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Accounting - Unit 1: Grade 11 Review

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Grade 12 Accounting Midterm Prep
Claudia Voin
Quiz by Claudia Voin, updated more than 1 year ago
Claudia Voin
Created by Claudia Voin over 9 years ago
1974
5
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Resource summary

Question 1

Question
Debt refers to
Answer
  • an asset
  • the right side of an account
  • a liability
  • the left side of an account

Question 2

Question
Which of the following items is not an asset?
Answer
  • A/R
  • cash
  • A/P
  • supplies

Question 3

Question
The common characteristic possessed by all assets is?
Answer
  • long life
  • great monetary value
  • tangible nature
  • future economic benefit

Question 4

Question
Liabilities...
Answer
  • are future economic benefits
  • are existing debts and obligations
  • possess service potential
  • are things of value used by the business in its operation

Question 5

Question
Owner's Equity , in a proprietorship, can be described as
Answer
  • creditorship claims on total assets
  • ownership claim on total assets
  • benefactor's claim on total assets
  • debtor claim on total assets

Question 6

Question
Notes Payable are classified as
Answer
  • an asset
  • owner's equity
  • revenue
  • a liability

Question 7

Question
The basic accounting EQN is written as
Answer
  • Assets + Liabilities = Owner's Equity
  • Assets = Liabilities + Owner's Equity
  • Assets = Revenues - Expenses
  • Assets + Owner's Equity = Liabilities

Question 8

Question
A way to write the expanded accounting EQN is
Answer
  • Assets + Expenses + Withdrawals = Owner's Capital + Revenue
  • Assets = Liabilities + Owner's Capital + Revenue - Expenses - Withdrawals
  • Assets + Owner's Capital = Liabilities + Revenue - Expenses - Withdrawals
  • Assets + Revenue = Liabilities + Owner's Capital + Expenses - Withdrawals

Question 9

Question
What is a ledger?
Answer
  • a list of all assets
  • accounts grouped together in book or computerized form
  • a list of all liabilities
  • the debit side of an account

Question 10

Question
If total liabilities = $75 000 and OE = $150 000, total assets =
Answer
  • 75 000
  • 150 000
  • 250 000
  • 225 000

Question 11

Question
An activity that changes the value of a firm's assets, liabilities, or owner's equity is referred to as
Answer
  • a service business
  • an income statement
  • a net loss
  • a transaction

Question 12

Question
If the assets of a business increase by $16 000 during an accounting period and OE increases by $4 000, what is the amount and direction of the change in liabilities for the period?
Answer
  • + $12 000
  • - $12 000
  • + $20 000
  • = $16 000

Question 13

Question
If an individual asset, in a proprietorship, is increased then
Answer
  • there must be an equal decrease in a specific liability
  • there must be an equal decrease in OE
  • there must be an equal decrease in another asset
  • none of these is possible

Question 14

Question
Net income occurs when
Answer
  • A > L
  • R = E
  • R > E
  • R < E

Question 15

Question
If the OE account increases from the beginning of the year to the end of the year, then
Answer
  • NI is less than other drawings
  • a NL is less than owner drawings
  • additional owner investments are less than NL
  • NI is greater than owner drawings

Question 16

Question
Before the following transaction, Sam's Landscaping has $25 000 in assets, $15 000 in liabilities, and $10 000 in OE. Sam borrows $10 000 from the bank. What effect will this have on the accounting EQN?
Answer
  • assets will increase by $10 000 and liabilities will decrease by $10 000
  • liabilities will decrease by $10 000 and OE will increase by $10 000
  • assets will increase by $10 000 and liabilities will increase by $10 000
  • assets will decrease by $10 000 and OE will decrease by $10 000

Question 17

Question
An accountant has debited an asset account for $1 000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
Answer
  • nothing further must be done
  • debit an OE account for $500
  • debit another asset account for $500
  • credit a different asset account for $500

Question 18

Question
Eric paid $500 for repairs on the truck he uses in his landscaping business. The effect on the accounting EQN would include a(n)
Answer
  • increase to OE
  • decrease to liabilities
  • decrease to assets
  • increase to revenue

Question 19

Question
James received a cheque for $1 000 from one of his clients for work he had performed in a prior accounting period. How should James record the receipt for this cheque?
Answer
  • increase cash $1 000, decrease A/P $1 000
  • increase cash $1 000, decrease service revenue $1 000
  • increase cash $1 000, increase capital $1 000
  • increase cash $1 000, decrease A/R $1 000

Question 20

Question
The purchase of supplies on credit
Answer
  • decreases liabilities
  • has no effect on the accounting EQN
  • decreases assets
  • increases liabilities

