Ch. 3 - quiz Flashcards
Accounts receivable are an asset account. Thus, increases in accounts receivable are booked as debits.
True or False
True
Throughout the reporting period, expense accounts are usually only debited.
True or False
True
From the fundamental accounting equation it follows that during a year,
the sum of all debits must equal zero.
True or False
False
From the fundamental accounting equation it follows that over the complete lifetime of a company, the sum of all debits must equal zero.
True or False
False
From the fundamental accounting equation it follows that over any given period of time, the difference between the sum of debits and the sum of credits must equal zero.
True or False
True
Assets and equity show the resources of a company, liabilities are the claims on these resources.
True or False
False
The beginning balance of all asset accounts are always credit entries.
True or False
False
Which of the following is NOT an asset account?
A. Inventory
B. Accounts receivable
C. Accounts payable
D. Cash
C
The accounting equation can be stated as:
A. Assets + Shareholders’ Equity = Liabilities
B. Assets –Liabilities = Shareholders’ Equity
C. Assets = Liabilities - Shareholders’ Equity
D. Assets – Shareholders’ Equity + Liabilities = Zero
B
At the end of the current accounting period, account balances are as follows: Cash, € 180,000;
Accounts Receivable, € 75,000;
Share Capital, € 20,000;
Retained Earnings, € 65,000.
The company’s liabilities are …
A. € 170,000
B. € 210,000
C. € 190,000
D. € 70,000
A
The double entry accounting process …
A. … requires that all transactions effect at least two accounts.
B. … mandates that the sum of the debits equal that of the credits for each
transaction.
C. Neither A or B is correct.
D. both A and B are correct
D
How would cash collected from customers appear on the Statement of Cash Flows?
A. it would be reported only under the indirect method, not under the direct method
B. as an operating activity X
C. as an investing activity
D. as a financing activity
B
Which of the following transactions affects the cash flow from financing activities in a statement of cash flows in accordance with IAS 7 ?
A. payment of salaries to the employees
B. acquisition of an item of property, plant, and equipment
C. sale of products on credit
D. issuance of new shares
D
