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Match the term with its definition.(There are more definitions than terms. ) -Posting


A) A summary of account names and numbers.
B) A simplified version of an account in the General Ledger.
C) Compares balance sheet items from two different time periods.
D) When a dollar value is assigned to an item recorded in the accounting system.
E) A journal entry that lowers the balance of the account.
F) An amount that is posted on the left side of a T-account or ledger.
G) The concept that a company must keep separate accounts by time period.
H) An amount that is posted on the right side of a T-account or ledger.
I) Assets are initially recorded at the amount paid to acquire them.
J) When journal entries are recorded in the appropriate T-account or ledger.
K) When a company's balance sheet has been verified by an outside auditor.
L) The principle that a company should use the least optimistic measure,when uncertainty exists.
M) The concept that any transaction must have at least two effects on the accounting equation.
N) The mechanism used to record each transaction in the General Journal.

O) D) and J)
P) B) and E)

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Which of the following would be classified as a noncurrent liability on the balance sheet at December 31,Year 1?


A) An accounts payable due on January 30,Year 2
B) A notes payable due November 30,Year 2
C) A note receivable that matures on April 30,Year 3
D) A notes payable due January 15,Year 3

E) B) and D)
F) A) and B)

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Which of the following would not be classified as a current asset?


A) Cash
B) Accounts Payable
C) Supplies
D) Inventory

E) B) and D)
F) B) and C)

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In part,a transaction affects the accounting equation by decreasing a liability.There is no effect on assets.Which of the following statements is correct with regards to this transaction?


A) If other liabilities are unchanged,stockholders' equity must be decreasing.
B) If other liabilities are unchanged,stockholders' equity must be increasing.
C) If stockholders' equity is unchanged,another liability must be decreasing.
D) If stockholders' equity is unchanged,other liabilities must be unchanged.

E) A) and B)
F) B) and D)

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Danny Company purchased supplies using cash.What is the effect on Danny's balance sheet?


A) No effect on total assets;decrease total liabilities;increase total stockholders' equity
B) Increase total assets;increase total liabilities;increase total stockholders' equity
C) Decrease total assets;no effect on total liabilities;increase total stockholders' equity
D) No effect on total assets;no effect on total liabilities;no effect on total stockholders' equity

E) A) and C)
F) A) and B)

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Typical steps needed before a business can start selling goods and/or services to customers include:


A) financing and investing activities.
B) only financing activities.
C) only investing activities.
D) only operating activities.

E) B) and D)
F) A) and B)

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A company issues $20 million in new stock.The company later uses this money to acquire a building.What is the effect of these two transactions on the company's accounts?


A) Buildings increases and Common Stock increases.
B) Buildings increases and Common Stock decreases.
C) Cash increases,Buildings increases,and Common Stock increases.
D) Cash decreases,Buildings increases,and Common Stock decreases.

E) A) and D)
F) B) and C)

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The standard formatting for a journal entry lists the dollar amounts for:


A) credits underneath and to the right of the dollar amounts for debits.
B) debits and credits aligned equally to the right.
C) debits underneath and to the right of the dollar amounts for credits.
D) debits and credits aligned equally to the left.

E) None of the above
F) B) and C)

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Oats,Inc. ,has $14,000 in Cash,$37,000 in Accounts Receivable,$2,500 in Supplies,$52,000 in Accounts Payable and $12,400 in Wages Payable.If Oats uses Cash to pay off $8,000 of the Wages Payable,which of the following statements is correct?


A) The company's current ratio will not change since current assets decreased by the same amount that current liabilities decreased.
B) The company will look more favorable to creditors.
C) The company has a greater ability to pay current liabilities.
D) The company's current ratio will decrease.

E) None of the above
F) All of the above

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How will a company's current ratio be affected when the company receives $20,000 from owners and issues common stock to them?


A) The current ratio will increase because current assets increase.
B) The current ratio will increase because current liabilities decrease.
C) There will be no change in the company's current ratio.
D) The current ratio will decrease because current liabilities increase.

E) A) and B)
F) C) and D)

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Transactions are entered into a(n) ________ each day they occur.


A) journal
B) ledger
C) trial balance
D) classified balance sheet

E) A) and B)
F) C) and D)

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What is the minimum number of accounts that must be involved in any transaction?


A) One
B) Two
C) Three
D) There is no minimum.

E) None of the above
F) B) and D)

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The current ratio:


A) is a measure of a firm's ability to pay its current liabilities.
B) equals current liabilities divided by current assets.
C) equals total assets divided by total liabilities.
D) is a measure of profitability.

E) None of the above
F) B) and D)

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Owners of a company:


A) hold promissory notes as evidence of their ownership claim.
B) are entitled to repayment of their investment.
C) have a claim that is secondary to creditor's claims.
D) have a claim equal to the amount of liabilities a company owes.

E) None of the above
F) A) and B)

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The following account balances were listed on the trial balance of Edgar Company at the end of the period:  Account  Balance  Accounts Payable 30,600 Cash 48,900 Common Stock 30,000 Equipment 13,500 Land 45,000 Notes Payable 60,000\begin{array}{lr}\text { Account } & \text { Balance } \\\text { Accounts Payable } & 30,600 \\\text { Cash } & 48,900 \\\text { Common Stock } & 30,000 \\\text { Equipment } & 13,500 \\\text { Land } & 45,000 \\\text { Notes Payable } & 60,000\end{array} The company's trial balance is not in balance and the company's accountant has determined that the error is in the cash account.What is the correct balance in the cash account?


A) $57,900
B) $31,500
C) $2,100
D) $62,100

E) None of the above
F) C) and D)

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Eagle Company used $50,000,000 of its cash to pay off debt,as a result,Eagle's stockholders' equity will decrease $50,000,000.

A) True
B) False

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Which of the following statements about the balance sheet is correct?


A) A classified balance sheet is one that contains privileged information.
B) Current liabilities are debts and other obligations that will be paid or fulfilled within 12 months of the balance sheet date.
C) All companies use the chart of account names defined by the Financial Accounting Standards Board (FASB) .
D) A balance sheet is prepared for a period of time.

E) C) and D)
F) All of the above

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In addition to requiring that the accounting equation remain in balance,the double-entry system also requires that:


A) the number of asset accounts must equal the number of liability and stockholder's equity accounts.
B) for any transaction,only two accounts are affected.
C) for any transaction,both sides of the accounting equation are affected.
D) the total dollar amount of debits must equal the total dollar amount of credits.

E) A) and B)
F) A) and C)

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Which events are recorded in the accounting system?


A) External exchanges only
B) Internal events only
C) Both external exchanges and internal events
D) Transactions are not recorded in the accounting system

E) B) and C)
F) A) and D)

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Which of the following is a report for internal use only?


A) Balance sheet
B) Statement of financial position
C) Trial balance
D) Classified balance sheet

E) None of the above
F) A) and B)

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