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ACCOUNTING C3 TEST True/False Indicate whether the statement is true or false. ____

1. After each transaction, the basic accounting equation should remain in balance.

____

2. A business transaction affects at least two accounts.

____

3. "Assets + Liabilities = Owner's Equity" is another way to express the basic accounting equation.

____

4. The increases and decreases caused by business transactions are recorded in specific accounts.

____

5. The free enterprise system is based on the right to own property.

____

6. One of the purposes of accounting is to provide financial information about property and the rights to that property.

____

7. The owner's claims to the assets of a business are liabilities.

____

8. A creditor has a financial claim to the assets of a business.

____

9. An account is a record of only the increases in the balance of a specific item such as cash or equipment.

____ 10. The total financial claims do not have to equal the total cost of the property. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 11. If the creditor's financial claim to property totals $1,000 and the owner's financial claim to property totals $11,000, the property value is ____. a. $10,000 c. $12,000 b. $11,000 d. $1,000 ____ 12. The account Accounts Receivable is an example of a(n) ____. a. asset c. owner's equity b. liability d. none of the above ____ 13. All of the following account titles are asset titles except ____. a. Office Furniture c. Cash in Bank b. Accounts Payable d. Equipment ____ 14. A business transaction that involves a purchase on account is considered to be a(n) ____. a. cash transaction c. investment by the owner b. credit transaction d. expense transaction ____ 15. Each of the following is a business expense except a payment for ____. a. advertising c. utility bills b. monthly rent d. equipment ____ 16. The purchase of a desk on account will increase Office Furniture and will also increase ____. a. Cash in Bank c. Accounts Receivable b. Accounts Payable d. Marie Krabish, Capital ____ 17. The word equities refers to claims against the assets of a business by ____. a. both creditors and owners c. owners only b. creditors only d. customers only

____ 18. If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two accounts affected are ____. a. Cash in Bank and Computer Equipment b. Cash in Bank and Accounts Receivable c. Cash in Bank and Paul Abdou, Capital d. Cash in Bank and Accounts Payable Matching

Match each item with the correct statement below. a. b. c. d. e. f. g. h. i. j. ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

account accounting equation accounts payable accounts receivable asset business transaction capital credit creditor equity

k. l. m. n. o. p. q. r. s. t.

expenses financial claims investments liabilities on account owner's equity property property rights revenue withdrawal

19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

____ are the prices paid for goods or services used to operate a business. "Assets = Liabilities + Owner's Equity" is called the ____. Income earned from the sale of goods and services is called ____. An economic event that causes a change in assets, liabilities, or owner's equity is called a(n) ____. ____ is the amount of money owed to a business's creditors. The owner's investment in the business is represented by the ____ account. The total amount of money to be received in the future for goods or services sold on credit is the ____. Anything of value that is owned or controlled by an individual or a business is called ____. The debts of a business are called its ____. When an owner takes cash or other assets out of a business for personal use, the transaction is called a(n) ____. ____ 29. Any property or item of value owned by a business is a(n) ____. Salam Optical is owned by Ali Salam. The transactions below all took place on April 15. Match the

following codes with each transaction below. a. b. c. d. e. ____ ____ ____ ____ ____

30. 31. 32. 33. 34.

Increases an asset and increases a liability Increases an asset and decreases an asset Decreases an asset and decreases a liability Increases an asset and increases owner’s equity Decreases an asset and decreases owner’s equity

Salam bought equipment for use in the business with cash, $1,850. Received cash for an eye exam. Paid wages for optical assistants. Made a part payment on account for office furniture purchased earlier. Billed a client for replacement eyeglasses.

Problem 35. Classify the following account names by identifying the proper classification code. Codes A L O 1. 2. 3. 4. 5. 6. 7.

Classification Asset Liability Owner's Equity

Accounts Receivable Computer Equipment Accounts Payable Cash in Bank Office Supplies Roberta Saba, Capital Repair Tools

36. Every business transaction affects at least two accounts. This keeps the accounting equation in balance. What effects do the following transactions have on each of the accounts listed in the table. Use a "+" (plus sign) to indicate an increase, a "–" (minus sign) to indicate a decrease, or "0" (zero) to indicate no change in the account. 1. 2. 3. 4. 5. 6. 7. 8.

