Accounting Compend- Multiple Choice

Question 1

Basic accounting theory is based on:

• single entry
• double entry
• triple entry
• a double book

Answer 1

double entry

Question 2

The group of accounts which you debit when increased are:

• assets and capital
• assets and income
• assets and expenses
• assets and liabilities

Answer 2

assets and expenses

Question 3

The group of accounts which you credit to increase are:

• liabilities and capital
• liabilities and expenses
• liabilities and assets
• assets and expenses

Answer 3

liabilities and capital

Question 4

When a funeral director buys a casket coach on credit, he would:

• debit cash and credit casket coach
• debit casket coach and credit accounts payable
• debit casket coach and credit cash
• credit casket coach and debit accounts payable

Answer 4

debit casket coach and credit accounts payable

Question 5

The payment of rent by cash is recorded:

• debit cash and credit capital
• debit accounts payable and credit cash
• debit rent expense and credit cash
• debit cash and credit rent expense

Answer 5

debit rent expense and credit cash

Question 6

Purchase of office supplies on credit is recorded by:

• debit office supplies and debit credit purchases
• debit purchases and credit accounts payable
• debit office supplies and credit accounts payable
• credit office supplies and debit accounts payable

Answer 6

Debit office supplies and credit accounts payable

Question 7

A ledger is a book of:

• original entry
• accounts
• accounting statements
• trial balances

Answer 7

accounts

Question 8

An entry on the debit side of a liability account indicates the account has been:

• increased
• decreased
• footed
• balanced

Answer 8

decreased

Question 9

An entry made on the debit side of the proprietorship account indicates that the account has been:

• increased
• decreased
• footed
• balanced

Answer 9

decreased

Question 10

An entry made on the debit side of an expense account indicates that the account has been:

• increased
• decreased
• footed
• balanced

Answer 10

increased

Question 11

The beginning balance in the supplies account is $600. During the month an additional $800 worth of supplies were purchased. At the end of the month, an inventory of the supplies found that only $300 remained on hand. What would be the amount of the adjusting entry for the supplies account?

Answer 11

$1,100.00

Question 12

An entry made on the debit side of an asset account indicates that the account has been:

• increased
• decreased
• footed
• balanced

Answer 12

increased

Question 13

The things of value owned by a business are:

• assets
• capital
• revenue
• liabilities

Answer 13

assets

Question 14

An accounting year ending on some date other than December 31st is called:

• current year
• calendar year
• fiscal year
• physical year

Answer 14

fiscal year

Question 15

A person to whom a debt is owed is called a:

• debtor
• creditor
• debt
• credit

Answer 15

creditor

Question 16

A plant asset was purchased by the funeral home costing $8,000. It has a useful life of 3 years and a salvage value of $2,000. Using the straight line method of depreciation, what would be the yearly amount of depreciation?

Answer 16

$2,000

Question 17

Which of these does not appear on the Balance Sheet?

• Assets
• Liabilities
• Expenses
• Proprietorship

Answer 17

Expenses

Question 18

Liabilities are all things a funeral home:

• owes
• owns
• spends
• sells

Answer 18

owes

Question 19

A Profit and Loss Statement can be prepared:

• only once a month
• only once every three months
• only once every 6 months
• at any time

Answer 19

at any time

Question 20

An entry on the credit side of an account indicates the account has been:

• increased
• decreased
• footed
• balanced

Answer 20

increased

Question 21

When cash is spent in the acquisition of an asset the net worth of a business is:

• increased
• decreased
• footed
• not affected

Answer 21

not affected

Question 22

The process of recording information in the ledger is called:

• journalizing
• balancing
• posting
• footing

Answer 22

posting

Question 23

Accounts Receivable is a/an:

• asset account
• liability account
• capital account
• revenue account

Answer 23

asset account

Question 24

Another term for Profit and Loss Statement is:

• Balance Sheet
• Income Statement
• Statement of Financial Condition
• Trial Balance

Answer 24

Income Statement

Question 25

The amount of revenue from the sale of funeral services would be shown on the: * Balance Sheet * Profit and Loss Statement * Statement of Financial Condition * Statement of Assets and LIabilites

Answer 25

Profit and Loss Statement

Question 26

The right side of a standard account is called the: * profit side * debit side * credit side * loss side

Answer 26

credit side

Question 27

The totaling of a column in a journal or ledger account is called: * journalizing * footing * posting * closing

Answer 27

footing

Question 28

Advertising expense would be reflected on the: * Balance Sheet * Statement of Owner's Equity * Income Statement * Statement of Financial Condition

