| 1.(TCO 1) Which statement(s) summarizes the revenues and expenses of an entity? |
Balance sheet only
Statement of cash flows and income statement
Statement of retained earnings and statement of operations
Income statement only
| 2.(TCO 1) Assets appear on the: |
balance sheet.
income statement.
statement of retained earnings.
both balance sheet and the statement of retained earnings. |
| 3.(TCO 2) Purchasing a three-year insurance policy for cash would include a: |
debit to Cash and a credit to Prepaid Insurance
debit to Prepaid Insurance and a credit to Cash
debit to Prepaid Insurance and a credit to Insurance Expense
debit to Insurance Expense and a credit to Dividends |
| 4.(TCO 2) The normal balance of a liability account is a _____ and the normal balance of the common stock account is a _____. |
debit; credit
debit; debit
credit; debit
credit; credit |
| 5.(TCO 3) Which statement about a trial balance is NOT true |
The trial balance must be prepared at the end of the accounting period.
The trial balance is a list of all accounts with their balances.
The trial balance lists the balance sheet accounts and their balances first and then the income statement accounts and their balances.
The trial balance lists asset accounts and their balances first, then liability accounts and their balances, and then stockholders equity accounts and their balances. |
| 6.(TCO 3) The normal balance of Accounts Payable is a _____ because it is a(n) _____ account. |
credit; liability
debit; asset
credit; stockholders equity
debit; expense |
| 7.(TCO 4) Adjusting entries are: |
not needed under the accrual basis of accounting.
prepared at the option of the auditor.
prepared at the beginning of the accounting period to update all accounts.
prepared at the end of the accounting period to update certain accounts. |
| 8.(TCO 4) A journal entry contains a debit to a liability account and a credit to a revenue account. This is an example of a(n): |
accrued expense.
deferred expense.
unearned revenue.
accrued revenue. |
| 9.(TCO 5) In a bank reconciliation, items recorded by the company, but not yet recorded by the bank, include: |
bank collections.
bank fees.
outstanding checks.
NSF checks. |
| 10.(TCO 5) All of the following are purposes of internal control EXCEPT: |
to promote operational inefficiency.
to encourage adherence to company policies.
to ensure accurate and reliable accounts records.
to safeguard assets. |
