#101 Accounting I2005 FBLA WRC
WRC 2005--Accounting I
True/False
Indicate whether the sentence or statement is true or false.
____1.The capital account is an owner's equity account.
____2.If two amounts are recorded on the same side of the accounting equation, the equation will no longer be in balance.
____3.A business that performs an activity for a fee is a service business.
____4.A proprietorship is also known as a sole proprietorship.
____5.A business has two types of equities.
____6.When an owner withdraws cash from the business, the transaction affects both assets and owner's equity.
____7.When cash is paid to the owner for personal use, assets decrease and owner's equity decreases.
____8.The right side of a balance sheet presents liabilities and assets.
____9.Sandra Stern, Drawing is increased with a credit.
____10.The source document for cash payments is a check.
____11.The Objective Evidence accounting concept requires that there be proof that a transaction did occur.
____12.A journal shows in one place all the changes in a single account.
____13.A chart of accounts is a list of account titles and numbers showing the location of each account in a ledger.
____14.If a bank does not receive payment from the person who signed the check, each endorser of the check is individually liable for payment.
____15.Blank endorsements should be used when sending checks through the mail.
____16.Most banks will accept postdated checks.
____17.Anytime a payment is made from the petty cash fund, a petty cash slip is prepared showing proof of a petty cash payment.
____18.The petty cash slip is the source document for the entry to replenish petty cash.
____19.All general ledger account titles are listed on a trial balance even if some accounts do not have a balance.
____20.Making adjustments to general ledger accounts is an application of the Matching Expenses with Revenue accounting concept.
____21.When the Income Statement Credit column total is greater than the Income Statement Debit column total on a work sheet, the business has a net income.
____22.Information needed to prepare the liabilities section of a balance sheet is obtained from the work sheet's Account Title column and the Balance Sheet Credit column.
____23.The Adequate Disclosure accounting concept is applied when financial statements contain all information necessary to understand a business's financial condition.
____24.Only revenue accounts and expense accounts are used in preparing the income statement.
____25.The net income on an income statement is verified by checking the balance sheet.
____26.An amount written in parentheses on a financial statement indicates an estimate.
____27.A balance sheet reports information about the elements of the accounting equation.
____28.A cash sale is a sale in which a credit card is used for the total amount of the sale at the time of the transaction.
____29.A listing of customer accounts, account balances, and total amount due from all customers is a schedule of accounts receivable.
____30.Medicare is funded by the federal government but not under the social security law.
____31.Employers in many states are required to withhold state, city, or county income tax from employee earnings.
____32.The information used to prepare payroll checks is taken from a payroll register.
____33.Employers must pay to the government the taxes withheld from employee earnings.
____34.The employer social security tax rate is not the same as the employee social security tax rate.
____35.Work sheets for service and merchandising businesses are very different.
____36.The inventory of supplies at the end of a fiscal period is determined by actually counting the amount of supplies on hand.
____37.Data needed to prepare the liabilities section of a balance sheet are obtained from a work sheet's Balance Sheet Debit column.
____38.Indicating a source document is not necessary when journalizing adjusting entries.
____39.Amounts needed for the closing entries are obtained from the Trial Balance columns of a work sheet.
____40.Expense accounts are closed by debiting the expense accounts and crediting Income Summary.
____41.Only one type of accounting system can be used to record, summarize, and report a business's financial information.
____42.The amount on each line of a purchases journal is posted as a credit to the named vendor account in the accounts payable ledger.
____43.When several journals are used, an abbreviation is used in the Post. Ref. column of a ledger to show the journal from which the posting is made.
____44.Purchases on account are recorded in a purchases journal at list price.
____45.A schedule of accounts receivable is prepared before financial statements are prepared to prove the accounts receivable ledger.
____46.A sales invoice is the source document for journalizing a sales on account transaction.
____47.When the allowance account has a previous credit balance, this previous balance is subtracted from the amount of the adjustment for uncollectible accounts expense.
____48.The Realization of Revenue accounting concept explains why failing to collect an account at a later date than the original sale cancels the sale and reduces revenue.