Answer 28

Income Statement

Question 29

The accounts payable would be shown on the: * Profit and Loss Statement * Balance Sheet * Accounts Receivable Ledger * Income Statement

Answer 29

Balance Sheet

Question 30

A group pf accounts constitutes as a/an: * ledger * journal * posting * special journal

Answer 30

ledger

Question 31

If the total operating expenses section of the income statement is smaller than the total of the income section, the difference is: * net worth * net loss * gross profit * net profit

Answer 31

net profit

Question 32

Expense means a/an: * increase in owner's equity * decrease in owner's equity * increase in an asset * increase in sales

Answer 32

decrease in owner's equity

Question 33

Which of the following accounts would be used to assist the accountant in an adjusting entry involving depreciation: * Automobile * Automobile Expense * Accumulated Depreciation * Allowance for doubtful accounts

Answer 33

Accumulated Depreciation

Question 34

The difference between the two sides of the account is called the: * account number * account balance * account schedule * net profit

Answer 34

account balance

Question 35

The title of an account which would normally have a credit balance is: * cash * accounts receivable * advertising expense * accounts payable

Answer 35

accounts payable

Question 36

An increase in proprietorship as the result of a business transaction is a/an: * asset * liability * net worth * income

Answer 36

Income

Question 37

A list of accounts that shows the arrangement of the accounts in the ledger is called: * Trial Balance * Balance Sheet * Chart of Accounts * Accounts Receivable Ledger

Answer 37

Chart of Accounts

Question 38

Double entry book keeping means an entry was made: * in a double book * in a journal and ledger * as an asset and a liability * as a debit and credit

Answer 38

as a debit and credit

Question 39

The proprietorship of a business may be increased by: * net income and borrowing from banks * net income and investment of assets in the business by the owner * collection of accounts receivable and borrowing from banks * borrowing from the banks and purchases of assets on credit.

Answer 39

net income and investment of assets in the business by the owner

Question 40

The proprietorship of a business may be decreased by: * net income and borrowing from banks * net income and investment of assets in the business by the owner * collection of accounts receivable and borrowing from banks * expenses and withdrawals of assets from the business by the owner.

Answer 40

expenses and withdrawals of assets from the business by the owner.

Question 41

To establish a petty cash fund, one would: * debit cash and credit petty cash * debit accounts payable and credit cash * debit petty cash and credit cash * debit cash and credit accounts payable

Answer 41

debit petty cash and credit cash

Question 42

The abbreviation for "debit" is: * Db. * Dr. * Dt. * Dbt.

Answer 42

Dr.

Question 43

The abbreviation for "credit" is: * Cd. * Ct. * Cr. * Cred.

Answer 43

Cr.

Question 44

A person who signs a check or draft ordering payment to be made is called the: * drawee * drawer * payee * maker

Answer 44

drawer

Question 45

A person or concern, usually a bank, that has been ordered to make a payment on a check or draft is called the: * drawee * drawer * payee * maker

Answer 45

drawee

Question 46

A person or company who will receive payment on a promissory note, check, or draft or money order is called the: * drawee * drawer * payee * maker

Answer 46

payee

Question 47

FICA refers to: * federal income tax * state income tax * city tax * social security

Answer 47

social security

Question 48

Property of a relatively permanent nature used in the operation of a business and not intended for resale is called: * current asset * fixed asset * current liability * fixed liability

Answer 48

fixed asset

Question 49

Debts that are not due and payable within a year are called: * current assets * fixed assets * current liabilities * fixed liabilities

Answer 49

fixed liabilities

Question 50

The difference between cost of goods sold and their selling price is called: * net profit * gross profit * ending inventory * cost of goods available for sale

Answer 50

gross profit

Question 51

The excess of current assets over current liabilities is called: * working capital * total capital * net worth * overhead

Answer 51

working capital

Question 52

A written promise of the customer to pay the business a sum of money at a future date is called a/an: * note payable * note receivable * accounts payable * accounts receivable

Answer 52

note receivable

Question 53

Which of these does not qualify as a current asset? * Cash * Accounts receivable * Office Supplies * Land

Answer 53

Land

Question 54

A synonym for fair wear and tear of a durable asset is: * obsolescence * antiquated * depreciation * redundant

Answer 54

depreciation

Question 55

A language of business employed to communicate financial information based upon the recording, classification, summarization, and interpretation of financial data is called: * accounting * budgeting * management * merchandising

Answer 55

Accounting

Question 56

Assets= Liabilities + Owner's Equity is the: * formula for determining net worth * accounting equation * formula for GAAP * expanded accounting equation

