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Accounting Quiz - Financial Accounting Fundamentals

Description

Chapters 1, 2, 3
Natalie Balzert
Quiz by Natalie Balzert, updated more than 1 year ago
Natalie Balzert
Created by Natalie Balzert over 9 years ago
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Resource summary

Question 1

Question
Owners of business firms are the only people who need accounting information.
Answer
  • True
  • False

Question 2

Question
Transactions that can be measured in dollars and cents are recorded in the financial information system.
Answer
  • True
  • False

Question 3

Question
The hiring of a new company president is an economic event recorded by the financial information system.
Answer
  • True
  • False

Question 4

Question
Management of a business enterprise is the major external user of information.
Answer
  • True
  • False

Question 5

Question
Accounting communicates financial information about a business enterprise to both internal and external users.
Answer
  • True
  • False

Question 6

Question
Accounting information is used only by external users with a financial interest in a business enterprise.
Answer
  • True
  • False

Question 7

Question
Financial statements are the major means of communicating accounting information to interested parties.
Answer
  • True
  • False

Question 8

Question
Bookkeeping and accounting are one and the same because the bookkeeping function includes the accounting process.
Answer
  • True
  • False

Question 9

Question
The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Answer
  • True
  • False

Question 10

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

Question 11

Question
A new account is opened for each transaction entered into by a business firm.
Answer
  • True
  • False

Question 12

Question
The recording process becomes more efficient and informative if all transactions are recorded in one account.
Answer
  • True
  • False

Question 13

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

Question 14

Question
An account is often referred to as a T-Account because of the way it is constructed.
Answer
  • True
  • False

Question 15

Question
A debit to an account indicates an increase in that account.
Answer
  • True
  • False

Question 16

Question
If a revenue account is credited, the revenue account is increased.
Answer
  • True
  • False

Question 17

Question
The normal balance of all accounts is a debit.
Answer
  • True
  • False

Question 18

Question
Debit and credit can be interpreted to mean increase and decrease, respectively.
Answer
  • True
  • False

Question 19

Question
The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.
Answer
  • True
  • False

Question 20

Question
A credit balance in a liability account indicates that an error in recording has occurred.
Answer
  • True
  • False

Question 21

Question
The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.
Answer
  • True
  • False

Question 22

Question
Revenues are a subdivision of retained earnings.
Answer
  • True
  • False

Question 23

Question
Under the double-entry system, revenues must always equal expenses.
Answer
  • True
  • False

Question 24

Question
Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.
Answer
  • True
  • False

Question 25

Question
Business documents can provide evidence that a transaction has occurred.
Answer
  • True
  • False

Question 26

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

Question 27

Question
Transactions are entered in the ledger accounts and then transferred to journals.
Answer
  • True
  • False

Question 28

Question
All business transactions must be entered first in the general ledger.
Answer
  • True
  • False

Question 29

Question
A simple journal entry requires only one debit to an account and one credit to an account.
Answer
  • True
  • False

Question 30

Question
A compound journal entry requires several debits to one account and several credits to one account.
Answer
  • True
  • False

Question 31

Question
Many business transactions affect more than one time period.
Answer
  • True
  • False

Question 32

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

Question 33

Question
The time period assumption is often referred to as the expense recognition principle.
Answer
  • True
  • False

Question 34

Question
A company's calendar year and fiscal year are always the same.
Answer
  • True
  • False

Question 35

Question
Accounting time periods that are one year in length are referred to as interim periods.
Answer
  • True
  • False

Question 36

Question
Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.
Answer
  • True
  • False

Question 37

Question
The cash basis of accounting is not in accordance with generally accepted accounting principles.
Answer
  • True
  • False

Question 38

Question
The expense recognition principle requires that efforts be matched with accomplishments.
Answer
  • True
  • False

Question 39

Question
Expense recognition is tied to revenue recognition.
Answer
  • True
  • False

