Accounting Quiz - Financial Accounting Fundamentals

Question 1 of 82

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Owners of business firms are the only people who need accounting information.

Select one of the following:

  • True
  • False

Question 2 of 82

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Transactions that can be measured in dollars and cents are recorded in the financial information system.

Select one of the following:

  • True
  • False

Question 3 of 82

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The hiring of a new company president is an economic event recorded by the financial information system.

Select one of the following:

  • True
  • False

Question 4 of 82

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Management of a business enterprise is the major external user of information.

Select one of the following:

  • True
  • False

Question 5 of 82

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Accounting communicates financial information about a business enterprise to both internal and external users.

Select one of the following:

  • True
  • False

Question 6 of 82

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Accounting information is used only by external users with a financial interest in a business enterprise.

Select one of the following:

  • True
  • False

Question 7 of 82

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Financial statements are the major means of communicating accounting information to interested parties.

Select one of the following:

  • True
  • False

Question 8 of 82

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Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.

Select one of the following:

  • True
  • False

Question 9 of 82

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The origins of accounting are attributed to Luca Pacioli, a famous mathematician.

Select one of the following:

  • True
  • False

Question 10 of 82

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The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm.

Select one of the following:

  • True
  • False

Question 11 of 82

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A new account is opened for each transaction entered into by a business firm.

Select one of the following:

  • True
  • False

Question 12 of 82

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The recording process becomes more efficient and informative if all transactions are recorded in one account.

Select one of the following:

  • True
  • False

Question 13 of 82

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When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.

Select one of the following:

  • True
  • False

Question 14 of 82

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An account is often referred to as a T-Account because of the way it is constructed.

Select one of the following:

  • True
  • False

Question 15 of 82

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A debit to an account indicates an increase in that account.

Select one of the following:

  • True
  • False

Question 16 of 82

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If a revenue account is credited, the revenue account is increased.

Select one of the following:

  • True
  • False

Question 17 of 82

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The normal balance of all accounts is a debit.

Select one of the following:

  • True
  • False

Question 18 of 82

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Debit and credit can be interpreted to mean increase and decrease, respectively.

Select one of the following:

  • True
  • False

Question 19 of 82

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The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Select one of the following:

  • True
  • False

Question 20 of 82

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A credit balance in a liability account indicates that an error in recording has occurred.

Select one of the following:

  • True
  • False

Question 21 of 82

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The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.

Select one of the following:

  • True
  • False

Question 22 of 82

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Revenues are a subdivision of retained earnings.

Select one of the following:

  • True
  • False

Question 23 of 82

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Under the double-entry system, revenues must always equal expenses.

Select one of the following:

  • True
  • False

Question 24 of 82

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Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.

Select one of the following:

  • True
  • False

Question 25 of 82

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Business documents can provide evidence that a transaction has occurred.

Select one of the following:

  • True
  • False

Question 26 of 82

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Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.

Select one of the following:

  • True
  • False

Question 27 of 82

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Transactions are entered in the ledger accounts and then transferred to journals.

Select one of the following:

  • True
  • False

Question 28 of 82

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All business transactions must be entered first in the general ledger.

Select one of the following:

  • True
  • False

Question 29 of 82

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A simple journal entry requires only one debit to an account and one credit to an account.

Select one of the following:

  • True
  • False

Question 30 of 82

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A compound journal entry requires several debits to one account and several credits to one account.

Select one of the following:

  • True
  • False

Question 31 of 82

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Many business transactions affect more than one time period.

Select one of the following:

  • True
  • False

Question 32 of 82

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The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Select one of the following:

  • True
  • False

Question 33 of 82

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The time period assumption is often referred to as the expense recognition principle.

Select one of the following:

  • True
  • False

Question 34 of 82

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A company's calendar year and fiscal year are always the same.

Select one of the following:

  • True
  • False

Question 35 of 82

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Accounting time periods that are one year in length are referred to as interim periods.

Select one of the following:

  • True
  • False

Question 36 of 82

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Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.

Select one of the following:

  • True
  • False

Question 37 of 82

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The cash basis of accounting is not in accordance with generally accepted accounting principles.

Select one of the following:

  • True
  • False

Question 38 of 82

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The expense recognition principle requires that efforts be matched with accomplishments.

Select one of the following:

  • True
  • False

Question 39 of 82

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Expense recognition is tied to revenue recognition.

Select one of the following:

  • True
  • False

Question 40 of 82

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The revenue recognition principle dictates that revenue can be recognized in the accounting period in which cash is received.

Select one of the following:

  • True
  • False

Question 41 of 82

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Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

Select one of the following:

  • True
  • False

Question 42 of 82

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Adjusting entries are often made because some business events are not recorded as they occur.