Answer 56

accounting equation

Question 57

The increase in net worth due to the excess of income over costs and expenses is called: * principal * loss * profit * overhead

Answer 57

profit

Question 58

Money paid for the use of money is called: * interest * bad debts * principal * petty cash

Answer 58

interest

Question 59

The difference between net sales and cost of goods sold: * principal * interest * sales tax * gross margin

Answer 59

gross margin

Question 60

Goods purchased for resale at a profit: * supplies * capital * fixed assets * merchandise

Answer 60

merchandise

Question 61

A disbursement is a: * budget * payment * receipt * footing

Answer 61

payment

Question 62

What would be the closing entry to close the revenue account? * Debit expense and revenue summary, credit revenue * Debit revenue, credit expenses * Debit revenue, credit expense and revenue summary * Debit capital, credit revenue

Answer 62

Debit revenue, credit expenses and revenue summary

Question 63

Income received, but not yet earned is: * a bad debt * net profit * deferred income * interest

Answer 63

deferred income

Question 64

A paper showing quantity, description, prices of items, total amount of purchase, and terms of payment is a/an: * invoice * ledger * journal * deposit slip

Answer 64

invoice

Question 65

One who has made a sale is called a/an: * consignor * maker * payee * vendor

Answer 65

vendor

Question 66

A estimate of revenue and probable expense for a given period of time is a: * balance sheet * bank statement * budget * bill

Answer 66

budget

Question 67

The person or business concern to whom a shipment is made is a: * vendee * consignee * payee * drawee

Answer 67

consignee

Question 68

A distribution of profits of a corporation to its stockholders as declared by the board of director is: * gross earnings * interest * investment * dividend

Answer 68

dividend

Question 69

The person who orders the bank to make payment of a financial instrument is properly termed a/an: * payee * drawee * drawer * endorser

Answer 69

drawer

Question 70

The sole owner of a business is a: * maker * drawer * proprietor * partner

Answer 70

proprietor

Question 71

A fund of currency and coin establishment for the payment of small amounts of money is: * accounts payable * petty cash * fixed assets * drawing account

Answer 71

petty cash

Question 72

The difference between total sales and sales returns and allowances is: * net profit * net sales * net worth * net loss

Answer 72

net sales

Question 73

The amount added to the cost of an article to determine the selling price of that article is the: * mark-up * other income * net profit * interest

Answer 73

Mark-up

Question 74

A total, written in small pencil figures, under the last entry in a column is the: * assets * balance * journalizing * footing

Answer 74

footing

Question 75

A double line under the last entry on a T-account means: * the entry is complete * there is more to do on the entry * do not post this entry * the entry is correct

Answer 75

the entry is complete

Question 76

Increases in the owner's equity resulting from business operation is known as: * interest * principle * overhead * income

Answer 76

income

Question 77

That portion of a plant assets original cost that cannot be depreciated is called: * mark-up * cost * scrap value * take home pay

Answer 77

scrap value

Question 78

A decrease in net worth due to excess of costs and expenses over income is: * proprietorship * retained earnings * take home pay * loss

Answer 78

loss

Question 79

The merchandise that a business keeps on hand for sale is the: * inventory * fixed assets * overhead * supplies

Answer 79

inventory

Question 80

Which of the following represents the difference between the total assets and total liabilities? 1. Owner's Equity 2. Net Worth 3. Net Income 4. Capital * 1 only * 1 & 2 only * 1,2,&4 only * 1,3,&4 only

Answer 80

1,2,& 4 only

Question 81

The holder or person owning stock in a corporation is the: * accountant * maker * stockholder * director

Answer 81

stockholder

Question 82

At the end of the month, a funeral home's assets totaled $50,000; the liabilities totaled $20,000; revenue for the month totaled $6,000; and the total of the expenses amounted to $4,000. Which of the following statements are true? 1. owner's equity= $70,000 2. owner's equity = $30,000 3. net income = $2,000 4. net loss = * 1 & 2 * 2 & 3 * 1 & 4 * 2 & 4

Answer 82

2 & 3

Question 83

The basic accounting theory is based on: * single entry * double entry * triple entry * both a & b

Answer 83

double entry

Question 84

The acronym REID is used when: * closing temporary accounts * making adjustments to the ledger * correcting journal entries * posting journal entries to the ledger

Answer 84

closing temporary accounts

Question 85

The period of time required to purchase goods and services and turn them back into cash is called: * the accounting cycle * a fiscal year * the normal operating cycle * a calendar year