____49.Canceling the balance of a customer account because the customer does not pay is called writing off an account.
____50.When an account is written off, the account balance is transferred to Allowance for Uncollectible Accounts.
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____51.A business has total cash of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. The balance of the cash account is now ____.
a. / $25,750.00 / c. / $28,700.00b. / $26,750.00 / d. / none of the above
____52.A business has total assets of $30,000.00. Then the business pays $1,000.00 on account, buys insurance coverage of $750.00, buys supplies for $1,200.00, and pays $300.00 more on account. Total assets are now ____.
a. / $25,750.00 / c. / $28,700.00b. / $26,750.00 / d. / none of the above
____53.When the owner withdraws cash for personal use, ____.
a. / liabilities increase and assets decreaseb. / assets decrease and owner's equity increases
c. / assets decrease and owner's equity decreases
d. / liabilities decrease and assets decrease
____54.When the owner invests cash in a business, the owner's capital account is ____.
a. / increased by a debit / c. / decreased by a debitb. / increased by a credit / d. / decreased by a credit
____55.When a business receives revenue, Sales is ____.
a. / increased by a debit / c. / decreased by a debitb. / increased by a credit / d. / decreased by a credit
____56.Debits must equal credits ____.
a. / in a T account / c. / on the equation's right sideb. / on the equation's left side / d. / in all transactions
____57.The normal balance side of any revenue account is ____.
a. / the debit side / c. / the left sideb. / the credit side / d. / none of the above
____58.A sale on account ____.
a. / increases an owner's equity account and increases an asset accountb. / increases a liability account and increases an asset account
c. / increases an owner's equity account and increases a liability account
d. / increases an owner's equity account and decreases a liability account
____59.If an error is discovered in a general journal entry, ____.
a. / cancel the error by drawing a neat line through the errorb. / correct the entry by writing the correct item above the canceled error
c. / do not erase the incorrect item
d. / all of the above
____60.When the previous balance of an account is zero and a credit amount is posted to the account, the new balance is ____.
a. / a dollar amountb. / a credit
c. / a debit
d. / none of the above
____61.When the previous balance of an account is a debit and a debit amount is posted to the account, the new balance is ____.
a. / a dollar amountb. / a credit
c. / a debit
d. / none of the above
____62.A business form ordering a bank to pay cash from a bank account is ____.
a. / a signature card / c. / a checkb. / a deposit slip / d. / none of the above
____63.An endorsement on the back of a check consisting only of a signature is ____.
a. / a blank endorsement / c. / a restrictive endorsementb. / a special endorsement / d. / an incorrect endorsement
____64.A lost check with a blank endorsement on it can be cashed by ____.
a. / anyone who has the checkb. / only the person whose name follows the words "Pay to the order of"
c. / only the person who endorsed the check
d. / no one
____65.On a work sheet, the balance of Cash is extended to the ____.
a. / Balance Sheet Debit column / c. / Income Statement Debit columnb. / Balance Sheet Credit column / d. / Income Statement Credit column
____66.If the Trial Balance columns are not equal and the difference is 1, the error often is ____.
a. / transposed numbers or a "slide" / c. / in postingb. / in writing an amount in the wrong column / d. / in addition
____67.If the Trial Balance columns are not equal and the difference can by divided evenly by 9, the error most likely is ____.
a. / in transposed numbers or a "slide" / c. / additionb. / subtraction / d. / in writing an amount in the wrong column
____68.The sections of an income statement are ____.
a. / assets, liabilities, and owner's equityb. / heading, revenue, expenses, and net income or net loss
c. / assets, liabilities, and net income or net loss
d. / assets, revenue, and net income or net loss
____69.After the adjusting entry for Prepaid Insurance has been posted, Insurance Expense has an up-to-date balance, which is the ____.
a. / same as the beginning balance for Prepaid Insuranceb. / same as the ending balance for Prepaid Insurance
c. / value of insurance premiums used during the fiscal period
d. / value of insurance premiums bought during the fiscal period
____70.Temporary accounts begin each new fiscal period with a ____.
a. / debit balance / c. / zero balanceb. / credit balance / d. / balance equal to the net income
____71.When the total expenses are greater than the total revenue, ____.
a. / the income summary account has a credit balanceb. / the income summary account has a debit balance
c. / debits equal credits
d. / none of the above
____72.The journal entry to close the expense accounts is ____.
a. / debit Income Summary; credit owner's capitalb. / debit Income Summary for the total expenses; credit each expense account
c. / debit each expense account; credit Income Summary
d. / none of the above
____73.Information needed to journalize a closing entry for the owner's drawing account is obtained from the ____.
a. / work sheet's Balance Sheet Debit columnb. / work sheet's Balance Sheet Credit column.
c. / income statement.
d. / work sheet's Income Statement Debit column.
