Question 1

A revenue account has a normal ___________ balance.

Accepted Answer

The answer of A revenue account has a normal ___________...

Question 2

Which of the following is an assumption made in the preparation of the financial statements?

Accepted Answer

The assumption that financial statements are prepared for a specific entity that is distinct from the entity's owners is a fundamental principle of accounting. This assumption ensures that the financial position, performance, and cash flows of the company are presented in a manner that is independent of the personal financial affairs of its owners. The other options are also important assumptions in accounting, but they are not as fundamental as the assumption of a separate legal entity.

Question 3

The issuance of common stock increases both ____________________ and stockholders' equity.

Accepted Answer

The answer of The issuance of common stock increases both...

Question 4

Which of the following underlying assumptions for the conceptual framework is the reason the dollar is used in the preparation of financial statements?

Accepted Answer

The use of the monetary unit assumption in the conceptual framework assumes that financial statements should be prepared in a single, stable currency. In practice, this means that the dollar (or another stable currency) is used as the unit of account in financial statements.

Question 5

The ____________________ principle says that assets of a company are initially recorded at their original cost.

Accepted Answer

The answer of The ____________________ principle says that assets of...

Question 6

The ____________________ is the file or book that contains all of the company's accounts.

Accepted Answer

The answer of The ____________________ is the file or book...

Question 7

The ___________________ is a chronological record of all transactions entered into by a business.

Accepted Answer

The answer of The ___________________ is a chronological record of...

Question 8

The ____________________ is a list of all the accounts used by an entity.

Accepted Answer

The answer of The ____________________ is a list of all...

Question 9

____________________ documents provide the evidence needed in an accounting system to record a transaction.

Accepted Answer

The answer of ____________________ documents provide the evidence needed in...

Question 10

In order for an internal or external event to be recognized in an accounting system, the items making up the event must impact the financial statements and they must be sufficiently reliable and ____________________.

Accepted Answer

The answer of In order for an internal or external...

Question 11

The ___________________ is a list of each active account and its debit or credit balance at a specific point in time.

Accepted Answer

The answer of The ___________________ is a list of each...

Question 12

Which of the following statements is true regarding economic events?

Accepted Answer

External events involve exchanges between an entity and another entity outside the company. The signing of a service contract is an internal event as it does not involve an external entity. While most economic events can be identified from a source document, some events such as management decisions or changes in market conditions may not have a specific source document. Lastly, all events need to be measured with sufficient reliability to ensure accurate financial reporting.

Question 13

The payment of salaries to employees will result in a debit to an expense account and a credit to the ___________ account.

Accepted Answer

The answer of The payment of salaries to employees will...

Question 14

Credits are always on the ____________________ side of a T-account.

Accepted Answer

The answer of Credits are always on the ____________________ side...

Question 15

____________________ is the quality of accounting information that allows a user to compare two or more accounting periods for a single company.

Accepted Answer

The answer of ____________________ is the quality of accounting information...

Question 16

For liabilities, stockholders' equity, and revenue accounts, debits will _____________ the account balance.

Accepted Answer

The answer of For liabilities, stockholders' equity, and revenue accounts,...

Question 17

Borrowing from the bank in order to acquire computer equipment for $1,500 has the effect of increasing both assets and ____________________.

Accepted Answer

The answer of Borrowing from the bank in order to...

Question 18

For assets, expenses, and dividend accounts, a credit will _______ the balance in the account.

Accepted Answer

The answer of For assets, expenses, and dividend accounts, a...

Question 19

The ____________________ side, or left-side, of a liability account is used to record decreases in the account balance.

Accepted Answer

The answer of The ____________________ side, or left-side, of a...

Question 20

If a law firm provides services on account for its clients, both ____________________ and retained earnings will increase.

Accepted Answer

The answer of If a law firm provides services on...

Quiz 2: The Accounting Information System