Accounting Compend- Multiple Choice Flashcards
Basic accounting theory is based on:
- single entry
- double entry
- triple entry
- a double book
double entry
The group of accounts which you debit when increased are:
- assets and capital
- assets and income
- assets and expenses
- assets and liabilities
assets and expenses
The group of accounts which you credit to increase are:
- liabilities and capital
- liabilities and expenses
- liabilities and assets
- assets and expenses
liabilities and capital
When a funeral director buys a casket coach on credit, he would:
- debit cash and credit casket coach
- debit casket coach and credit accounts payable
- debit casket coach and credit cash
- credit casket coach and debit accounts payable
debit casket coach and credit accounts payable
The payment of rent by cash is recorded:
- debit cash and credit capital
- debit accounts payable and credit cash
- debit rent expense and credit cash
- debit cash and credit rent expense
debit rent expense and credit cash
Purchase of office supplies on credit is recorded by:
- debit office supplies and debit credit purchases
- debit purchases and credit accounts payable
- debit office supplies and credit accounts payable
- credit office supplies and debit accounts payable
Debit office supplies and credit accounts payable
A ledger is a book of:
- original entry
- accounts
- accounting statements
- trial balances
accounts
An entry on the debit side of a liability account indicates the account has been:
- increased
- decreased
- footed
- balanced
decreased
An entry made on the debit side of the proprietorship account indicates that the account has been:
- increased
- decreased
- footed
- balanced
decreased
An entry made on the debit side of an expense account indicates that the account has been:
- increased
- decreased
- footed
- balanced
increased
The beginning balance in the supplies account is $600. During the month an additional $800 worth of supplies were purchased. At the end of the month, an inventory of the supplies found that only $300 remained on hand. What would be the amount of the adjusting entry for the supplies account?
$1,100.00
An entry made on the debit side of an asset account indicates that the account has been:
- increased
- decreased
- footed
- balanced
increased
The things of value owned by a business are:
- assets
- capital
- revenue
- liabilities
assets
An accounting year ending on some date other than December 31st is called:
- current year
- calendar year
- fiscal year
- physical year
fiscal year
A person to whom a debt is owed is called a:
- debtor
- creditor
- debt
- credit
creditor
A plant asset was purchased by the funeral home costing $8,000. It has a useful life of 3 years and a salvage value of $2,000. Using the straight line method of depreciation, what would be the yearly amount of depreciation?
$2,000
Which of these does not appear on the Balance Sheet?
- Assets
- Liabilities
- Expenses
- Proprietorship
Expenses
Liabilities are all things a funeral home:
- owes
- owns
- spends
- sells
owes
A Profit and Loss Statement can be prepared:
- only once a month
- only once every three months
- only once every 6 months
- at any time
at any time
An entry on the credit side of an account indicates the account has been:
- increased
- decreased
- footed
- balanced
increased
When cash is spent in the acquisition of an asset the net worth of a business is:
- increased
- decreased
- footed
- not affected
not affected
The process of recording information in the ledger is called:
- journalizing
- balancing
- posting
- footing
posting
Accounts Receivable is a/an:
- asset account
- liability account
- capital account
- revenue account
asset account
Another term for Profit and Loss Statement is:
- Balance Sheet
- Income Statement
- Statement of Financial Condition
- Trial Balance
Income Statement
The amount of revenue from the sale of funeral services would be shown on the:
- Balance Sheet
- Profit and Loss Statement
- Statement of Financial Condition
- Statement of Assets and LIabilites
Profit and Loss Statement
The right side of a standard account is called the:
- profit side
- debit side
- credit side
- loss side
credit side
The totaling of a column in a journal or ledger account is called:
- journalizing
- footing
- posting
- closing
footing
Advertising expense would be reflected on the:
- Balance Sheet
- Statement of Owner’s Equity
- Income Statement
- Statement of Financial Condition
Income Statement
The accounts payable would be shown on the:
- Profit and Loss Statement
- Balance Sheet
- Accounts Receivable Ledger
- Income Statement
Balance Sheet
A group pf accounts constitutes as a/an:
- ledger
- journal
- posting
- special journal
ledger
If the total operating expenses section of the income statement is smaller than the total of the income section, the difference is:
- net worth
- net loss
