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