16) The assumption that a business will continue to operate into the future is the: A) Economic entity assumption. B) Going concern assumption. C) Monetary unit assumption. D) Periodicity assumption.
17) The usual balance in a Contra-Owners’ Equity account is a: A) DR B) It depends C) CR
18) The usual balance in a Contra-Revenue account is a: A) DR B) It depends C) CR
19) Below is the company’s Cash T-account. Cash Beg. 1,200 5,200 3,100 End. 3,300 The $5,200 amount could represent which of the following? A) Ending balance of cash. B) Purchase of supplies on account. C) Collection from customers. D) Payment for salaries.
20) ABC reports the following information for the year: Net credit sales $120,000 Average accounts receivable 20,000 Cash collections on credit sales 100,000 What is ABC’s receivables turnover ratio? A) 5.0. B) 1.2. C) 0.2. D) 6.0.
21) For a journal entry with only two lines, the following entry is valid: Increase in a Liability, Decrease Owners’ Equity. A) True B) False
22) When the company pays stockholders a dividend, what is the effect on the accounting equation for that company? A) Decrease assets and decrease liabilities. B) Decrease assets and decrease stockholders’ equity. C) Decrease stockholders’ equity and increase assets. D) Increase liabilities and increase assets.
23) Which of the following would increase assets and increase liabilities? A) Provide services to customers on account. B) Purchase office supplies on account. C) Pay dividends to stockholders. D) Receive a utility bill but do not pay it immediately.
24) Which of the following are classified as Accounts Receivable? (This question may have multiple answers) A) Tax refunds owed to us by the IRS. B) Monies that customers owe us for providing a service. C) Monies that customers owe us from sale of merchandise. D) Loans we made to a customer.
25) For a journal entry with only two lines, the following entry is valid: Increase in a liability, Increase in an Expense. A) True B) False
26) Choose one: A) It is possible for the Income Statement to balance B) The Income Statement always balances C) The Income Statement never balances
27) Consider the following list of accounts: Cash Retained Earnings Service Revenue Utilities Expense Salaries Expense Accounts Receivable Accounts Payable Common Stock Equipment Dividends How many of these accounts have a normal debit balance? A) Four. B) Five. C) Seven. D) Six.
28) After the Third STEP in the Operating Cycle the firm has? A) Inventory B) None of the other three C) Account Receivable D) Cash
29) The Income Statement always balances. A) False B) True 30) If a Trial Balance balances A) all account balances must be correct B) some account balances may be wrong
30) If a Trial Balance balances A) all account balances must be correct B) some account balances may be wrong
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