- gross profit
- net profit
net profit
Expense means a/an:
- increase in owner’s equity
- decrease in owner’s equity
- increase in an asset
- increase in sales
decrease in owner’s equity
Which of the following accounts would be used to assist the accountant in an adjusting entry involving depreciation:
- Automobile
- Automobile Expense
- Accumulated Depreciation
- Allowance for doubtful accounts
Accumulated Depreciation
The difference between the two sides of the account is called the:
- account number
- account balance
- account schedule
- net profit
account balance
The title of an account which would normally have a credit balance is:
- cash
- accounts receivable
- advertising expense
- accounts payable
accounts payable
An increase in proprietorship as the result of a business transaction is a/an:
- asset
- liability
- net worth
- income
Income
A list of accounts that shows the arrangement of the accounts in the ledger is called:
- Trial Balance
- Balance Sheet
- Chart of Accounts
- Accounts Receivable Ledger
Chart of Accounts
Double entry book keeping means an entry was made:
- in a double book
- in a journal and ledger
- as an asset and a liability
- as a debit and credit
as a debit and credit
The proprietorship of a business may be increased by:
- net income and borrowing from banks
- net income and investment of assets in the business by the owner
- collection of accounts receivable and borrowing from banks
- borrowing from the banks and purchases of assets on credit.
net income and investment of assets in the business by the owner
The proprietorship of a business may be decreased by:
- net income and borrowing from banks
- net income and investment of assets in the business by the owner
- collection of accounts receivable and borrowing from banks
- expenses and withdrawals of assets from the business by the owner.
expenses and withdrawals of assets from the business by the owner.
To establish a petty cash fund, one would:
- debit cash and credit petty cash
- debit accounts payable and credit cash
- debit petty cash and credit cash
- debit cash and credit accounts payable
debit petty cash and credit cash
The abbreviation for “debit” is:
- Db.
- Dr.
- Dt.
- Dbt.
Dr.
The abbreviation for “credit” is:
- Cd.
- Ct.
- Cr.
- Cred.
Cr.
A person who signs a check or draft ordering payment to be made is called the:
- drawee
- drawer
- payee
- maker
drawer
A person or concern, usually a bank, that has been ordered to make a payment on a check or draft is called the:
- drawee
- drawer
- payee
- maker
drawee
A person or company who will receive payment on a promissory note, check, or draft or money order is called the:
- drawee
- drawer
- payee
- maker
payee
FICA refers to:
- federal income tax
- state income tax
- city tax
- social security
social security
Property of a relatively permanent nature used in the operation of a business and not intended for resale is called:
- current asset
- fixed asset
- current liability
- fixed liability
fixed asset
Debts that are not due and payable within a year are called:
- current assets
- fixed assets
- current liabilities
- fixed liabilities
fixed liabilities
The difference between cost of goods sold and their selling price is called:
- net profit
- gross profit
- ending inventory
- cost of goods available for sale
gross profit
The excess of current assets over current liabilities is called:
- working capital
- total capital
- net worth
- overhead
working capital
A written promise of the customer to pay the business a sum of money at a future date is called a/an:
- note payable
- note receivable
- accounts payable
- accounts receivable
note receivable
Which of these does not qualify as a current asset?
- Cash
- Accounts receivable
- Office Supplies
- Land
Land
A synonym for fair wear and tear of a durable asset is:
- obsolescence
- antiquated
- depreciation
- redundant
depreciation
A language of business employed to communicate financial information based upon the recording, classification, summarization, and interpretation of financial data is called:
- accounting
- budgeting
- management
- merchandising
Accounting
Assets= Liabilities + Owner’s Equity is the:
- formula for determining net worth
- accounting equation
- formula for GAAP
- expanded accounting equation
accounting equation
The increase in net worth due to the excess of income over costs and expenses is called:
- principal
- loss
- profit
- overhead
profit
Money paid for the use of money is called:
- interest
- bad debts
- principal
- petty cash
interest
The difference between net sales and cost of goods sold:
- principal
- interest
- sales tax
- gross margin
gross margin
Goods purchased for resale at a profit:
- supplies
- capital
- fixed assets
- merchandise
merchandise
A disbursement is a:
- budget
- payment
- receipt
- footing
payment
What would be the closing entry to close the revenue account?