Answer 85

the normal operating cycle

Question 86

A ledger is a book of: * accounting statements * trial balance * original entry * accounts

Answer 86

accounts

Question 87

An entry on the debit side of the owner's equity indicates that the account has been: * increased * decreased * neither * both

Answer 87

decreased

Question 88

An entry on the credit side of an expense account indicates the account has been: * adjusted * closed * increased * balanced

Answer 88

closed

Question 89

The book of original entry is in: * alpha-numeric order * chronological order * numeric order * highest to lowest order

Answer 89

chronological order

Question 90

The debts one owes are: * assets * liabilities * income * expenses

Answer 90

liabilities

Question 91

The things one owns are: * capital accounts * assets * liabilities * revenues

Answer 91

assets

Question 92

Sales minus cost of goods sold equals: * net profit * gross profit * overhead * operation expenses

Answer 92

gross profit

Question 93

The amount of depreciation taken during the current fiscal year is properly termed: * accumulated depreciation * depreciation expense * current depreciation * cumulative depreciation

Answer 93

depreciation expense

Question 94

The decrease in the value of a fixed asset is called: * a discount * an obsolescence * depreciation * credit

Answer 94

depreciation

Question 95

The process of recording information in the ledger is called: * journalizing * balancing * posting * editing

Answer 95

posting

Question 96

sThe primary purpose of a business is: * sales * service * prestige * profit

Answer 96

profit

Question 97

The only time the debit side of the revenue account is used is when you make: * adjusting entries * posting entries * journalizing entries * closing entries

Answer 97

closing entries

Question 98

When cash is spent in the acquisition of an asset the impact on the accounting equation is: * the asset cash is debited * the asset cash is credited * the new asset is credited * owner's equity is debited

Answer 98

the asset cash is credited

Question 99

An entry on the credit side of a liability account indicates that the account has been: * increased * decreased * balanced * audited

Answer 99

increased

Question 100

Accounts payable is a/an: * asset account * liability account * owner's equity account * expense account

Answer 100

liability account

Question 101

Good will is classified as a/an: * intangible asset * liability account * revenue account * tangible asset

Answer 101

intangible asset

Question 102

Another name for Profit and Loss Statement is: * Balance Sheet * Income Statement * Statement of Financial Condition * Work Sheet

Answer 102

Income Statement

Question 103

The amount of income from the sale of funeral services would be shown on which formal financial statement? * Balance Sheet * Profit and Loss Statement * Work Sheets * Trial Balance

Answer 103

Profit and Loss Statement

Question 104

The left side of a standard account is called the: * credit side * debit side * profit side * sales side

Answer 104

debit side

Question 105

Income earned but not received is called: * fiscal income * accrued income * deferred income * future income

Answer 105

accrued income

Question 106

The totaling of a column of a journal or ledger is called: * journalizing * footing * summarizing * posting

Answer 106

footing

Question 107

The cost of operating a business is called: * accounts payable * fixed liabilities * overhead * revenue

Answer 107

overhead

Question 108

Working capital is a measure of: * liquidity * profitability * leverage * investing activities

Answer 108

liquidity

Question 109

The debit side of the T-account is: * plus side * minus side * right side * left side

Answer 109

left side

Question 110

A book in which the daily transaction of a business are first written is the: * ledger * schedule * index * journal

Answer 110

journal

Question 111

The credit side of the T-account is: * plus side * minus side * right side * left side

Answer 111

right side

Question 112

A decrease in owners equity resulting from a business transaction is a/an: * expense * liability * net worth * income

Answer 112

expense

Question 113

An increase to which of the accounts will increase owner's equity? * Account Payable * Drawing * Client Fees * Rent Expense

Answer 113

Client Fees

Question 114

A term which is used synonymously with operating expenses is: * net sales * overhead * gross profit * cost of goods sold

Answer 114

Overhead

Question 115

Accounts receivable are examples of: * assets * liabilities * proprietorship * income

Answer 115

assets

Question 116

Checks returned to the depositor that have been paid by the bank are: * canceled checks * deposit checks * order checks * outstanding checks

Answer 116

canceled checks

Question 117

A check that has been issued but not presented for payment to a bank is called: * cancelled check * deposited check * order check * outstanding check

Answer 117

outstanding check

Question 118

Accounts receivable which are uncollectable are: * incurred income * accrued income * fixed assets * bad debt

Answer 118

bad debts

Question 119

A ledger must contain: * assets * liabilities * all accounts * cash disbursed

Answer 119

all accounts

Question 120

A loan from a bank secured by property is: * an asset * a note receivable * a mortgage payable * an account payable