Select one of the following:

  • True
  • False

Question 43 of 82

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Adjusting entries are recorded in the general journal but not posted to the accounts in the general ledger.

Select one of the following:

  • True
  • False

Question 44 of 82

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Revenue received before it is earned and expenses paid before being used or consumed are both initially recorded as liabilities.

Select one of the following:

  • True
  • False

Question 45 of 82

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Accrued revenues are revenues which have been received but not yet earned.

Select one of the following:

  • True
  • False

Question 46 of 82

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The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

Select one of the following:

  • True
  • False

Question 47 of 82

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Accumulated Depreciation is a liability account and has a credit normal account balance.

Select one of the following:

  • True
  • False

Question 48 of 82

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A liability - revenue account relationship exists with an unearned rent revenue adjusting entry.

Select one of the following:

  • True
  • False

Question 49 of 82

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The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Select one of the following:

  • True
  • False

Question 50 of 82

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Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

Select one of the following:

  • True
  • False

Question 51 of 82

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Asset prepayments become expenses when they expire.

Select one of the following:

  • True
  • False

Question 52 of 82

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A contra asset account is subtracted from a related account in the balance sheet.

Select one of the following:

  • True
  • False

Question 53 of 82

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If prepaid costs are initially recorded as an asset, no adjusting entires will be required in the future.

Select one of the following:

  • True
  • False

Question 54 of 82

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The cost of a depreciable asset less accumulated depreciation reflects the look value of the asset.

Select one of the following:

  • True
  • False

Question 55 of 82

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Accrued revenues are revenues that have been earned and received before financial statements have been prepared.

Select one of the following:

  • True
  • False

Question 56 of 82

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An adjusting entry for accrued expenses results in an increase to an expense account and an increase to a liability account.

Select one of the following:

  • True
  • False

Question 57 of 82

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Accrued expenses are expenses incurred but not yet paid or recorded at the statement date.

Select one of the following:

  • True
  • False

Question 58 of 82

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Financial statements can be prepared from the information provided by an adjusted trial balance.

Select one of the following:

  • True
  • False

Question 59 of 82

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The adjusted trial balance is the primary basis for the preparation of financial statement.

Select one of the following:

  • True
  • False

Question 60 of 82

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The adjusting entry at the end of the period to record an expired cost may be different depending on whether the cost was initially recorded as an asset or an expense.

Select one of the following:

  • True
  • False

Question 61 of 82

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Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

Select one of the following:

  • True
  • False

Question 62 of 82

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An adjusting entry requiring a credit to Insurance Expense indicates that the initial transaction was charged to an asset account.

Select one of the following:

  • True
  • False

Question 63 of 82

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A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet.

Select one of the following:

  • True
  • False

Question 64 of 82

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If a worksheet is used, financial statements can be prepared before adjusting entries are journalized.

Select one of the following:

  • True
  • False

Question 65 of 82

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If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.

Select one of the following:

  • True
  • False

Question 66 of 82

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It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet.

Select one of the following:

  • True
  • False

Question 67 of 82

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The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet.

Select one of the following:

  • True
  • False

Question 68 of 82

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The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.

Select one of the following:

  • True
  • False

Question 69 of 82

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The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.

Select one of the following:

  • True
  • False

Question 70 of 82

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Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.

Select one of the following:

  • True
  • False

Question 71 of 82

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The Dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

Select one of the following:

  • True
  • False

Question 72 of 82

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After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.

Select one of the following:

  • True
  • False

Question 73 of 82

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Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.

Select one of the following:

  • True
  • False

Question 74 of 82

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Closing the Dividends account to Retained Earnings is not necessary if net income is greater than dividends during the period.

Select one of the following:

  • True
  • False

Question 75 of 82

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The Dividends account is a permanent account whose balance is carried forward to the next accounting period.

Select one of the following:

  • True
  • False

Question 76 of 82

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Closing entries are journalized after adjusting entires have been journalized.

Select one of the following:

  • True
  • False

Question 77 of 82

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The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.

Select one of the following:

  • True
  • False

Question 78 of 82

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The post-closing trial balance is entered in the first two columns of a worksheet.

Select one of the following:

  • True
  • False

Question 79 of 82

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A business entity has only one accounting cycle over is economic existence.

Select one of the following:

  • True
  • False

Question 80 of 82

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The accounting cycle begins at the start of a new accounting period.

Select one of the following:

  • True
  • False

Question 81 of 82

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Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account.

Select one of the following:

  • True
  • False

Question 82 of 82

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Correcting entries are made any time an error is discovered even though it may not be at the end of an accounting period.

Select one of the following:

  • True
  • False
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Accounting Quiz - Financial Accounting Fundamentals

Natalie Balzert
Quiz by , created about 2 years ago

Chapters 1, 2, 3

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Natalie Balzert
Created by Natalie Balzert about 2 years ago
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