- Debit expense and revenue summary, credit revenue
- Debit revenue, credit expenses
- Debit revenue, credit expense and revenue summary
- Debit capital, credit revenue
Debit revenue, credit expenses and revenue summary
Income received, but not yet earned is:
- a bad debt
- net profit
- deferred income
- interest
deferred income
A paper showing quantity, description, prices of items, total amount of purchase, and terms of payment is a/an:
- invoice
- ledger
- journal
- deposit slip
invoice
One who has made a sale is called a/an:
- consignor
- maker
- payee
- vendor
vendor
A estimate of revenue and probable expense for a given period of time is a:
- balance sheet
- bank statement
- budget
- bill
budget
The person or business concern to whom a shipment is made is a:
- vendee
- consignee
- payee
- drawee
consignee
A distribution of profits of a corporation to its stockholders as declared by the board of director is:
- gross earnings
- interest
- investment
- dividend
dividend
The person who orders the bank to make payment of a financial instrument is properly termed a/an:
- payee
- drawee
- drawer
- endorser
drawer
The sole owner of a business is a:
- maker
- drawer
- proprietor
- partner
proprietor
A fund of currency and coin establishment for the payment of small amounts of money is:
- accounts payable
- petty cash
- fixed assets
- drawing account
petty cash
The difference between total sales and sales returns and allowances is:
- net profit
- net sales
- net worth
- net loss
net sales
The amount added to the cost of an article to determine the selling price of that article is the:
- mark-up
- other income
- net profit
- interest
Mark-up
A total, written in small pencil figures, under the last entry in a column is the:
- assets
- balance
- journalizing
- footing
footing
A double line under the last entry on a T-account means:
- the entry is complete
- there is more to do on the entry
- do not post this entry
- the entry is correct
the entry is complete
Increases in the owner’s equity resulting from business operation is known as:
- interest
- principle
- overhead
- income
income
That portion of a plant assets original cost that cannot be depreciated is called:
- mark-up
- cost
- scrap value
- take home pay
scrap value
A decrease in net worth due to excess of costs and expenses over income is:
- proprietorship
- retained earnings
- take home pay
- loss
loss
The merchandise that a business keeps on hand for sale is the:
- inventory
- fixed assets
- overhead
- supplies
inventory
Which of the following represents the difference between the total assets and total liabilities?
- Owner’s Equity
- Net Worth
- Net Income
- Capital
- 1 only
- 1 & 2 only
- 1,2,&4 only
- 1,3,&4 only
1,2,& 4 only
The holder or person owning stock in a corporation is the:
- accountant
- maker
- stockholder
- director
stockholder
At the end of the month, a funeral home’s assets totaled $50,000; the liabilities totaled $20,000; revenue for the month totaled $6,000; and the total of the expenses amounted to $4,000. Which of the following statements are true?
