Claudia Voin
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Grade 12 Accounting Midterm Prep

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Claudia Voin
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Accounting - Unit 1: Grade 11 Review

Accounting - Unit 1: Grade 11 Review

Question 1 of 55

1

Debt refers to

Select one of the following:

  • an asset

  • the right side of an account

  • a liability

  • the left side of an account

Explanation

Question 2 of 55

1

Which of the following items is not an asset?

Select one of the following:

  • A/R

  • cash

  • A/P

  • supplies

Explanation

Question 3 of 55

1

The common characteristic possessed by all assets is?

Select one of the following:

  • long life

  • great monetary value

  • tangible nature

  • future economic benefit

Explanation

Question 4 of 55

1

Liabilities...

Select one of the following:

  • are future economic benefits

  • are existing debts and obligations

  • possess service potential

  • are things of value used by the business in its operation

Explanation

Question 5 of 55

1

Owner's Equity , in a proprietorship, can be described as

Select one of the following:

  • creditorship claims on total assets

  • ownership claim on total assets

  • benefactor's claim on total assets

  • debtor claim on total assets

Explanation

Question 6 of 55

1

Notes Payable are classified as

Select one of the following:

  • an asset

  • owner's equity

  • revenue

  • a liability

Explanation

Question 7 of 55

1

The basic accounting EQN is written as

Select one of the following:

  • Assets + Liabilities = Owner's Equity

  • Assets = Liabilities + Owner's Equity

  • Assets = Revenues - Expenses

  • Assets + Owner's Equity = Liabilities

Explanation

Question 8 of 55

1

A way to write the expanded accounting EQN is

Select one of the following:

  • Assets + Expenses + Withdrawals = Owner's Capital + Revenue

  • Assets = Liabilities + Owner's Capital + Revenue - Expenses - Withdrawals

  • Assets + Owner's Capital = Liabilities + Revenue - Expenses - Withdrawals

  • Assets + Revenue = Liabilities + Owner's Capital + Expenses - Withdrawals

Explanation

Question 9 of 55

1

What is a ledger?

Select one of the following:

  • a list of all assets

  • accounts grouped together in book or computerized form

  • a list of all liabilities

  • the debit side of an account

Explanation

Question 10 of 55

1

If total liabilities = $75 000 and OE = $150 000, total assets =

Select one of the following:

  • 75 000

  • 150 000

  • 250 000

  • 225 000

Explanation

Question 11 of 55

1

An activity that changes the value of a firm's assets, liabilities, or owner's equity is referred to as

Select one of the following:

  • a service business

  • an income statement

  • a net loss

  • a transaction

Explanation

Question 12 of 55

1

If the assets of a business increase by $16 000 during an accounting period and OE increases by $4 000, what is the amount and direction of the change in liabilities for the period?

Select one of the following:

  • + $12 000

  • - $12 000

  • + $20 000

  • = $16 000

Explanation

Question 13 of 55

1

If an individual asset, in a proprietorship, is increased then

Select one of the following:

  • there must be an equal decrease in a specific liability

  • there must be an equal decrease in OE

  • there must be an equal decrease in another asset

  • none of these is possible

Explanation

Question 14 of 55

1

Net income occurs when

Select one of the following:

  • A > L

  • R = E

  • R > E

  • R < E

Explanation

Question 15 of 55

1

If the OE account increases from the beginning of the year to the end of the year, then

Select one of the following:

  • NI is less than other drawings

  • a NL is less than owner drawings

  • additional owner investments are less than NL

  • NI is greater than owner drawings

Explanation

Question 16 of 55

1

Before the following transaction, Sam's Landscaping has $25 000 in assets, $15 000 in liabilities, and $10 000 in OE. Sam borrows $10 000 from the bank. What effect will this have on the accounting EQN?

Select one of the following:

  • assets will increase by $10 000 and liabilities will decrease by $10 000

  • liabilities will decrease by $10 000 and OE will increase by $10 000

  • assets will increase by $10 000 and liabilities will increase by $10 000

  • assets will decrease by $10 000 and OE will decrease by $10 000

Explanation

Question 17 of 55

1

An accountant has debited an asset account for $1 000 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Select one of the following:

  • nothing further must be done

  • debit an OE account for $500

  • debit another asset account for $500

  • credit a different asset account for $500

Explanation

Question 18 of 55

1

Eric paid $500 for repairs on the truck he uses in his landscaping business. The effect on the accounting EQN would include a(n)

Select one of the following:

  • increase to OE

  • decrease to liabilities

  • decrease to assets

  • increase to revenue

Explanation

Question 19 of 55

1

James received a cheque for $1 000 from one of his clients for work he had performed in a prior accounting period. How should James record the receipt for this cheque?

Select one of the following:

  • increase cash $1 000, decrease A/P $1 000

  • increase cash $1 000, decrease service revenue $1 000

  • increase cash $1 000, increase capital $1 000

  • increase cash $1 000, decrease A/R $1 000

Explanation

Question 20 of 55

1

The purchase of supplies on credit

Select one of the following:

  • decreases liabilities

  • has no effect on the accounting EQN

  • decreases assets

  • increases liabilities

Explanation

Question 21 of 55

1

Which of the following activities increases OE?

