most likely be reported on which of the following financial statements?

a. Statement of contingencies

b. Balance sheet

c. Income statement

d. Statement of stockholders equity

25. Marvin Inc. sells products to customers for $250 that originally cost $150. The total impact on the expanded accounting equation of this transaction is:

a. Increase in retained earnings for $250.

b. Increase in current assets for $100.

c. Decrease in retained earnings for $150.

d. Increase in current liabilities for $100.

26. From the dividends column of the expanded accounting equation worksheet, the total would go on which of the financial statements?

a. Balance sheet

b. Statement of stockholders equity

c. Statement of amounts received by owners

d. Income statement

27. If amounts of cash are received from a customer and under the revenue recognition model, they are determined to have not been earned yet, the company receiving the cash would properly:

a. Increase assets

b. Increase expenses

c. Increase revenue

d. Increase liabilities