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1. The type of business organization that can continue indefinitely is known as a:

1. sole proprietorship.
2. partnership.
3. corporation.
4. None of the above

2. Accounts Payable had a normal starting balance of $600. There were debit postings of $350 and credit postings of $200 during the month. The ending balance is

1. $750 credit.
2. $750 debit.
3. $450 debit.
4. $450 credit.

3. Which of the following is NOT part of the Purchasing function?

1. Reconciling the bank account
2. Preparing a Purchase Requisition
3. Recording a payment made to a creditor
4. Verifying the accuracy of a creditor's invoice

4. Which of the following is correct when speaking about a businesss assets?

1. Assets are things of value owned.
2. Assets must always equal Liabilities.
3. Assets are shown at their current value.
4. Assets are disclosed on the Income Statement.

5. Assets are equal to

1. liabilities + owner's equity.
2. liabilities - owner's equity.
3. liabilities - revenues.
4. revenues - expenses.

6. The process that begins with recording business transactions and includes the completion of the financial statements is the

1. calendar year.
2. natural business years.
3. fiscal year.
4. accounting cycle.

7. The first step of the accounting cycle is

1. recording journal entries.
2. posting to the ledger.
3. preparing a trial balance.
4. analyzing business transactions

8. Which of the following is NOT a main type of Special Journal?

1. Sales Journal
2. Personnel Journal
3. Cash Receipts Journal
4. Cash Payments Journal

9. Accounts of a single type are kept in this ledger.

1. supplemental ledger.
2. additional ledger.
3. subsidiary ledger.
4. None of these answers are correct.

10. Which of these statements about "T" accounts is FALSE?

1. They are used mainly in classroom demonstrations.
2. They have both a left side and a right side.
3. They are used extensively in computer accounting.
4. Each account has a normal balance which is either a debit or a credit.

11. During the month of October, Ford advertised on the Internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is

1. Accounts Payable debit; Cash credit.
2. Advertising Expense debit; Accounts Payable credit.
3. Advertising Expense debit; Cash credit.
4. A journal entry is not made in November.

12. Bookkeeping is primarily

1. preparing financial reports.
2. analyzing the company's financial position.
3. record-keeping.
4. preparing tax reports

13. The left side of any account is the

1. debit side.
2. credit side.
3. ending balance.
4. footings.

14. The process of initially recording business transactions in a journal is called

1. sliding.
2. posting.
3. Journalizing.
4. Transposing.

15. Renzi's Volleyball Gym purchased equipment for $1,400. It made a down payment of $800 with the remainder on account. The journal entry to record this transaction is

a. Cash 800

Accounts Receivable 800

b. Accounts Payable 600

Cash 800

Equipment 1,400

c . Supplies 1,400

Cash 800

Accounts Payable 600

d. Equipment 1,400

Accounts Payable 600

Cash 800

16. The proper format for a journal entry includes all of the following EXCEPT

1. the total amounts of debits must equal the total amount of credits.
2. skip a line between transactions.
3. the credit portion of the transaction is always first.
4. listed in chronological order.

17. Credit terms of 1/10, n/30 mean that

1. 1% discount is allowed if the bill is paid within 10 days, or the entire amount is due within 30 days.
2. a discount is allowed if the bill is paid within 30 days.
3. a discount is allowed if the bill is paid after 10 days.
4. a 1% discount is allowed if the customer pays the bill within 30 days.

18. When using a subsidiary ledger, the Accounts Receivable account in the general ledger is called the

1. master account.
2. subsidiary account.
3. receivable account.
4. controlling account

19. Which of the following is a characteristic of a sole proprietorship?

1. Business owned by more than one person
2. Easy to form
3. Each stockholder acts as an owner of the company
4. Can continue indefinitely.

20. Which account is not used with a perpetual inventory system?

1. Sales Returns and Allowances
2. Purchase Returns and Allowances
3. Inventory
4. Cost of Goods Sold

21. If the beginning capital was $14,000 and in a fiscal period there was revenue of $8,000, withdrawals of $3,000, and expenses of $1,500 then the ending capital would be

1. $26,500.
2. $23,500.
3. $17,500.
4. $20,500.

22. Cash had a normal starting balance of $600. There were debit postings of $200 and credit postings of $300 during the month. The ending balance is

1. $500 credit.
2. $1,100 debit.
3. $500 debit.
4. $1,100 credit.

23. "PR" in the general journal and general ledger stands for

1. peer reviewer.
2. posting reference.
3. prior receipt.
4. None of the above are correct.

24. The main reason most businesses do not use only a General Journal is

1. a General Journal is much too inefficient.
2. a General Journal is prone to many errors.
3. two or more clerks cannot use the General Journal at the same time.
4. both A and C are correct

25. The arrangements between buyer and seller as to when payments for merchandise are to be made are called

1. credit terms.
2. net cash.
3. cash on demand.
4. gross cash.

26. Which of the following statements about subsidiary ledgers is most accurate?

1. The subsidiary ledger accounts will never equal the control account in the general ledger.
2. The accounts receivable subsidiary ledger is a book of accounts that provides supporting detail for Accounts Receivable.
3. The subsidiary ledger accounts will equal the amount in the Sales account.
4. All of these answers are correct.

27. A form used in business to place an order for the buying of goods from a seller is

1. purchase requisition.
2. purchase order.
3. purchase discount.
4. purchases returns.

28. The side that increases the account balance, by the rules of debit and credit, is said to be the

1. debit side.
2. credit side.
3. normal balance.
4. None of these answers are correct.

29. The twelve-month period a business chooses for its accounting period is a(n)

1. calendar year.
2. accounting period.
3. fiscal year.
4. accounting cycle.

30. A chart of accounts

1. is set up in alphabetical order.
2. includes account balances.
3. is a listing of all the accounts used by a company.
4. All of the above are correct.

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