Professional Documents
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Question:* What happen to an asset when it is depreciated? Question:* True or False: Recording a business transaction always
Answer: it decreases in value
requires at least a debit to one account and a credit to a different
account.
Question:* The books of original entry are known as the ......? Answer: True
Answer: Journals
system, the total of the debits must equal the total of the credits?
Answer: True
Question:* Under what section is the Accounts Receivable account
reported in the Balance Sheet?
Question:* When an owner contributes additional money to a business, Answer: Current assets
Question:* The golden rule of accounting says that, for every debit
Question:* Income that has been earned within a financial period but
entry, there must be...
has not yet been received in cash, is known as ...? Answer: a corresponding credit entry
Answer: accrued revenue
Question:* What is a listing of account numbers with account titles but Question:* An accounts payable ledger records which transactions?
Answer: Purchases made on credit
without amounts called?
Answer: Chart of Accounts
Question:* The calculation for gross profit is, Sales less ...?
Question:* An invoice being paid that relates to insurance cover for Answer: Cost of goods sold
the next accounting period should be reported in the financial
statements for this accounting period as .....?
Question:* Which of the following would NOT be considered a The
Answer: a prepaid expense
Bottom Line result in financial reporting?
Answer: Sales
Question:* What is the typical balance of a liability account reported Question:* Which of the following is more an accountant's role than a
in the Balance Sheet? bookkeeper's role?
Answer: credit balance Answer: reporting to governments and meeting statutory
requirements
Question:* An accounting principle that record asset such as land at Question:* If a supplier's invoice is recorded on the last day of the
original cost and ignoring increases in value is the: year for future services, one side of the entry should be accounts
Answer: Historical Cost Rule
payable, and the other entry should be to which account?
Answer: Prepaid Expense
Question:* Transactions that include revenue that has been earned but
Question:* When an asset is sold for cash, into which journal is the
not yet collected OR expenses that have been incurred but not yet
transaction recorded?
evidenced or paid, are known as...
Answer: Cash receipts journal
Answer: Accruals
Question:* Which statement correctly completes the sentence? If Cost Question:* When applying the accrual basis of accounting, how would
of Goods Sold increases, ........ you report expenses that covered a future period?
Answer: gross profit decreases Answer: As an asset - prepaid expenses
Question:* Under which account group is 'Accumulated depreciation' Question:* The accounting convention that requires the assets of a
reported in the financial statements? business to be reported in the financial statement at the actual price
Answer: Assets
that was paid to acquire them, is known as .....?
Answer: Historical cost
Question:* The owner of a small business writes himself a check for Question:* When an invoice for a service covers more than one
5,000 for personal use. How is this check recorded in the journal? accounting period, the journal entry will show an Expense and a:
Answer: credit Cash at bank account, debit Drawings Answer: Prepaid Expense
Question:* Recording revenues as they are earned and expenses as Question:* As at the balance date, prepaid expenses will be
they are incurred, regardless of when the money is exchanged, is represented in the financial statements as ....?
Answer: a debit balance current asset
known as ....?
Answer: Accrual accounting
Question:* A chart of accounts is an index of the accounts contained in Question:* Which account is NOT part of the profit and loss account?
Answer: Accumulated depreciation
the ... ?
Answer: General Ledger
Question:* TUV Co. performed services for Client Asim and billed them
Question:* If Assets totaled $40,000 and Owners Equity is 40% of the in December. TUV follows the accrual basis of accounting. In January
total Assets, what is the value of the Liabilities? TUV received the $5,000 from Asim and debited the Cash account:
Answer: $24,000
What account should it credit?
Answer: Account receivable
Question:* Which of the following is a current liability? Question:* Is it acceptable in accounting that some of the expenses
Answer: Accrued expenses
reported on the income statement are estimates?
Answer: Yes
Question:* A bank service charge on the bank statement will require a Question:* Only legal entities can be accounting entities under
_____________ to the general ledger account 'Cash at Bank' of the accounting conventions. True or False?
Answer: False
business.
Answer: credit entry
Question:* In times of rising costs for inventory, the Cost of Goods Sold general ledger?
Answer: it is debited
will be highest under which inventory valuation method?
Answer: LIFO
Question:* Which of the following is NOT a feature of a perpetual
Question:* What does a debit balance on a bank statement indicate? inventory system?
Answer: the bank account is overdrawn Answer: gross profit calculations cannot be done without a physical
stocktake
Question:* Investments securities held for the purpose of retiring Question:* Which of the following is NOT generally used as an
bonds payable shall be classified as: alternative name for an 'Income Statement'?
Answer: Current assets Answer: Net Profit Statement