Final Exam Accounting 1 Review

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Accounting 1 Semester 1 Final Exam Review Practice
True/False Indicate whether the sentence or statement is true or false. ____ ____ ____ ____ ____ ____ ____ ____ ____ 1. Accounting is the language of business. 2. The relationship among assets, liabilities, and owner's equity can be written as an equation. 3. The accounting equation does not have to be in balance to be correct. 4. A business that performs an activity for a fee is a service business. 5. The amount in an account is an account balance. 6. The capital account is a liability account. 7. Double lines below a column total mean that the totals have been verified as correct. 8. A withdrawal is an expense. 9. Cash is increased by expenses.

____ 10. Payments for advertising, equipment repairs, utilities, and rent are expense transactions. ____ 11. Revenue is a decrease in owner's equity resulting from the operation of a business. ____ 12. The accounting equation must remain in balance after the changes caused by a transaction have been recorded! ____ 13. The accounts on the left side of the accounting equation include the liabilities and owner's equity. ____ 14. When a company receives cash from a customer for a prior sale, the transaction decreases the cash account balance and increases the accounts receivable balance. ____ 15. When cash is paid for expenses, the business has less cash; therefore, the asset account Cash is decreased and the owner's equity account is increased! ____ 16. When cash is paid to the owner for personal use, assets decrease and owner's equity decreases. ____ 17. The right side of a balance sheet presents liabilities and assets. ____ 18. The balance of an account increases on the same side as the normal balance side. ____ 19. A list of accounts used by a business is a chart of accounts. ____ 20. Capital is an owner's equity account with a normal debit balance. ____ 21. When cash is paid for supplies, the supplies account is increased by a debit. ____ 22. The balance of a drawing account represents the total value of assets taken out of a business by the owner. ____ 23. The normal balance side of an accounts receivable account is a credit. ____ 24. Accounts payable accounts are increased with a debit. ____ 25. Information for each transaction recorded in a journal is an entry. ____ 26. A receipt is the source document for cash received from sales transactions. ____ 27. A memorandum is a business form giving written acknowledgment for cash received.

____ 28. Posting is transferring information from a journal entry to a ledger account. ____ 29. Only the column totals for special amount columns in a journal are posted. ____ 30. A check mark in parentheses below a General Debit column total indicates that the total is not posted. ____ 31. If a bank does not receive payment from the person who signed the check, each endorser of the check is individually liable for payment. ____ 32. A check with a future date on it is a postdated check. ____ 33. On a bank statement reconciliation, the adjusted check stub balance must be the same as the adjusted bank balance. ____ 34. When writing a check, the first step is to prepare the check stub. ____ 35. The source document for an electronic funds transfer is a memorandum. ____ 36. When the petty cash fund is replenished, the balance of the petty cash account increases. ____ 37. The balance of the supplies account plus the value of the supplies on hand equals the up-to-date balance of the supplies account. ____ 38. The value of the prepaid insurance coverage used during a fiscal period is an expense. ____ 39. Journals, ledgers, and work sheets are considered permanent records. ____ 40. Totaling and ruling the Adjustments columns of a work sheet is necessary to prove the equality of debits and credits. ____ 41. Two financial statements are prepared from the information on the work sheet. ____ 42. Component percentages on an income statement are calculated by dividing sales and total expenses by net...
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