- owner’s equity= $70,000
- owner’s equity = $30,000
- net income = $2,000
- net loss =
- 1 & 2
- 2 & 3
- 1 & 4
- 2 & 4
2 & 3
The basic accounting theory is based on:
- single entry
- double entry
- triple entry
- both a & b
double entry
The acronym REID is used when:
- closing temporary accounts
- making adjustments to the ledger
- correcting journal entries
- posting journal entries to the ledger
closing temporary accounts
The period of time required to purchase goods and services and turn them back into cash is called:
- the accounting cycle
- a fiscal year
- the normal operating cycle
- a calendar year
the normal operating cycle
A ledger is a book of:
- accounting statements
- trial balance
- original entry
- accounts
accounts
An entry on the debit side of the owner’s equity indicates that the account has been:
- increased
- decreased
- neither
- both
decreased
An entry on the credit side of an expense account indicates the account has been:
- adjusted
- closed
- increased
- balanced
closed
The book of original entry is in:
- alpha-numeric order
- chronological order
- numeric order
- highest to lowest order
chronological order
The debts one owes are:
- assets
- liabilities
- income
- expenses
liabilities
The things one owns are:
- capital accounts
- assets
- liabilities
- revenues
assets
Sales minus cost of goods sold equals:
- net profit
- gross profit
- overhead
- operation expenses
gross profit
The amount of depreciation taken during the current fiscal year is properly termed:
- accumulated depreciation
- depreciation expense
- current depreciation
- cumulative depreciation
depreciation expense
The decrease in the value of a fixed asset is called:
- a discount
- an obsolescence
- depreciation
- credit
depreciation
The process of recording information in the ledger is called:
- journalizing
- balancing
- posting
- editing
posting
sThe primary purpose of a business is:
- sales
- service
- prestige
- profit
profit
The only time the debit side of the revenue account is used is when you make:
- adjusting entries
- posting entries
- journalizing entries
- closing entries
closing entries
When cash is spent in the acquisition of an asset the impact on the accounting equation is:
- the asset cash is debited
- the asset cash is credited
- the new asset is credited
- owner’s equity is debited
the asset cash is credited
An entry on the credit side of a liability account indicates that the account has been:
- increased
- decreased
- balanced
- audited
increased
Accounts payable is a/an:
- asset account
- liability account
- owner’s equity account
- expense account
liability account
Good will is classified as a/an:
- intangible asset
- liability account
- revenue account
- tangible asset
intangible asset
Another name for Profit and Loss Statement is:
- Balance Sheet
- Income Statement
- Statement of Financial Condition
- Work Sheet
Income Statement
The amount of income from the sale of funeral services would be shown on which formal financial statement?
- Balance Sheet
- Profit and Loss Statement
- Work Sheets
- Trial Balance
Profit and Loss Statement
The left side of a standard account is called the:
- credit side
- debit side
- profit side
- sales side
debit side
Income earned but not received is called:
- fiscal income
- accrued income
- deferred income
- future income
accrued income
The totaling of a column of a journal or ledger is called:
- journalizing
- footing
- summarizing
- posting
footing
The cost of operating a business is called:
- accounts payable
- fixed liabilities
- overhead
- revenue
overhead
Working capital is a measure of:
- liquidity
- profitability
- leverage
- investing activities
liquidity
The debit side of the T-account is:
- plus side
- minus side
- right side
- left side
left side
A book in which the daily transaction of a business are first written is the:
- ledger
- schedule
- index
- journal
journal
The credit side of the T-account is:
- plus side
- minus side
- right side
- left side
right side
A decrease in owners equity resulting from a business transaction is a/an:
- expense
- liability
- net worth
- income
expense
An increase to which of the accounts will increase owner’s equity?
- Account Payable
- Drawing
- Client Fees
- Rent Expense
Client Fees
A term which is used synonymously with operating expenses is:
- net sales
- overhead
- gross profit
- cost of goods sold
Overhead
Accounts receivable are examples of:
- assets
- liabilities
- proprietorship
- income
assets
Checks returned to the depositor that have been paid by the bank are:
- canceled checks
- deposit checks
- order checks
- outstanding checks
canceled checks
A check that has been issued but not presented for payment to a bank is called:
- cancelled check
- deposited check
- order check
- outstanding check
outstanding check
Accounts receivable which are uncollectable are:
- incurred income
- accrued income
- fixed assets
- bad debt
bad debts
A ledger must contain:
- assets
- liabilities
- all accounts
- cash disbursed
all accounts
A loan from a bank secured by property is:
- an asset
- a note receivable
- a mortgage payable
- an account payable
a mortgage payable
Salary expense is considered to be:
- a cost of goods sold
- capitalization
- an operating expense
- fixed expense
an operating expense
Posting is a/an:
- form of advertising
- transportation of figures
- recording of a liability
- transfer of figures from the journal to the ledger
Transfer of figures from the journal to the ledger
When delivery revenue is earned on account, which accounts increase and decrease?