Select one of the following:

  • performance of services for client on credit

  • withdrawal of cash for personal

  • payment of office rent

  • purchase of supplies on credit

Explanation

Question 22 of 55

1

The three basic financial statements are

Select one of the following:

  • income statement, bank statement, balance sheet

  • income statement, statement of owner's equity, balance sheet

  • bank statement, invoice, and revenue statement

  • statement of owner's equity, balance sheet, worksheet

Explanation

Question 23 of 55

1

A listing of a firm's assets, liabilities, and OE at a specific point in time is known as

Select one of the following:

  • a statement of OE

  • a balance sheet

  • the accounting EQN

  • an income statement

Explanation

Question 24 of 55

1

Which of the following is not true of the terms debit and credit?

Select one of the following:

  • they can be abbreviated as DR and CR

  • they can be interpreted as increase or decrease

  • they can be used to describe the balance of an account

  • they can be interpreted to mean left or right

Explanation

Question 25 of 55

1

Which statement is true regarding the rules for debits and credits?

Select one of the following:

  • debits are always positive, credits always negative

  • debits on the right, credits on the left

  • a debit will decrease an asset

  • a credit will be recorded on the right side of an account

Explanation

Question 26 of 55

1

What is the change to the balance in OE when revenues were $1 500, expenses were $800, and withdrawals were $400?

Select one of the following:

  • an increase of $1 500

  • a decrease of $400

  • an increase of 300

  • an increase of $700

Explanation

Question 27 of 55

1

Tom invoices his customer $1 200 for services. The correct entry to record this transaction is

Select one of the following:

  • debit A/R $1 200 and credit deferred payments $1 200

  • debit cash $1 200 and credit service revenue $1 200

  • debit A/R $1 200 and service revenue $1 200

  • none of the above are correct

Explanation

Question 28 of 55

1

Which of the following is true?

Select one of the following:

  • when we receive cash, we credit the cash account

  • when we receive cash, we debit the revenue account

  • when we pay a bill, we debit the cash account

  • when we pay a bill, we credit the cash account

Explanation

Question 29 of 55

1

A TB is a list of all

Select one of the following:

  • business liabilities

  • ledger accounts and their balances

  • revenues and expenses

  • business assets

Explanation

Question 30 of 55

1

The normal balance of liabilities and OE is, respectively

Select one of the following:

  • credit and credit

  • debit and debit

  • debit and credit

  • credit and debit

Explanation

Question 31 of 55

1

An account will be said to have a credit balance if

Select one of the following:

  • the normal balance is a credit

  • there are more credit transactions than debit

  • the sum of the credit transactions is greater than that of the debit

  • the account is an OE account

Explanation

Question 32 of 55

1

A/R had a normal balance of $8 500 at the beginning of the month. During the month, the account had debit postings of $8 500 and credit postings of $10 000. The balance of A/R at the end of the month is a

Select one of the following:

  • $8 500 credit balance

  • $10 000 credit balance

  • $7 000 debit balance

  • $10 000 debit balance

Explanation

Question 33 of 55

1

The following accounts have normal balances as shown below. What is the TB total for debits and credits?
A/P - 1 500, A/R - 2 000, Capital - 4 000, Cash - 1 000, Equip - 5 000, Notes Payable - 3 500, Withdrawals - 1 000

Select one of the following:

  • 8 000 debit and 8 000 credit

  • 10 000 debit and 10 000 credit

  • 9 000 debit and 9 000 credit

  • 8 000 debit and 10 000 credit

Explanation

Question 34 of 55

1

What is the purpose of a TB?

Select one of the following:

  • to verify that all transactions are correct

  • to show net income

  • to show that all transactions have been recorded

  • to verify equality of debits and credits

Explanation

Question 35 of 55

1

The book of original entry is the

Select one of the following:

  • four-column account

  • journal

  • ledger

  • TB

Explanation

Question 36 of 55

1

The owner of a business purchases equipment by making a down payment with the balance owed on account. This transaction is recorded by debiting the

Select one of the following:

  • equip account and crediting the cash and A/P accounts

  • equip account and the A/P account and crediting the cash account

  • cash account and the equip account and crediting the A/P account

  • cash account and the A/P account and crediting the equip account

Explanation

Question 37 of 55

1

When a business transaction requires entries to more than one debit or more than one credit, it is called a

Select one of the following:

  • complex entry

  • compound entry

  • standard entry

  • double entry

Explanation

Question 38 of 55

1

Thomas' Dry Wall completed work on a house. Thomas received $3 500 when he finished the job and will receive the balance of $1 500 in 30 days. The correct journal entry to record this event is

Select one of the following:

  • debit cash $3 500 and credit service revenue $3 500

  • debit A/R $5 000 and credit cash $3 500 and service revenue $1 500

  • debit cash $3 500 and credit A/R $1 500 and service revenue $5 000

  • debit cash $3 500 and A/R $1 500 and credit service revenue $5 000

Explanation

Question 39 of 55

1

The journal entry to record the payment of Ralph's Plumbing and Repair electric bill of $175 for the month is

Select one of the following:

  • debit cash $175 and credit A/P $175

  • debit cash $175 and credit utilities expense $175

  • debit utilities expense $175 and credit cash $175

  • none of the above are correct

Explanation

Question 40 of 55

1

A term used for transferring information from the journal to the ledger is

Select one of the following:

  • transference

  • transposing

  • posting

  • referencing

Explanation

Question 41 of 55

1

When the new balance of an account is calculated

Select one of the following:

  • a debit posting is added if the account has a credit balance

  • a credit posting is subtracted if the account has a credit balance

  • a debit posting is subtracted if the account has a debit balance

  • a debit posting is subtracted if the account has a credit balance

Explanation

Question 42 of 55

1

What is a transposition error?