Question 21

Question
Which of the following activities increases OE?
Answer
  • performance of services for client on credit
  • withdrawal of cash for personal
  • payment of office rent
  • purchase of supplies on credit

Question 22

Question
The three basic financial statements are
Answer
  • income statement, bank statement, balance sheet
  • income statement, statement of owner's equity, balance sheet
  • bank statement, invoice, and revenue statement
  • statement of owner's equity, balance sheet, worksheet

Question 23

Question
A listing of a firm's assets, liabilities, and OE at a specific point in time is known as
Answer
  • a statement of OE
  • a balance sheet
  • the accounting EQN
  • an income statement

Question 24

Question
Which of the following is not true of the terms debit and credit?
Answer
  • they can be abbreviated as DR and CR
  • they can be interpreted as increase or decrease
  • they can be used to describe the balance of an account
  • they can be interpreted to mean left or right

Question 25

Question
Which statement is true regarding the rules for debits and credits?
Answer
  • debits are always positive, credits always negative
  • debits on the right, credits on the left
  • a debit will decrease an asset
  • a credit will be recorded on the right side of an account

Question 26

Question
What is the change to the balance in OE when revenues were $1 500, expenses were $800, and withdrawals were $400?
Answer
  • an increase of $1 500
  • a decrease of $400
  • an increase of 300
  • an increase of $700

Question 27

Question
Tom invoices his customer $1 200 for services. The correct entry to record this transaction is
Answer
  • debit A/R $1 200 and credit deferred payments $1 200
  • debit cash $1 200 and credit service revenue $1 200
  • debit A/R $1 200 and service revenue $1 200
  • none of the above are correct

Question 28

Question
Which of the following is true?
Answer
  • when we receive cash, we credit the cash account
  • when we receive cash, we debit the revenue account
  • when we pay a bill, we debit the cash account
  • when we pay a bill, we credit the cash account

Question 29

Question
A TB is a list of all
Answer
  • business liabilities
  • ledger accounts and their balances
  • revenues and expenses
  • business assets

Question 30

Question
The normal balance of liabilities and OE is, respectively
Answer
  • credit and credit
  • debit and debit
  • debit and credit
  • credit and debit

Question 31

Question
An account will be said to have a credit balance if
Answer
  • the normal balance is a credit
  • there are more credit transactions than debit
  • the sum of the credit transactions is greater than that of the debit
  • the account is an OE account

Question 32

Question
A/R had a normal balance of $8 500 at the beginning of the month. During the month, the account had debit postings of $8 500 and credit postings of $10 000. The balance of A/R at the end of the month is a
Answer
  • $8 500 credit balance
  • $10 000 credit balance
  • $7 000 debit balance
  • $10 000 debit balance

Question 33

Question
The following accounts have normal balances as shown below. What is the TB total for debits and credits? A/P - 1 500, A/R - 2 000, Capital - 4 000, Cash - 1 000, Equip - 5 000, Notes Payable - 3 500, Withdrawals - 1 000
Answer
  • 8 000 debit and 8 000 credit
  • 10 000 debit and 10 000 credit
  • 9 000 debit and 9 000 credit
  • 8 000 debit and 10 000 credit

Question 34

Question
What is the purpose of a TB?
Answer
  • to verify that all transactions are correct
  • to show net income
  • to show that all transactions have been recorded
  • to verify equality of debits and credits

Question 35

Question
The book of original entry is the
Answer
  • four-column account
  • journal
  • ledger
  • TB

Question 36

Question
The owner of a business purchases equipment by making a down payment with the balance owed on account. This transaction is recorded by debiting the
Answer
  • equip account and crediting the cash and A/P accounts
  • equip account and the A/P account and crediting the cash account
  • cash account and the equip account and crediting the A/P account
  • cash account and the A/P account and crediting the equip account

Question 37

Question
When a business transaction requires entries to more than one debit or more than one credit, it is called a
Answer
  • complex entry
  • compound entry
  • standard entry
  • double entry

Question 38

Question
Thomas' Dry Wall completed work on a house. Thomas received $3 500 when he finished the job and will receive the balance of $1 500 in 30 days. The correct journal entry to record this event is
Answer
  • debit cash $3 500 and credit service revenue $3 500
  • debit A/R $5 000 and credit cash $3 500 and service revenue $1 500
  • debit cash $3 500 and credit A/R $1 500 and service revenue $5 000
  • debit cash $3 500 and A/R $1 500 and credit service revenue $5 000