Question 40

Question
The revenue recognition principle dictates that revenue can be recognized in the accounting period in which cash is received.
Answer
  • True
  • False

Question 41

Question
Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.
Answer
  • True
  • False

Question 42

Question
Adjusting entries are often made because some business events are not recorded as they occur.
Answer
  • True
  • False

Question 43

Question
Adjusting entries are recorded in the general journal but not posted to the accounts in the general ledger.
Answer
  • True
  • False

Question 44

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

Question 45

Question
Accrued revenues are revenues which have been received but not yet earned.
Answer
  • True
  • False

Question 46

Question
The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.
Answer
  • True
  • False

Question 47

Question
Accumulated Depreciation is a liability account and has a credit normal account balance.
Answer
  • True
  • False

Question 48

Question
A liability - revenue account relationship exists with an unearned rent revenue adjusting entry.
Answer
  • True
  • False

Question 49

Question
The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.
Answer
  • True
  • False

Question 50

Question
Unearned revenue is a prepayment that requires an adjusting entry when services are performed.
Answer
  • True
  • False

Question 51

Question
Asset prepayments become expenses when they expire.
Answer
  • True
  • False

Question 52

Question
A contra asset account is subtracted from a related account in the balance sheet.
Answer
  • True
  • False

Question 53

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

Question 54

Question
The cost of a depreciable asset less accumulated depreciation reflects the look value of the asset.
Answer
  • True
  • False

Question 55

Question
Accrued revenues are revenues that have been earned and received before financial statements have been prepared.
Answer
  • True
  • False

Question 56

Question
An adjusting entry for accrued expenses results in an increase to an expense account and an increase to a liability account.
Answer
  • True
  • False

Question 57

Question
Accrued expenses are expenses incurred but not yet paid or recorded at the statement date.
Answer
  • True
  • False

Question 58

Question
Financial statements can be prepared from the information provided by an adjusted trial balance.
Answer
  • True
  • False

Question 59

Question
The adjusted trial balance is the primary basis for the preparation of financial statement.
Answer
  • True
  • False

Question 60

Question
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.
Answer
  • True
  • False

Question 61

Question
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.
Answer
  • True
  • False

Question 62

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

Question 63

Question
A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet.
Answer
  • True
  • False

Question 64

Question
If a worksheet is used, financial statements can be prepared before adjusting entries are journalized.
Answer
  • True
  • False

Question 65

Question
If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income.
Answer
  • True
  • False

Question 66

Question
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.
Answer
  • True
  • False

Question 67

Question
The adjustments on a worksheet can be posted directly to the accounts in the ledger from the worksheet.
Answer
  • True
  • False

Question 68

Question
The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns.
Answer
  • True
  • False

Question 69

Question
The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.
Answer
  • True
  • False

Question 70

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

Question 71

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

Question 72

Question
After closing entries have been journalized and posted, all temporary accounts in the ledger should have zero balances.
Answer
  • True
  • False

Question 73

Question
Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.
Answer
  • True
  • False

Question 74

Question
Closing the Dividends account to Retained Earnings is not necessary if net income is greater than dividends during the period.
Answer
  • True
  • False

Question 75

Question
The Dividends account is a permanent account whose balance is carried forward to the next accounting period.
Answer
  • True
  • False

Question 76

Question
Closing entries are journalized after adjusting entires have been journalized.
Answer
  • True
  • False

Question 77

Question
The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.
Answer
  • True
  • False

Question 78

Question
The post-closing trial balance is entered in the first two columns of a worksheet.
Answer
  • True
  • False

Question 79

Question
A business entity has only one accounting cycle over is economic existence.
Answer
  • True
  • False

Question 80

Question
The accounting cycle begins at the start of a new accounting period.
Answer
  • True
  • False

Question 81

Question
Both correcting entries and adjusting entries always affect at least one balance sheet account and one income statement account.
Answer
  • True
  • False

Question 82

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