Accounting 1 Review #1 State Test

Which is the most common form of business organization in this country? A. Sole Proprietorship B. Partnership C. Corporation D. Not-for-profit organization

The assumption that the financial records of the business are separate from the owner’s personal records is called ___, A. Financial Claim B. Business Entity C. Going Concern D. GAAP

This form of business offers more liability protection to its owners. A. Sole Proprietorship B. Partnership C. Corporation D. Not-for-profit organization

The amount of money earned after the expenses are paid is ___ A. Profit B. Revenue C. Capital D. Charter

“Rent” and “Utilities” are what kind of accounts? A. Assets B. Liabilities C. Revenue D. Expenses

The side of the account that is increased is called the: A. Debit side B. Credit side C. Normal Balance side D. Accounting side 30

A business paper from which information is obtained for a journal entry is called a(n): A. Source Document B. Receipt C. Invoice D. Check 30

Planning, recording, analyzing, and interpreting financial information is called: A. Organizing B. Profiting C. Formatting D. Accounting

Anything of value that is owned is called a(n): A. Asset B. Liability C. Possession D. Expense

A business sold services on account. How is the transaction recorded? A. debit Accounts Receivable debit Sales B. credit Accounts Receivable credit Sales C. debit Accounts Receivable credit Sales D. credit Accounts Receivable debit Sales

Sales is decreased on the: A. Debit side B. Credit side C. Normal Balance side D. Average Balance side 30

A business activity that changes assets, liabilities, or owner’s equity is called a(n): A. Deal B. Withdrawal C. Transaction D. Investment

Transferring information from a journal entry to a ledger account is called: A. Posting B. Transferring C. Summarizing D. Journalizing

The amount remaining after the value of all liabilities is subtracted from the value of all assets is called? A. Profit B. Loss C. Owner’s Equity D. Account Balance

When supplies are bought on account, the business to whom money is owed is a(n): A. Asset account B. Liability account C. Equity account D. Capital account

Which of the following is not a transaction that will affect owner’s equity: A. Paid cash for supplies B. Received cash from sales C. Sold services on account D. Received cash from owner as an investment

A list of accounts used by a business is called a(n): A. List B. Chart of Accounts C. Accounting Record D. Financial Statement

When a company receives cash from a customer for a prior sale, the transaction: A. increases Cash, decreases Accounts Receivable B. increases Accounts Receivable, decreases Cash C. increases both Cash and Accounts Receivable D. decreases both Cash and Accounts Receivable

A business bought supplies on account. How is this transaction recorded? A. debit Supplies credit Cash B. debit Supplies credit Accounts Payable C. debit Cash credit Supplies D. debit Accounts Payable credit supplies

What is the accounting equation? A. Owner’s Equity = Assets + Liabilities B. Liabilities = Assets – Owner’s Equity C. Assets = Liabilities + Owner’s Equity D. Assets = Liabilities – Owner’s Equity

The accidental reversal of two numbers is called a: A. Dyslexic error B. Transposition error C. Slide error D. Switch error

Transactions are recorded in a journal in: A. Alphabetical order B. Order of importance C. Account number order D. Chronological order

Which of the following is not part of a journal entry? A. Signature B. Source document C. Date D. Debit

When a transaction changes both sides of the accounting equation: A. An increase on the right side must offset a decrease on the left side B. An increase on the left side must equal an increase on the right side C. Neither side of the equation changes D. None of these

“Sales” is what kind of account? A. Asset B. Liability C. Owner’s Equity D. Revenue E. Expense

Balance the accounting equation: Owner’s equity is $19,000 and Liabilities are $20,000 so Assets are: A. $1,000 B. $39,000 C. -$1,000 D. -$39,000

Balance the accounting equation: Assets are $10,000 and Owner’s Equity is $5,000 so Liabilities are: A. $10,000 B. $5,000 C. $0 D. $15,000

If cash is increased by $2000 when the owner invests cash into the business, then capital is: A. Increased by $2,000 B. Decreased by $2,000 C. Not changed

When services are sold on account: A. Accounts Payable is debited and Sales is credited B. Sales is debited and Accounts Payable is credited C. Accounts Receivable is debited and Sales is credited D. Sales is debited and Accounts Receivable is credited