The owner deposited $60,000 cash in the business bank account. Wrote a check to pay the month's rent. The owner invested a computer in the business. Bought computer equipment on account. Received a check from a customer for services. The owner withdrew cash for personal use. Sold one of the computers on account. Paid cash for a microcomputer. Cash in Bank

Accounts Receivable

Computer Equipment

Accounts Payable

J.R. Boudreau, Capital

1. 2. 3. 4. 5. 6. 7. 8. 37. Tracy Migre, a certified public accountant, has completed the following transactions. Ms. Migre's assets, liabilities, and owner's equity account titles and balances are shown in the table. Use the table to show the effect of each transaction. Transactions: 1. Owner invested additional cash in the business, $5,000.

2. 3. 4. 5. 6. 7. 8. 9.

Paid the telephone bill, $600. Wrote a check to a creditor as partial payment on account, $500. Bought supplies on account, $150. Received a check for accounting services, $300. Owner invested office equipment in the business, $2,500. Completed accounting services and agreed to accept payment later, $900. Withdrew cash from the business for personal use, $2,000. Received a check as partial payment on account, $450.

Beg. Bal. 1. New Bal. 2. New Bal. 3. New Bal. 4. New Bal. 5. New Bal. 6. New Bal. 7. New Bal. 8. New Bal. 9. New Bal.

Cash in Bank $5,000

Accounts Receivable $900

Equipment Supplies $14,000

$1,500

Accounts Payable $3,000

T. Migre, Capital $18,400

ACCOUNTING C1 TEST Answer Section TRUE/FALSE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS:

T T F T T T F T F F

PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS:

1 1 1 1 1 1 1 1 1 1

NAT: NAT: NAT: NAT:

NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A.

NAT: NAT: NAT: NAT: NAT:

NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A.

C A B B D B A C

PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS:

1 1 1 1 1 1 1 1

NAT: NBEA I.A.

MULTIPLE CHOICE 11. 12. 13. 14. 15. 16. 17. 18.

ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS:

NAT: NBEA I.A. NAT: NBEA I.A. | NBEA II.C.

MATCHING 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.

ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS:

K B S F C G D Q N T E

PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS: PTS:

1 1 1 1 1 1 1 1 1 1 1

NAT: NAT: NAT: NAT: NAT: NAT: NAT: NAT: NAT: NAT: NAT:

NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. | NBEA II.C. NBEA I.A.

30. 31. 32. 33. 34.

ANS: ANS: ANS: ANS: ANS:

B D E C D

PTS: PTS: PTS: PTS: PTS:

1 1 1 1 1

NAT: NAT: NAT: NAT: NAT:

NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A. NBEA I.A.

PROBLEM 35. ANS: 1. A 2. A 3. L 4. A 5. A 6. O 7. A PTS: 1

NAT: NBEA I.A.

36. ANS:

1. 2.

Cash in Bank + –

Accounts Receivable 0 0

Computer Equipment 0 0

Accounts Payable 0 0

J.R. Boudreau, Capital + –

3. 4. 5.

0 0 +

0 0 0

+ + 0

0 + 0

+ 0 +

6. 7.

– 0

0 +

0 –

0 0

– 0

8.

–

0

+

0

0

PTS: 1

NAT: NBEA I.A.

37. ANS:

Beg. Bal. 1. New Bal. 2. New Bal. 3. New Bal. 4. New Bal. 5. New Bal. 6. New Bal. 7.

Cash in Bank $5,000 +5,000 $10,000 –600 $9,400 –500 $8,900

Accounts Equipment Supplies Receivable $900 $14,000 $1,500

Accounts Payable $3,000

$900

$14,000

$1,500

$3,000

$900

$14,000

$1,500

$900

$14,000

$8,900 +300 $9,200

$900

$14,000

$1,500 +150 $1,650

$3,000 –500 $2,500 +150 $2,650

$900

$1,650

$2,650

$9,200

$900 +900

$14,000 +2,5000 $16,500

$1,650

$2,650

T. Migre, Capital $18,400 +5,000 $23,400 –600 $22,800 $22,800 $22,800 +300 $23,100 +2,500 $25,600 +900

New Bal. 8. New Bal. 9. New Bal. PTS: 1

$9,200 –2,000 $7,200 +450 $7,650

$1,800

$16,500

$1,650

$2,650

$1,800 –450 $1,350

$16,500

$1,650

$2,650

$26,500 –2,000 $24,500

$16,500

$1,650

$2,650

$24,500

NAT: NBEA I.A....