Question 39

Question
The journal entry to record the payment of Ralph's Plumbing and Repair electric bill of $175 for the month is
Answer
  • debit cash $175 and credit A/P $175
  • debit cash $175 and credit utilities expense $175
  • debit utilities expense $175 and credit cash $175
  • none of the above are correct

Question 40

Question
A term used for transferring information from the journal to the ledger is
Answer
  • transference
  • transposing
  • posting
  • referencing

Question 41

Question
When the new balance of an account is calculated
Answer
  • a debit posting is added if the account has a credit balance
  • a credit posting is subtracted if the account has a credit balance
  • a debit posting is subtracted if the account has a debit balance
  • a debit posting is subtracted if the account has a credit balance

Question 42

Question
What is a transposition error?
Answer
  • a math error involving an incorrectly placed decimal point
  • a recording error involving an incorrectly place decimal point
  • a posting error involving an incorrectly placed decimal point
  • a posting error involving a reversal of digits

Question 43

Question
An awareness of the normal balance of accounts would help you spot which of the following as an error in recording?
Answer
  • a debit balance in the drawings account
  • a credit balance in an expense account
  • a credit balance in a liability account
  • a credit balance in a revenue account

Question 44

Question
Which of the following errors will cause a TB to not balance?
Answer
  • journalizing a transaction twice
  • failure to record a transaction
  • failure to post part of an entry to the ledger
  • posting a transaction twice

Question 45

Question
Which of the following entries would cause a TB not to balance
Answer
  • a debit to cash for $360 and credit to equip for $360
  • a debit to cash for $400 and credit to A/P for $400
  • a debit to A/P for $560 and credit to A/P for $560
  • a debit to salaries expense for $780 and credit to salaries payable for $870

Question 46

Question
A TB would only help in detecting which of the following errors
Answer
  • a transaction not journalized
  • an entry posted twice
  • an entry using incorrect accounts
  • a transposition error when transferring the debit side of a journal entry to the ledger

Question 47

Question
Linda prepared the Tb and found that total debits were $19 000 and total credits were $21 500. Which of the following errors would cause the TB to be out of balance?
Answer
  • the payment of rent was recorded as a debit to cash for $2 500 and credit to rent expense for $2 500
  • the purchase of equip on account was recorded as a debit to equip for $2 500 and a credit to cash for $2 500
  • the receipt of a customer's payment was recorded as a credit to A/R for $1 250 ad a credit to cash for $1 250
  • the purchase of supplies was recorded as a debit to supplies expense for $1 250 and a credit to supplies for $1 250

Question 48

Question
If a purchase of supplies on account for $100 is journalized correctly but posted as a debit to the supplies account for $1 000 and a credit to A/P for $100, what effects will the error have?
Answer
  • the TB will be out of balance, but A/P account will be correct
  • the TB will be in balance
  • the TB will be in balance, and the supplies account will be correct
  • the TB will be out of balance, and both supplies account and the A/P account will be incorrect

Question 49

Question
The payment of a $450 invoice for utilities was recorded as a debit to rent expense for $540 and a credit to cash for $540. The entry to correct this mistake is
Answer
  • debit rent expense $90, credit cash $90
  • debit utilities expense $540, credit rent expense $540
  • debit cash $540, credit utilities expense $450 and rent expense $90
  • debit cash $90 and utilities expense $450, and credit rent expense $540

Question 50

Question
Trent received a $350 payment from one of his customers and incorrectly recorded this amount as a debit for $530 to cash and a credit to A/P for $530. The entry that will correct the error is
Answer
  • debit A/P $180, credit cash $180
  • debit A/R $530, credit sales $530
  • debit A/P 530, credit A/R $350 and cash $180
  • debit cash $350 and credit A/R $350

Question 51

Question
A business organized as a corporation
Answer
  • is not a separate legal entity in most provinces
  • requires that shareholders are personally liable for debts of the business
  • is owned by its shareholders
  • terminates when one of the owners dies

Question 52

Question
A partnership form of business organization
Answer
  • is a separate legal entity
  • is a common form of organization for professional businesses
  • enjoys an unlimited life
  • has limited liability

Question 53

Question
Which of the following is not an advantage of the corporate business form?
Answer
  • limited liability of shareholders
  • transferability of ownership
  • unlimited personal liability for shareholders
  • unlimited life

Question 54

Question
The accounting EQN for a corporation may be expressed as
Answer
  • Assets = Liabilities + Shareholders' Equity
  • Assets = Liabilities + Partners' Equity
  • Assets = Liabilities + Owner's Equity
  • all of the above

Question 55

Question
Accumulated earnings in a corporation are reported in
Answer
  • capital
  • share capital
  • retained earnings
  • dividends
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