Accounting Semester 1 Final Review 2014
True/False
Indicate whether the statement is true or false.
____
1. A double rule under a column of figures means that the figures are to be added or subtracted.
____
2. A net income for the period is the amount left after the expenses for the period have been subtracted from
revenue.
____
3. The revenue, expense, and the Income Summary accounts are included on the statement of changes in owner's
equity.
____
4. A net loss decreases the balance in the owner's capital account.
____
5. Net income or net loss is the difference between total revenue and total expenses over a specific period of
time.
____
6. A single rule across both amount columns of the Trial Balance section means that no more entries will be
made.
____
7. A work sheet is prepared at the end of each fiscal period.
____
8. The heading is the same on all three financial statements.
____
9. Account titles are listed on the work sheet in alphabetical order.
____ 10. The work sheet is a working paper and is prepared in pen.
____ 11. A net income will increase the owner's capital account.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 12. The most common time period covered by an accounting report is one ____.
a. quarter
c. year
b. month
d. week
____ 13. Accounting is often call the "language of business" because ____.
a. all business owners have a good understanding of accounting principles
b. accountants in many companies share financial information
c. it is easy to understand
d. it is fundamental to the communication of financial information
____ 14. An example of an internal user of accounting information is ____.
a. the president of a bank that has loaned money to the business
b. the Internal Revenue Service
c. a large stockholder
d. the manager in charge of a specific product line
____ 15. To survive, a business must ____.
a. earn a profit and invest excess profits
b. earn a profit and have someone willing to take the risk to run it
c. make a product consumers want and report profits to the IRS
d. have adequate start-up capital and prepare periodic reports
____ 16. The assumption that requires accounting reports to be prepared for a specific period of time is ____.
____ 17.
____ 18.
____ 19.
____ 20.
____ 21.
a. business entity
c. unit of measure
b. going concern
d. accounting period
The type of business that provides a product or a service, makes sales to customers, and incurs expenses is
____.
a. a merchandising business
c. a service business
b. a manufacturing business
d. all of the above
In a business, it is the entrepreneur who ____.
a. is willing to take the risks to establish and organize the venture
b. provides the labor needed to operate the business
c. supplies the capital needed to establish the business
d. manages the financial aspects of the business
The amount of money earned after the costs of operating a business are paid is ____.
a. profit
c. expense
b. revenue
d. capital
The most common form of business organization is the ____.
a. corporation
c. sole proprietorship
b. partnership
d. not-for-profit organization
Which of the following would not be considered a service business?
a. General Motors
c. Alamo Rent a Car
b. Delta Air Lines
d. North American Van Lines
Matching
Match each item with the correct statement below.
a. expenses
e. revenue recognition
b. fees
f. temporary capital
c. permanent
g. withdrawal
d. revenue
____
____
____
____
____
____
22.
23.
24.
25.
26.
27.
Money a business earns from the sale of goods or services is the ____.
The costs of doing business are known as ____.
The balance of a(n) ____ account does not carry forward to the next accounting period.
The dollar balance of a(n) ____ account is carried forward from one period to the next.
When a business follows the GAAP of ____, revenue is recorded on the date it is earned.
A(n) ____ occurs when the owner takes assets out of the business for personal use.
Match each item with the correct statement below.
a. balance sheet
b. Balance Sheet section of the work sheet
c. current assets
d. current liabilities
e. current ratio
f. financial statements
g. income statement
h. Income Statement section of the work sheet
i. liquidity ratio
j. net income or net loss
k. on a specific date
l. profitability ratio
m.
n.
o.
p.
q.
quick ratio
ratio analysis
report form
return on sales
statement of changes in owner's equity
____ 28. The ____ is completed as a support document for the balance sheet.
____ 29. ____ is a comparison of two items on a financial statement, resulting in a percentage that is used to evaluate
the relationship between the two items.
____ 30. The ____ reports a business's net income or net loss over an entire accounting period.
____ 31. A(n) ____ is the financial statement that reports the final balances in all asset, liability, and owner's equity
accounts at the end of the accounting period.
____ 32. ____ indicates what percentage of net sales represents profit.
____ 33. ____ summarize the changes resulting from business transactions that have occurred during an accounting
period.
____ 34. In the ____, the classifications of balance sheet accounts are shown one under the other.
____ 35. ____ is reported on the income statement.
____ 36. The balance sheet reports financial information ____.
____ 37. One source of information for completing the balance sheet is the ____.
____ 38. The information needed to prepare the income statement comes from the____.
Match each item with the correct statement below.
a. correcting entry
f.
b. general ledger
g.
c. ledger
h.
d. ledger account form
i.
e. posting
proving the ledger
slide
transposition error
trial balance
____ 39. A periodic report prepared by a business to test the equality of total debits and total credits in the ledger is
called a(n) ____.
____ 40. Adding all the debit balances and all the credit balances and then comparing the two totals to see whether they
are equal is called ____.
____ 41. If you meant to write $27 but wrote $72, this mistake is called a(n) ____.
____ 42. Transferring data from the journal to the ledger is called ____.
____ 43. Whether accounts are kept manually in a special file or electronically on magnetic disks or tapes, the ledger is
often called a(n) ____.
____ 44. The accounting stationery used to record financial information about specific accounts is a(n) ____.
____ 45. Errors discovered after posting has taken place require a(n) ____.
____ 46. If you were to write $190 as either $19 or $1,900, this mistake would be called a(n) ____.
____ 47. The accounts used by a business can be kept on pages or cards, which are kept together in a book or file called
a(n) ____.
Problem
48. Shown below are the steps followed in recording a business transaction in a journal. Place these activities in
their proper order. Use 1 for the first step and 6 for the last step.
1.
2.
Record the amount of the debit.
Record the amount of the credit.
3.
4.
5.
6.
Record the title of the account to be credited, indented from the left edge of
the Description column.
Write a brief reference to the source document or a description of the entry
in the Description column, indented from the title of the account credited.
Enter the date of the transaction in the Date column.
Record the title of the account to be debited.