ACC-questions format-OU-for exam #1

Question 1

The _____ of a liability decreases both cash and accounts payable

Answer 1

Payment

Question 2

What is the difference between a shareholder and an owner of a corporation?

Answer 2

Nothing they are the same thing

Question 3

is Accounts payable a liability

Answer 3

true

Question 4

Dividends are the distribution of cash or other assets out of earnings to?

Answer 4

Stockholders

Question 5

Although ______ reduce retained earnings, they are not considered _______

Answer 5

Dividends, expenses

Question 6

A company purchases new manufacturing equipment using a loan from the bank, they plan on repaying the loan over 10 years what is this an example of?

Answer 6

A liability

Question 7

Assets will be increased by 40,000 if a company issues common stock for ______ And uses 30,000 of cash to purchase a truck

Answer 7

40,000

Question 8

If a company issues common stock for 40,000 and uses 30,000 to buy a new truck, assets will be increased by how much?

Answer 8

40,000 - 30,000 = 10,000 but 30,000 in equipment so 10,000 + 30,000 = 40,000

Question 9

If a company issues common stock for 40,000 and uses 30,000 of the cash to purchase a truck, assets will be increased by 10,000 True or False?

Answer 9

False

Question 10

How are retained earnings calculated?

Answer 10

Beginning balance + Net income - dividends. Net income = revenues - expenses 90,000 - 20,000 - 10,000 - 35,000 = 25,000
Question 11:

Question 11

The amount of cash at the end of the period, in the statement of cash flows, should also be reported in the?

Answer 11

Balance sheet

Question 12

The recording of journal entries with equal debit and credits is the basics of?

Answer 12

The double entry bookkeeping system

Question 13

Which of the following statements is true concerning a simple entry

Answer 13

A simply entry include one debit account and one credit account

Question 14

Liabilities and assets are on opposite sides of the accounting equation. How does this affect the related debits and credits?

Answer 14

Debits and credits increase and decrease accounts in an opposite manner for assets and liabilities

Question 15

Both dividends and retained earnings are stockholders equity accounts. Why do debits and credits act in opposite ways in these two accounts

Answer 15

Revenues increase retained earnings, so both accounts are increased with credits. Expenses and dividends decrease retained earnings, so these accounts are increased with debits

Question 16

Why is the double entry system designed so that assets and liabilities are increase and decreased with opposite debits and credits

Answer 16

Assets and liabilities are on opposite sides of the accounting equation

Question 17

What order are transactions in a journal recorded

Answer 17

Chronological order

Question 18

The journal can also be referred to as

Answer 18

The book of original entry

Question 19

The credit account is ____ just prior to writing the account name

Answer 19

indented

Question 20

What is the common term given to entering transaction data in the journal?

Answer 20

Journalizing

Question 21

Which of the following is referred to as the book of original entry?

Answer 21

Journal

Question 22

What is the purpose of the “explanation” of each transaction that appears in a journal entry?

Answer 22

It provides additional insight into the purpose of the activity recorded.

Question 23

When journalizing a transaction, what information should be placed in the reference column?

Answer 23

The account number

Question 24

Which of the following repeatedly occurs throughout the accounting cycle?

Answer 24

Recording transactions

Question 25

Before transaction data can be journalized, it must be

Answer 25

Analyzed

Question 26

Which of the following is NOT part of a complete journal entry?

Answer 26

The accounts balances after the entry has been posted

Question 27

Which of the following is true of a journal entry that is prepared with two credits and one debit?

Answer 27

There will be no error, as compound entries are permissible

Question 28

In journalizing a transaction,

Answer 28

the title of the credit account is indented

Question 29

Which of the following presents the correct order for the steps in preparing a journal entry?

Answer 29

Enter debit, enter credit and write an explanation.

Question 30

What is NOT the purpose or benefit of a journal?

Answer 30

It ensures that financial statements are always correct.

Question 31

What effect may result if specific account titles are not used in journalizing?

Answer 31

The financial statements may not be accurate.

Question 32

If a company fails to make an adjusting entry to record supplies expense for a period, then

Answer 32

expenses will be understated

Question 33

An entry increases Salary and Wages Expense by $5,000, decreases Salary and Wages Payable by $3,000, and decreases Cash by $8,000. What transaction does this reflect?

Answer 33

the entry reflects a $5,000 payment of wages and salaries for the current period and $3,000 for wages and salaries accrued previously.

Question 34

Which of the following statements is true regarding adjusting entries for Unearned Revenue?

Answer 34

An adjusting entry is made to debit a liability account and credit a revenue account.