Download 6) The SEC and FASB are two organizations that are primarily

6) The SEC and FASB are two organizations that are primarily
responsible for establishing generally accepted accounting
principles. It is true that
A.
B.
C.
D.
the SEC is a private organization of accountants.
the SEC often mandates guidelines when no
accounting principles exist.
the SEC and FASB rarely cooperate in developing
accounting standards.
they are both governmental agencies.
7) Auditing is
A.
B.
C.
D.
a part of accounting that involves only recording of
economic events.
an area of accounting that involves such activities as cost
accounting, budgeting, and accounting information
systems.
conducted by the Securities and Exchange Commission to
ensure that registered financial statements are presented
fairly.
the examination of financial statements by a CPA in
order to express an opinion on their fairness.
8) All of the financial statements are for a period of time except
the
A.
B.
C.
D.
retained earnings.
balance sheet.
statement of cash flows.
income statement.
9) Which of the following statements is not true?
A.
B.
C.
D.
Expenses have normal debit balances.
Expenses decrease stockholders' equity.
Expenses are a negative factor in the computation of net
income.
Expenses increase stockholders' equity.
10) An account will have a credit balance if the
A.
B.
C.
D.
first transaction entered was a credit.
debits exceed the credits.
last transaction entered was a credit.
credits exceed the debits.
11) If a company has overdrawn its bank balance, then
A.
B.
C.
D.
its cash account will show a credit balance.
the cash account debits will exceed the cash account
credits.
it cannot be detected by observing the balance of the cash
account.
its cash account will show a debit balance.
12) Which of the following statements is true?
A.
B.
C.
D.
Credits decrease assets and decrease liabilities.
Credits decrease assets and increase
liabilities.
Debits decrease liabilities and decrease assets.
Debits increase assets and increase liabilities.
13) On June 1, 2008 Leno Inc. buys a copier machine for its
business and finances this purchase with cash and a note. When
journalizing this transaction, the company's accountant will
A.
B.
C.
D.
use two journal entries.
make a simple entry.
list the credit entries first, which is proper form for this
type of transaction.
make a compound entry.
14) Which of the following journal entries is recorded correctly
and in the standard format?
A) Wages Expense
Cash
Advertising Expense
B) Wages Expense
Advertising Expense
Cash
600
1,500
900
600
900
1,500
C) Cash
Wages Expense
Advertising Expense
D) Wages Expense
Advertising
Expense
1,500
600
900
60
0
90
0
1,50
0
Cash
A.
B.
C.
D.
A
B
C
D
15) On August 13, 2008, Dudbury Enterprises purchased office
equipment for $1,000 and office supplies of $200 on account.
Which of the following journal entries is recorded correctly and
in the standard format?
A) Office Equipment
Account Payable
Office Supplies
B) Office Equipment
Office Supplies
Account Payable
C) Accounts Payable
Office Equipment
Office Supplies
D) Office Equipment
Office Supplies
Accounts
Payable
1,000
1,200
200
1,000
200
1,200
1,200
1,000
200
1,00
0
200
1,20
0
A.
B.
C
.
D.
A
C
D
B
16) Adjusting entries are required
A.
B.
C.
D.
because some costs expire with the passage of time
and have not yet been journalized.
when expenses are recorded in the period in which they
are incurred.
when revenues are recorded in the period in which they
are earned.
when the company's profits are below the budget.
17) Accounts often need to be adjusted because
A.
B.
C.
D.
there are never enough accounts to record all the
transactions.
there are always errors made in recording transactions.
management can't decide what they want to report.
many transactions affect more than one time period.
18) The preparation of adjusting entries is
A.
B.
C.
D.
straight forward because the accounts that need
adjustment will be out of balance.
only required for accounts that do not have a normal
balance.
optional when financial statements are prepared.
often an involved process requiring the skills of a
professional.
19) Can financial statements be prepared directly from the adjusted
trial balance?
A.
B.
C.
D.
They cannot. The general ledger must be used.
No, the adjusted trial balance merely proves the equality
of the total debit and total credit balances in the ledger
after adjustments are posted. It has no other purpose.
They can because that is the only reason that an
adjusted trial balance is prepared.
Yes, adjusting entries have been recorded in the general
journal and posted to the ledger accounts.
20) Financial statements are prepared directly from the
A.
B.
C.
D.
general journal.
trial balance.
adjusted trial
balance.
ledger.