Answer 120

a mortgage payable

Question 121

Salary expense is considered to be: * a cost of goods sold * capitalization * an operating expense * fixed expense

Answer 121

an operating expense

Question 122

Posting is a/an: * form of advertising * transportation of figures * recording of a liability * transfer of figures from the journal to the ledger

Answer 122

Transfer of figures from the journal to the ledger

Question 123

When delivery revenue is earned on account, which accounts increase and decrease? * Cash increases and revenue increases * Accounts receivable increases and revenues increases * Accounts receivable increases and revenues decreases * Accounts receivable decreases and revenues decreases

Answer 123

Accounts receivable increases and revenues increases

Question 124

A special fund for use in disbursing small sums of money is called a/an: * petty cash fund * working fund * impress fund * loan fund

Answer 124

petty cash fund

Question 125

A journal designed for recording a particular type of transaction is known as a/an: * general ledger * general journal * special journal * combination journal

Answer 125

special journal

Question 126

If a funeral home sells a funeral service on a 30 day account, the entry to record the transaction would be to: * debit sales; credit accounts receivable * debit accounts receivable; credit sales * debit accounts payable; credit purchases * debit notes receivable; credit sales

Answer 126

Debit accounts receivable; credit sales

Question 127

If a funeral director receives payment from a client who had purchased a service on a 30 day account, he would make which of the following entries in his journal: * debit cash; credit accounts receivable * debit accounts receivable; credit cash * debit purchases; credit cash * debit cash; credit sales

Answer 127

debit cash; credit accounts receivable

Question 128

If a funeral director purchases caskets from a casket manufacturer on a 30 day account, he would record the transaction as follows: * debit sales; credit purchases * debit purchases; credit cash * debit purchases; credit accounts receivable * debit purchases; credit accounts payable

Answer 128

debit purchases; credit accounts payable

Question 129

A funeral car is purchased by a funeral home for $30,000. The vehicle will be used for 5 years and then replaced. If the estimated salvage value will be $5,000, what will be the amount of yearly depreciation using the straight line method of depreciation for computation? * $2000 * $3500 * $5000 * $6500

Answer 129

$5000

Question 130

David O'Dell is an employee of Mid-Cities Embalming Service and is paid a salary of $1850 per month. He is also paid time and a half for all hours worked in excess of 40 hours per week. If Mr. O'Dell worked 62 hours last week, his gross earnings for the period would be: * $569.41 * $629.14 * $779.14 * $869.41

Answer 130

$779.14

Question 131

John Smith is employed at a local funeral home and is paid an hourly rate of $5 per hour. He is also paid time and a half for any hours worked in excess of 40 hours per week. For the current pay period, he worked a total of 60 hours. If his FICA is 6% and his withholding tax is 10%, what is his take home pay for the week? * $329 * $315.85 * $350 * $294

Answer 131

$294

Question 132

Liability accounts are identified by the account title followed by the word: * expense * revenue * payable * drawing

Answer 132

payable

Question 133

Expenses are listed on which of the following reports: 1. Profit and Loss Statement 2. Statement of Financial Condition 3. Income Statement 4. Balance Sheet * 1 & 2 * 1 & 3 * 2 & 4 * 3 & 4

Answer 133

1 & 3

Question 134

The report that shows the financial condition of the business at a point in time is called the: 1. Income Statement 2. Statement of Financial Condition 3. Balance Sheet 4. Profit and Loss Statement * 1 & 2 * 2 & 3 * 1 & 4 * 3 & 4

Answer 134

2 & 3

Question 135

The accounting equation may be stated as: 1. liabilities = assets + owner's equity 2. assets + liabilities = owner's equity 3. assets= liabilities + owner's equity 4. assets - liabilities = owner's equity * 1 & 2 * 1 & 3 * 2 & 4 * 3 & 4

Answer 135

3 & 4

Question 136

When you recognize revenue when it is earned, and expenses when they are incurred you are operating under the: * cash basis of accounting * modified cash basis of accounting * accrual basis of accounting * fiscal basis of accounting

Answer 136

accrual basis of accounting

Question 137

The account that provides a current or future benefit to the business is properly termed: * a liability account * a drawing account * an expense account * an asset account

Answer 137

an asset account

Question 138

Methods of depreciation that allow the business to recover the cost early in the life of the asset include: 1. double declining balance 2. straight line depreciation 3. sum of the year's digits 4. accumulated depreciation * 1 & 3 * 2 & 3 * 1 & 4 * 2 & 4

Answer 138

1 & 3