Accounting 201Chapter 02 Practice Test

Question 1

Which of the following transactions will increase total assets?
A) Provide services to customers on account. B) Purchase supplies for cash.
C) Collect cash from customer for services provided on account last month.
D) Pay dividends to current stockholders.

Answer 1

A

Question 2

Which of following transactions represents an external transaction?
A) Prepaid rent is used up through the passage of time.
B) Depreciation for office equipment is recorded.
C) Stockholders are paid a quarterly dividend.
D) Supplies purchased last month are used up.

Answer 2

C

Question 3

Which of the following decreases total stockholders’ equity?
A) Issuing common stock.
B) Purchasing equipment for cash.
C) Purchasing supplies on account.
D) Paying employees current month wages and salaries.

Answer 3

D

Question 4

Which of the following accounts is increased by a credit?   
A) Accounts Receivable.   
B) Cash.   
C) Accounts Payable.   
D) Salaries Expense.

Answer 4

C

Question 5

Which of the following shows a chronological record of all transactions?   
A) The general ledger.   
B) The chart of accounts.   
C) The trial balance.   
D) The general journal.

Answer 5

D

Question 6

A credit to Service Revenue will:   
A) Increase stockholders' equity.   
B) Decrease stockholders' equity.   
C) Increase liabilities.   
D) Decrease assets.

Answer 6

A

Question 7

Which of the following accounts normally has a credit balance?   
A) Cash.   
B) Accounts Receivable.   
C) Dividends.   
D) Retained Earnings.

Answer 7

D

Question 8

Measuring external transactions typically involves:   
A) Four steps.   
B) Five steps.   
C) Six steps.   
D) Seven steps.

Answer 8

C

Question 9

Which of the following correctly describes a list of accounts and their balances, showing that debits equal credits?   
A) General ledger.   
B) Trial balance.   
C) Journal.   
D) Chart of accounts.

Answer 9

B

Question 10

Which of the following mistakes would cause the accounting equation NOT to balance?
A) Increase in expenses, increase in cash.
B) Increase in assets, increase in liabilities.
C) Decrease in assets, decrease in liabilities. D) Increase in assets, increase in stockholders’ equity.

Answer 10

A

Question 11

What is the ultimate effect of recording expenses on stockholders’ equity?
A) Stockholders’ equity increases.
B) Stockholders’ equity decreases.
C) Stockholders’ equity is not affected.
D) The effect on stockholders’ equity depends on whether or not cash is paid.

Answer 11

B

Question 12

When a company provides services to a customer for cash, which of the following would be recorded?   
A) Debit Cash.   
B) Debit Service Revenue.   
C) Credit Service Revenue.   
D) Both a and c.

Answer 12

C