QUIZ CH 01 CH 02

Topics: Balance sheet, Double-entry bookkeeping system, Generally Accepted Accounting Principles Pages: 7 (790 words) Published: November 13, 2014
Wenzhou-Kean University Fall 2013 ACCT 2200

30 MINUTE QUIZ-CH.1/CH.2
True/False
Circle the correct answer
T

1.

Accounting is the information system that identifies, records, and communicates the economic events of an organization to interested users.
True

T

2.

Bookkeeping deals with the record-keeping process and is only one aspect of accounting. True

T

3.

4.

5.

6.

7.

8.

False

Collection of an accounts receivable will increase both cash and accounts receivable. True

F

False

The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities. True

F

False

Net income is the excess of revenues over expenses for the accounting period. True

T

False

The Financial Accounting Standards Board is the primary accounting standard-setting body in the United States.
True

T

False

Internal users are those who manage the business.
True

T

False

False

An expense paid with cash would result in an equal decrease in liabilities and owner’s equity.
True

False

1

Wenzhou-Kean University Fall 2013 ACCT 2200

F

9.

Liabilities represent the ownership claim on total assets.
True

F

10.

Certified Public Accountants are only permitted to prepare audit reports and tax returns. True

F

11.

12.

13.

14.

15.

16.

False

The basic steps in the recording process are (1) to analyze each transaction, (2) to enter the transaction in a journal, and (3) to transfer the journal entry to the appropriate ledger accounts.
True

T

False

The ledger is the entire group of accounts maintained by a company. True

T

False

An account will have a credit balance if the total debit amounts exceed the total credit amounts.
True

T

False

The owner’s capital account is increased by credits.
True

F

False

Assets are increased by debits and liabilities are decreased by credits. True

T

False

False

Transferring journal entries to the ledger accounts is called posting and should be performed in chronological order. True

False

2

Wenzhou-Kean University Fall 2013 ACCT 2200

T

17.

Assets = liabilities + owner’s capital – drawings + revenues – expenses is a correct form of the expanded basic accounting equation.
True

F

18.

In posting, one should enter “J2” in the Post. Ref. Column on page two of the journal. True

F

19.

20.

False

When the columns of the trial balance equal each other, it proves no errors occurred in recording and posting.
True

T

False

False

The double-entry system helps ensure the accuracy of the recorded amounts and helps to detect errors.
True

False

3

Wenzhou-Kean University Fall 2013 ACCT 2200

Multiple Choice
Circle the correct answer
D

1.

All of the following are external users of accounting information except a. labor unions.
b. taxing authorities.
c. regulatory agencies.
d. company officers.

2.

Recording consists of
a. identifying and measuring economic events.
b. preparing and distributing accounting reports.
c. keeping a systematic, chronological diary of events, measured in dollars and cents. d. identifying, measuring, receiving, and communicating economic events to interested users.

D

3.

The financial statement that summarizes information about the cash inflows and outflows during a period is the
a. income statement.
b. owner’s equity statement.
c. balance sheet.
d. statement of cash flows.

B

4.

Which of the following is not an acceptable statement of the basic accounting equation? a. Assets – Liabilities = Owner’s equity
b. Assets = Liabilities – Owner’s equity
c. Assets = Liabilities + Owner’s equity
d. Assets – Owner’s equity = Liabilities

5.

Accountants involved with cost accounting, budgeting, and internal auditing are part of which broad category...
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