____74.The last step in the accounting cycle is ____.
a. / to journalize and post the closing entriesb. / to prepare a work sheet and financial statements
c. / to analyze transactions and journalize and post them
d. / none of the above
____75.Keeping the reports and financial records of a business separate from the personal records of the partners is an application of the accounting concept ____.
a. / Going Concern / c. / Historical Costb. / Business Entity / d. / Objective Evidence
____76.The entry to journalize a purchase of merchandise on account is ____.
a. / debit Accounts Payable; credit Merchandiseb. / debit Accounts Payable; credit Purchases
c. / debit Purchases; credit Accounts Payable
d. / debit Purchases; credit Merchandise
____77.An increase in revenue resulting from a sale on account should be recorded ____.
a. / at the time of the sale / c. / at the end of the fiscal periodb. / at the end of each month / d. / when the final payment is made
____78.A sale for which cash will be received at a later date is a ____.
a. / cash sale / c. / delayed-payment saleb. / credit card sale / d. / sale on account
____79.A subsidiary ledger containing only accounts for vendors from whom items are purchased or bought on account is ____.
a. / an accounts payable ledger / c. / a general ledgerb. / an accounts receivable ledger / d. / none of the above
____80.An account in a general ledger that summarizes all accounts in a subsidiary ledger is ____.
a. / an expense account / c. / a controlling accountb. / a contra account / d. / a capital account
____81.The special amount column totals of the cash receipts journal are ____.
a. / posted monthly to a customer accountb. / posted to the general ledger controlling account at the end of each month
c. / not posted
d. / posted often
____82.A general ledger sorts and summarizes all information affecting ____.
a. / income statement and balance sheet accountsb. / accounts receivable accounts
c. / accounts payable accounts
d. / none of the above
____83.The period covered by a salary payment is a ____.
a. / bimonthly base / c. / pay periodb. / pay schedule / d. / payroll
____84.A business form used to record payroll information is ____.
a. / a wage register / c. / a payroll registerb. / a payroll tax register / d. / an employee time card
____85.When a semimonthly payroll is paid, the credit to Cash is equal to the ____.
a. / total earnings of all employeesb. / total deductions for income tax and social security and Medicare tax
c. / total deductions
d. / net pay of all employees
____86.To record the total federal tax payment for employee income tax, social security tax and Medicare tax, the account credited is ____.
a. / Cash / c. / Social Security Tax Payableb. / Employee Income Tax Payable / d. / Medicare Care Tax Payable
____87.To record the payment of federal unemployment tax, the account debited is ____.
a. / a revenue account / c. / a liability accountb. / an expense account / d. / an asset account
____88.Preparing a work sheet at the end of each fiscal period is an application of the accounting concept ____.
a. / Accounting Period Cycle / c. / Matching Expenses with Revenueb. / Adequate Disclosure / d. / Historical Cost
____89.The amount of goods on hand for sale to customers is ____.
a. / a merchandise inventory / c. / a schedule of goods on handb. / an inventory / d. / a purchases inventory
____90.On a work sheet, Accounts Payable is extended to the ____.
a. / Income Statement Debit column / c. / Balance Sheet Debit columnb. / Income Statement Credit column / d. / Balance Sheet Credit column
____91.When a work sheet is completed, a net loss will appear in the ____.
a. / Income Statement Debit and Balance Sheet Credit columnsb. / Income Statement Credit and Balance Sheet Debit columns
c. / Income Statement Debit and Income Statement Credit columns
d. / Balance Sheet Debit and Balance Sheet Credit columns
____92.Acceptable component percentages should be determined _____.
a. / based only on industry standardsb. / based only on comparisons with prior fiscal periods
c. / based on industry standards and comparisons with prior fiscal periods
d. / based on the amount of each sales dollar that is considered acceptable
____93.The two types of journal entries needed to change general ledger account balances at the end of the fiscal period are ____.
a. / adjusting and correcting entries / c. / adjusting and closing entriesb. / closing and correcting entries / d. / none of the above
____94.To close the revenue account, the revenue account balance for the fiscal period is transferred into ____.
a. / the income summary account / c. / the cash accountb. / the partners' capital accounts / d. / none of the above
____95.Each unit of ownership in a corporation is ____.
a. / a share of stock / c. / a trade discountb. / capital stock / d. / none of the above
____96.Total shares of ownership in a corporation is ____.
a. / a share of stock / c. / a trade discountb. / capital stock / d. / none of the above
____97.Using a copy of the sales invoice as the source document for recording a sale on account transaction is an application of the accounting concept ____.
a. / Matching Expenses with Revenue / c. / Objective Evidenceb. / Historical Cost / d. / Realization of Revenue
____98.When the percentage of total sales on account method is used, the estimated uncollectible accounts expense is calculated by ____.
a. / multiplying total sales on account times the percentageb. / dividing total sales on account by the percentage
c. / multiplying total sales times the percentage
d. / dividing total sales by the percentage
____99.Estimating uncollectible accounts expense at the end of a fiscal period is an application of the accounting concept ____.
a. / Business Entity / c. / Realization of Revenueb. / Objective Evidence / d. / Matching Expenses with Revenue
____100.The journal entry to reopen an account that has been written off is debit Accounts Receivable and credit ____.
a. / Cash / c. / Uncollectible Accounts Expenseb. / Allowance for Uncollectible Accounts / d. / none of the above
Answer Key
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