Deck 25: Service Business Organized As a Proprietorship

Question 1

A transaction recorded in a journal is not considered a permanent record.

Answer 1

False

Question 2

The source document for an electronic funds transfer is a memorandum.

Answer 2

True

Question 3

The drawing account is a permanent account.

Answer 3

False

Question 4

A transaction for the sale of goods or services results in a decrease in owner's equity.

Question 5

The formula for calculating net income is total revenue minus total expenses.

Question 6

If the previous account balance and the current entry posted to an account are both credits, the new account balance is a credit.

Question 7

Adjusting entries must be posted to the general ledger accounts.

Question 8

Temporary accounts are used to accumulate information until it is transferred to the owner's capital account.

Question 9

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.

Question 10

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.

Question 11

Income Summary is a(n)

A) asset account.
B) liability account.
C) temporary account.
D) permanent account.

Question 12

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.

Question 13

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.

Question 14

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.

Question 15

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.

Question 16

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.

Question 17

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.

Question 18

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.

Question 19

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.

Question 20

Asset accounts include Cash, Prepaid Insurance, and

A) Accounts Payable.
B) Accounts Receivable.
C) Sales.
D) Utilities Expense.

Question 21

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.

Question 22

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.

Question 23

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.

Question 24

Select the one term that best fits each definition

-A list of accounts used by a business.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 25

Select the one term that best fits each definition

-A financial statement that reports assets, liabilities, and owner's equity on a specific date.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 26

Select the one term that best fits each definition

-A person or business to whom a liability is owed.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 27

Select the one term that best fits each definition

-Transferring information from a journal entry to a ledger account.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 28

Select the one term that best fits each definition

-A proof of the equality of debits and credits in a general ledger.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 29

Select the one term that best fits each definition

-An increase in equity resulting from the sale of goods or services.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 30

Select the one term that best fits each definition

-A planned process designed to compile financial data and summarize the results in accounting records and reports.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 31

Select the one term that best fits each definition

-An accounting device used to analyze transactions.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 32

Select the one term that best fits each definition

-Accounts used to accumulate information until it is transferred to the owner's capital account.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 33

Select the one term that best fits each definition

-Accounts used to accumulate information from one fiscal period to the next.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 34

Select the one term that best fits each definition

-Journal entries used to prepare temporary accounts for a new fiscal period.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 35

Select the one term that best fits each definition

-The cost of goods or services used to operate a business.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 36

Select the one term that best fits each definition

-Reporting income when earned and expenses when incurred.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 37

Select the one term that best fits each definition

-A financial statement showing the revenue and expenses for a fiscal period.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance

Question 38

Select the one term that best fits each definition

-Journal entries recorded to update general ledger accounts at the end of a fiscal period.

A) accounting system
B) accrual basis of accounting
C) adjusting entries
D) balance sheet
E) chart of accounts
F) closing entries
G) creditor
H) expense
I) posting
J) income statement
K) permanent accounts
L) revenue
M) T account
N) temporary accounts
O) trial balance