- Cash increases and revenue increases
- Accounts receivable increases and revenues increases
- Accounts receivable increases and revenues decreases
- Accounts receivable decreases and revenues decreases
Accounts receivable increases and revenues increases
A special fund for use in disbursing small sums of money is called a/an:
- petty cash fund
- working fund
- impress fund
- loan fund
petty cash fund
A journal designed for recording a particular type of transaction is known as a/an:
- general ledger
- general journal
- special journal
- combination journal
special journal
If a funeral home sells a funeral service on a 30 day account, the entry to record the transaction would be to:
- debit sales; credit accounts receivable
- debit accounts receivable; credit sales
- debit accounts payable; credit purchases
- debit notes receivable; credit sales
Debit accounts receivable; credit sales
If a funeral director receives payment from a client who had purchased a service on a 30 day account, he would make which of the following entries in his journal:
- debit cash; credit accounts receivable
- debit accounts receivable; credit cash
- debit purchases; credit cash
- debit cash; credit sales
debit cash; credit accounts receivable
If a funeral director purchases caskets from a casket manufacturer on a 30 day account, he would record the transaction as follows:
- debit sales; credit purchases
- debit purchases; credit cash
- debit purchases; credit accounts receivable
- debit purchases; credit accounts payable
debit purchases; credit accounts payable
A funeral car is purchased by a funeral home for $30,000. The vehicle will be used for 5 years and then replaced. If the estimated salvage value will be $5,000, what will be the amount of yearly depreciation using the straight line method of depreciation for computation?
- $2000
- $3500
- $5000
- $6500
$5000
David O’Dell is an employee of Mid-Cities Embalming Service and is paid a salary of $1850 per month. He is also paid time and a half for all hours worked in excess of 40 hours per week. If Mr. O’Dell worked 62 hours last week, his gross earnings for the period would be:
- $569.41
- $629.14
- $779.14
- $869.41
$779.14
John Smith is employed at a local funeral home and is paid an hourly rate of $5 per hour. He is also paid time and a half for any hours worked in excess of 40 hours per week. For the current pay period, he worked a total of 60 hours. If his FICA is 6% and his withholding tax is 10%, what is his take home pay for the week?
- $329
- $315.85
- $350
- $294
$294
Liability accounts are identified by the account title followed by the word:
- expense
- revenue
- payable
- drawing
payable
Expenses are listed on which of the following reports:
- Profit and Loss Statement
- Statement of Financial Condition
- Income Statement
- Balance Sheet
- 1 & 2
- 1 & 3
- 2 & 4
- 3 & 4
1 & 3
The report that shows the financial condition of the business at a point in time is called the:
- Income Statement
- Statement of Financial Condition
- Balance Sheet
- Profit and Loss Statement
- 1 & 2
- 2 & 3
- 1 & 4
- 3 & 4
2 & 3
The accounting equation may be stated as:
- liabilities = assets + owner’s equity
- assets + liabilities = owner’s equity
- assets= liabilities + owner’s equity
- assets - liabilities = owner’s equity
- 1 & 2
- 1 & 3
- 2 & 4
- 3 & 4
3 & 4
When you recognize revenue when it is earned, and expenses when they are incurred you are operating under the:
- cash basis of accounting
- modified cash basis of accounting
- accrual basis of accounting
- fiscal basis of accounting
accrual basis of accounting
The account that provides a current or future benefit to the business is properly termed:
- a liability account
- a drawing account
- an expense account
- an asset account
an asset account
Methods of depreciation that allow the business to recover the cost early in the life of the asset include:
- double declining balance
- straight line depreciation
- sum of the year’s digits
- accumulated depreciation
- 1 & 3
- 2 & 3
- 1 & 4
- 2 & 4
1 & 3