Select one of the following:

  • a math error involving an incorrectly placed decimal point

  • a recording error involving an incorrectly place decimal point

  • a posting error involving an incorrectly placed decimal point

  • a posting error involving a reversal of digits

Explanation

Question 43 of 55

1

An awareness of the normal balance of accounts would help you spot which of the following as an error in recording?

Select one of the following:

  • a debit balance in the drawings account

  • a credit balance in an expense account

  • a credit balance in a liability account

  • a credit balance in a revenue account

Explanation

Question 44 of 55

1

Which of the following errors will cause a TB to not balance?

Select one of the following:

  • journalizing a transaction twice

  • failure to record a transaction

  • failure to post part of an entry to the ledger

  • posting a transaction twice

Explanation

Question 45 of 55

1

Which of the following entries would cause a TB not to balance

Select one of the following:

  • a debit to cash for $360 and credit to equip for $360

  • a debit to cash for $400 and credit to A/P for $400

  • a debit to A/P for $560 and credit to A/P for $560

  • a debit to salaries expense for $780 and credit to salaries payable for $870

Explanation

Question 46 of 55

1

A TB would only help in detecting which of the following errors

Select one of the following:

  • a transaction not journalized

  • an entry posted twice

  • an entry using incorrect accounts

  • a transposition error when transferring the debit side of a journal entry to the ledger

Explanation

Question 47 of 55

1

Linda prepared the Tb and found that total debits were $19 000 and total credits were $21 500. Which of the following errors would cause the TB to be out of balance?

Select one of the following:

  • the payment of rent was recorded as a debit to cash for $2 500 and credit to rent expense for $2 500

  • the purchase of equip on account was recorded as a debit to equip for $2 500 and a credit to cash for $2 500

  • the receipt of a customer's payment was recorded as a credit to A/R for $1 250 ad a credit to cash for $1 250

  • the purchase of supplies was recorded as a debit to supplies expense for $1 250 and a credit to supplies for $1 250

Explanation

Question 48 of 55

1

If a purchase of supplies on account for $100 is journalized correctly but posted as a debit to the supplies account for $1 000 and a credit to A/P for $100, what effects will the error have?

Select one of the following:

  • the TB will be out of balance, but A/P account will be correct

  • the TB will be in balance

  • the TB will be in balance, and the supplies account will be correct

  • the TB will be out of balance, and both supplies account and the A/P account will be incorrect

Explanation

Question 49 of 55

1

The payment of a $450 invoice for utilities was recorded as a debit to rent expense for $540 and a credit to cash for $540. The entry to correct this mistake is

Select one of the following:

  • debit rent expense $90, credit cash $90

  • debit utilities expense $540, credit rent expense $540

  • debit cash $540, credit utilities expense $450 and rent expense $90

  • debit cash $90 and utilities expense $450, and credit rent expense $540

Explanation

Question 50 of 55

1

Trent received a $350 payment from one of his customers and incorrectly recorded this amount as a debit for $530 to cash and a credit to A/P for $530. The entry that will correct the error is

Select one of the following:

  • debit A/P $180, credit cash $180

  • debit A/R $530, credit sales $530

  • debit A/P 530, credit A/R $350 and cash $180

  • debit cash $350 and credit A/R $350

Explanation

Question 51 of 55

1

A business organized as a corporation

Select one of the following:

  • is not a separate legal entity in most provinces

  • requires that shareholders are personally liable for debts of the business

  • is owned by its shareholders

  • terminates when one of the owners dies

Explanation

Question 52 of 55

1

A partnership form of business organization

Select one of the following:

  • is a separate legal entity

  • is a common form of organization for professional businesses

  • enjoys an unlimited life

  • has limited liability

Explanation

Question 53 of 55

1

Which of the following is not an advantage of the corporate business form?

Select one of the following:

  • limited liability of shareholders

  • transferability of ownership

  • unlimited personal liability for shareholders

  • unlimited life

Explanation

Question 54 of 55

1

The accounting EQN for a corporation may be expressed as

Select one of the following:

  • Assets = Liabilities + Shareholders' Equity

  • Assets = Liabilities + Partners' Equity

  • Assets = Liabilities + Owner's Equity

  • all of the above

Explanation

Question 55 of 55

1

Accumulated earnings in a corporation are reported in

Select one of the following:

  • capital

  • share capital

  • retained earnings

  • dividends

Explanation

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