ACCOUNTING I

Fall Final Exam Study Guide 

 

1. Classify the following as: Asset, Liability, Owner’s Equity, Revenue or Expense and give the Normal Balance

Cash

Accounts Receivable

Accounts Payable

Drawing

Sales

Rent

2. When cash is paid on account, Accounts Payable is?

a. Increased by a debitb. Decreased by a creditc. Increased by a creditd. Decreased by a debit

 

3. When cash is received on account

a. AR is decreased and cash is increased.b. Sales is increased and cash is increased.c. AR is increased and cash is increased.d. Sales is decreased and cash is increased.

 

4. The journal entry when an owner invests in the business is

a. debit Capital, credit cashb. debit Cash, Credit Accounts Payablec. debit Cash; credit Capitald. debit Cash; credit Drawing

5. Match the followingAccount Number 

500200300100400

Classification Asset

LiabilityCapital

RevenueExpense

6. A debit may signifya. a decrease in an asset.b. an increase in a liability.c. an increase in an asset.d. a decrease in an expense

7. The normal balances of assets, liabilities and owner’s equity are respectively,

a. debit, debit and credit.b. debit, credit and debit.c. credit, debit and debit.d. debit, credit and credit.

 

8. If net sales is $10,000 and operating expenses are $7,500 your component percentage for net income is a. 75%b. 100%c. 25%d. 20%

 

9. The recording of debit and credit parts of a transaction is called

a. matching revenue to expenseb. double-entry accountingc. closing the booksd. objective evidence

 

10. The Petty Cash account is debited

a. when you replenish the Petty Cash Accountb. when you establish the Petty Cash Account

  

11. What is the ending balance on the bank reconciliation using a $10 bank fee, $250.00 in outstanding checks and $500.00 outstanding deposit

Checkbook Balance $5,010

Bank Balance $4,750

12. Net Income is entered in the worksheet’s?

a. Income Statement Debit and Balance Sheet Credit sidesb. Income Statement Credit and Balance Sheet Debit sides 

13.The adjusting entry for insurance isa. Credit Insurance Expense; Debit Prepaid Insuranceb. Debit Insurance Expense; Credit Cashc. Debit Insurance Expense; Credit Prepaid Insuranced. Debit Cash; credit Prepaid Insurance

 

14. To close the sales accounta. Debit Sales; credit Cashb. Debit Income Summary; credit Salesc. debit Sales; credit Income Summaryd. Debit Cash; credit Sales

 

15. Revenue from Services would appear on the worksheet in the

a. Income Statement Cr. column.b. Adjusted Trial Balance Dr. column.c. Balance Sheet Cr. column.d. Adjustments Dr. column.

 

16. Temporary accounts closed at the end of the accounting cycle

a. Cash and Capital.b. Revenue and expense accounts and the owner’s drawing account.c. contra accounts.d. open accounts.

TRUE OR FALSE17. Only the person a check is made out to

can own the check.

 18. If the person a check is made out to

simply signs their name on the back of the check that is called a blank endorsement. 

19. A blank endorsement transfers ownership to whoever is in possession of the check

20.A Balance Sheet reports a business’s financial condition on a single date.

 21. When the owner withdraws cash the owner’s drawing account should be posted with a credit.

  22. The formula for calculating Net Income

component percentage is Net Income/Net Sales.

23. Proving cash means comparing the cash

balance in the general ledger to the cash balance in your check book.

24.Permanent accounts accumulate balances while temporary accounts are zeroed out at the end of the fiscal period.

 25. If Sales are greater than expenses you have

Net Income therefore for Net Income on the Income Statement credits to sales would be greater than debits to expenses.

26.Closing entries are made at the end of the accounting period to transfer balances of temporary accounts to the owner’s capital account, closing Sales, Expense, Net Income and Drawing).

 27. A worksheet is used to plan adjustments and

sort financial information after publishing financial statements

28.A balance sheet reports a business’s financial progress over a period of time.

  29.Temporary accounts will begin each fiscal

period with a zero balance.  30.A journal entry or transaction is a business

activity with a debit and credit that will change assets, liabilities or owner’s equity.

 

31. Assets are what you owe and liabilities are what you own.

 32. In the Accounting Equation Assets=Liabilities + Owner’s Equity, Owner’s Equity can not be negative.

 33. A chart of accounts is a list of accounts

used by a business and only lists the account name and number.

 

34. The left side of the T-account is the credit side.

   

35. Transactions are recorded in chronological order in a journal and the accounting system will post each entry immediately to the individual ledger and every ledger will keep a running balance of each account.

 36. Double lines rules across a journal or

worksheet indicate the amounts have been verified as correct

 

37. An cash payment entry was posted in error to Rent Expense instead of Repair Expense. The correction would be to Debit Repair Expense and credit Rent Expense

   38. Assets are listed on the Balance sheet in

Alphabetical order and Expenses are listed on the Income Statement in Chronological Order.

 39. A check with a future date is called a post-

dated check, if it is submitted before the date on the check the bank may refuse to pay and it would be considered a dishonored check.

 

40.Closing entries make all revenue, expense and drawing accounts zero

 

41.A business owned by one person is called a proprietorship.

 42.The Father of Accounting is known to be

Mario Luigi 

43. Match the followingSource Doc 

CRTSM

Classification A. Sale on Account, Dr. AR, Cr.

SaleB. Receipt, Debit CashC. Tape, Dr. Cash, Cr. SaleD. MemorandumE. Check, Credit Cash