Accounting - Multiple Choice

If an error is recorded in a journal entry:

(A) cancel the error by drawing a neat line through the error

(B) correct the entry by writing the correct item above the canceled error

(C) do not erase the incorrect item

(D) all of these

(D) all of these

The first step in the posting procedure is writing the:

(A) entry date in the Date column of the account

(B) journal page number in the Post. Ref. column of the journal

(C) account number in the Post. Ref. column of the account

(D) entry amount in the Debit or Credit column of the account

(A) entry date in the Date column of the account

Income Summary is a(n) 

(A) asset account

(B) liability account

(C) temporary account

(D) permanent account

(C) temporary account

Assets taken out of a business for the personal use of the owner are called:

(A) net income

(B) net loss

(C) investments

(D) withdrawals

(D) withdrawals

The entry to establish a $200.00 petty cash fund is:

(A) debit Petty Cash, $200.00; credit Cash, $200.00

(B) debit Petty Cash, $200.00; credit Miscellaneous Expense, $200.00

(C) debit Miscellaneous Expense, $200.00; credit Cash, $200.00

(D) debit Cash, $200.00; credit Petty Cash, $200.00

(A) debit Petty Cash, $200.00; credit Cash, $200.00

If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is:

(A) increased

(B) decreased

(C) unaffected

(D) correct

(B) decreased

On a work sheet, the balance of the owner’s drawing account is extended to the:

(A) Income Statement Debit column

(B) Income Statement Credit column

(C) Balance Sheet Debit column 

(D) Balance Sheet Credit column

(C) Balance Sheet Debit column

Information needed to prepare an income statement’s Revenue section is obtained from a work sheet’s Account Title column and:

(A) Income Statement Debit column

(B) Income Statement Credit column

(C) Balance Sheet Debit column

(D) Balance Sheet Credit column.

(B) Income Statement Credit column

When cash is paid for insurance:

(A) Prepaid Insurance is decreased

(B) Prepaid Insurance is credited

(C) Prepaid Insurance is increased

(D) none of these

(C) Prepaid Insurance is increased

The first digit in the account number 410 means that the account is in the:

(A) Assets division of the general ledger

(B) Liabilities division of the general ledger

(C) Revenue division of the general ledger

(D) Expenses division of the general ledger

(C) Revenue division of the general ledger

The journal entry to close Income Summary when there is a net income is:

(A) debit Sales; credit Income Summary

(B) debit owner’s capital; credit Income Summary

(C) debit Income Summary; credit Sales

(D) debit Income Summary; credit owner’s capital

(D) debit Income Summary; credit owner’s capital

Asset accounts include Cash, Prepaid Insurance, and:

(A) Accounts Payable

(B) Accounts Receivable

(C) Sales

(D) Utilities Expense

(B) Accounts Receivable

The formula for calculating the net income ratio is:

(A) net income divided by total sales

(B) total sales divided by total expenses

(C) total sales minus total expenses divided by net income

(D) none of these

(A) net income divided by total sales

Reporting changes in financial information for a specific period of time in the form of financial statements is an application of the accounting concept:

(A) Matching Expenses with Revenue

(B) Accounting Period Cycle

(C) Consistent Reporting

(D) Going Concern

(B) Accounting Period Cycle

The normal balance side of any expense account is:

(A) the debit side

(B) the credit side

(C) the right side

(D) either the debit side or credit side

(A) the debit side