Quiz
Accounting Quiz - Financial Accounting Fundamentals
Questions in this quiz (82)
1Owners of business firms are the only people who need accounting information.
- ATrue
- BFalse
2Transactions that can be measured in dollars and cents are recorded in the financial information system.
- ATrue
- BFalse
3The hiring of a new company president is an economic event recorded by the financial information system.
- ATrue
- BFalse
4Management of a business enterprise is the major external user of information.
- ATrue
- BFalse
5Accounting communicates financial information about a business enterprise to both internal and external users.
- ATrue
- BFalse
6Accounting information is used only by external users with a financial interest in a business enterprise.
- ATrue
- BFalse
7Financial statements are the major means of communicating accounting information to interested parties.
- ATrue
- BFalse
8Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.
- ATrue
- BFalse
9The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
- ATrue
- BFalse
10The study of accounting will be useful only if a student is interested in working for a profit-oriented business firm.
- ATrue
- BFalse
11A new account is opened for each transaction entered into by a business firm.
- ATrue
- BFalse
12The recording process becomes more efficient and informative if all transactions are recorded in one account.
- ATrue
- BFalse
13When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.
- ATrue
- BFalse
14An account is often referred to as a T-Account because of the way it is constructed.
- ATrue
- BFalse
15A debit to an account indicates an increase in that account.
- ATrue
- BFalse
16If a revenue account is credited, the revenue account is increased.
- ATrue
- BFalse
17The normal balance of all accounts is a debit.
- ATrue
- BFalse
18Debit and credit can be interpreted to mean increase and decrease, respectively.
- ATrue
- BFalse
19The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.
- ATrue
- BFalse
20A credit balance in a liability account indicates that an error in recording has occurred.
- ATrue
- BFalse
21The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.
- ATrue
- BFalse
22Revenues are a subdivision of retained earnings.
- ATrue
- BFalse
23Under the double-entry system, revenues must always equal expenses.
- ATrue
- BFalse
24Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.
- ATrue
- BFalse
25Business documents can provide evidence that a transaction has occurred.
- ATrue
- BFalse
26Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.
- ATrue
- BFalse
27Transactions are entered in the ledger accounts and then transferred to journals.
- ATrue
- BFalse
28All business transactions must be entered first in the general ledger.
- ATrue
- BFalse
29A simple journal entry requires only one debit to an account and one credit to an account.
- ATrue
- BFalse
30A compound journal entry requires several debits to one account and several credits to one account.
- ATrue
- BFalse
31Many business transactions affect more than one time period.
- ATrue
- BFalse
32The time period assumption states that the economic life of a business entity can be divided into artificial time periods.
- ATrue
- BFalse
33The time period assumption is often referred to as the expense recognition principle.
- ATrue
- BFalse
34A company's calendar year and fiscal year are always the same.
- ATrue
- BFalse
35Accounting time periods that are one year in length are referred to as interim periods.
- ATrue
- BFalse
36Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.
- ATrue
- BFalse
37The cash basis of accounting is not in accordance with generally accepted accounting principles.
- ATrue
- BFalse
38The expense recognition principle requires that efforts be matched with accomplishments.
- ATrue
- BFalse
39Expense recognition is tied to revenue recognition.
- ATrue
- BFalse
40The revenue recognition principle dictates that revenue can be recognized in the accounting period in which cash is received.
- ATrue
- BFalse
41Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.
- ATrue
- BFalse
42Adjusting entries are often made because some business events are not recorded as they occur.
- ATrue
- BFalse
43Adjusting entries are recorded in the general journal but not posted to the accounts in the general ledger.
- ATrue
- BFalse
44Revenue received before it is earned and expenses paid before being used or consumed are both initially recorded as liabilities.
- ATrue
- BFalse
45Accrued revenues are revenues which have been received but not yet earned.
- ATrue
- BFalse
46The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.
- ATrue
- BFalse
47Accumulated Depreciation is a liability account and has a credit normal account balance.
- ATrue
- BFalse
48A liability - revenue account relationship exists with an unearned rent revenue adjusting entry.
- ATrue
- BFalse
49The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.
- ATrue
- BFalse
50Unearned revenue is a prepayment that requires an adjusting entry when services are performed.
- ATrue
- BFalse
51Asset prepayments become expenses when they expire.
- ATrue
- BFalse
52A contra asset account is subtracted from a related account in the balance sheet.
- ATrue
- BFalse
53If prepaid costs are initially recorded as an asset, no adjusting entires will be required in the future.
- ATrue
- BFalse
54The cost of a depreciable asset less accumulated depreciation reflects the look value of the asset.
- ATrue
- BFalse
55Accrued revenues are revenues that have been earned and received before financial statements have been prepared.
- ATrue
- BFalse
56An adjusting entry for accrued expenses results in an increase to an expense account and an increase to a liability account.
- ATrue
- BFalse
57Accrued expenses are expenses incurred but not yet paid or recorded at the statement date.
- ATrue
- BFalse
58Financial statements can be prepared from the information provided by an adjusted trial balance.
- ATrue
- BFalse
59The adjusted trial balance is the primary basis for the preparation of financial statement.
- ATrue
- BFalse
60The 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.
- ATrue
- BFalse
61Rent 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.
- ATrue
- BFalse
62An adjusting entry requiring a credit to Insurance Expense indicates that the initial transaction was charged to an asset account.
- ATrue
- BFalse
63A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet.
- ATrue
- BFalse
64If a worksheet is used, financial statements can be prepared before adjusting entries are journalized.
- ATrue
- BFalse
65If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.
- ATrue
- BFalse
66It 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.
- ATrue
- BFalse
67The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet.
- ATrue
- BFalse
68The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.
- ATrue
- BFalse
69The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.
- ATrue
- BFalse
70Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.
- ATrue
- BFalse
71The Dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.
- ATrue
- BFalse
72After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.
- ATrue
- BFalse
73Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.
- ATrue
- BFalse
74Closing the Dividends account to Retained Earnings is not necessary if net income is greater than dividends during the period.
- ATrue
- BFalse
75The Dividends account is a permanent account whose balance is carried forward to the next accounting period.
- ATrue
- BFalse
76Closing entries are journalized after adjusting entires have been journalized.
- ATrue
- BFalse
77The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.
- ATrue
- BFalse
78The post-closing trial balance is entered in the first two columns of a worksheet.
- ATrue
- BFalse
79A business entity has only one accounting cycle over is economic existence.
- ATrue
- BFalse
80The accounting cycle begins at the start of a new accounting period.
- ATrue
- BFalse
81Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account.
- ATrue
- BFalse
82Correcting entries are made any time an error is discovered even though it may not be at the end of an accounting period.
- ATrue
- BFalse
Information
- Description
- Chapters 1, 2, 3
- Author
- Natalie Balzert
- Language
- English
- Views
- 955
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