Financial Accounting: Multiple choice chapter 3 PDF

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It includes 30 multiple choice question related to chapter 3: Accounting Information System....

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QUIZ 3 1.The ledger a. should always have a credit balance. b. accumulates the increases and decreases that occur during the period for a single balance sheet or income statement item. c. is the book of original entry. (general journal) d. compiles all source documents. 2.A business activity that changes assets, liabilities, or owner’s equity is called a/an: a. Transaction

b. Revenue

c. Expense

d. Withdraws

3.When dividends are paid a. total assets remain the same.

b. stockholders' equity will increase. d. total assets will decrease.

c. total assets will increase.

4.When a company pays cash for an insurance premium: a. Liabilities increases

c. One asset increases and another asset decreases.

b. Assets decrease.

d. Assets decrease and owner’s equity increases

5.In the transaction, paid cash to buy a computer, which accounts are affected? b. Assets

a. Assets and liabilities c. Liabilities and owner's equity

d. Liabilities

6.In the transaction, owner withdrew cash for personal use, what type of accounts is affected? a. Assets and liabilities

b. Assets and owner's equity

c. Assets

d. Liabilities and owner's equity

7.A decrease in owner's equity resulting from costs of operating a business is a/an: a. Expense

b. Asset

c. Liability

d. Revenue

8.An increase in owner's equity resulting from the operation of a business is called a/an: a. Withdrawal

b. Asset

c. Revenue

d. Expense

9.If a business paid $600 for an amount owed on a loan, this would: a. Decrease assets and not affect liabilities

b. Decrease assets and increase liabilities

c. Decrease assets and decrease liabilities

d. Decrease owner's equity and decrease liabilities

10.When cash is paid to an advertising agency for advertisements for the business: a. Assets increase and owner's equity increases. b. Assets decrease and owner's equity decreases. c. Assets increase and owner's equity decreases. d. Liabilities increases and owner's equity decreases

11.The name given to an account is an account: a. Title

b. Reference

c. Number

d. Balance

12.A tool used to show an increase or decrease in an account caused by a transaction is a/an: a. T-account

b. Ledger

c. Journal

d. Balance sheet

13.A book or file containing a separate page for each business account is called a/an: a. Memorandum

b. Income statement.

c. General ledger

d. Journal.

14.The term credit means: a. to increase.

b. to decrease.

c. the left side of an account.

d. the right side of an account.

15.Which of the following is a group of accounts in that all normally have a debit balance? a. Cash, Mortgage payable, and Inventory b. Land, Cost of goods sold, and Paid-in capital c. Accounts receivable, Salaries expense, and Dividends d. Prepaid rent, Building, and Notes payable 16.Revenue accounts are increased by credits: a. always. b. only when they have a debit balance. c. only when they have a credit balance. d. never. 17.The normal balance of the Rent Expense account is: a. Negative

b. Debit

c. Credit

d. Zero

18.In the transaction, paid cash for computer paper, you should b. Debit Supplies and credit cash

a. Debit Cash and credit Owner's Capital

c. Debit Miscellaneous Expense and Credit Cash d. Debit Owner's Drawing and credit Cash 19.In the transaction, paid cash on account to Sam’s company, which accounts are affected? a. Credit

b. Debit

c. Normal balance

d. Liabilities

20.Money taken out of the business by an owner for personal use is called a/an: a. Withdrawal

b. Revenue

c. Asset

d. Expense

21.The normal balance of the Carolyn Smith, Drawing account is: a. Debit

b. Credit

c. Negative

d. Zero

22.All these accounts have a debit balance except a. Drawing

b. Assets

c. Liabilities

23.All these accounts have a credit balance except:

d. Expense

a. Liabilities

b. Assets

c. Owner’s equity

d. Revenue

24.Recording business transactions in a journal is called: a. Analyzing transactions.

b. Journalizing.

c. Balancing

d. Posting

25.In the transaction, TFV travel agency paid $7,500 cash to buy computer equipment, you should: a. Debit Miscellaneous Expense and credit Computer Equipment. b. Debit Cash and debit Computer Equipment. c. Debit Cash and credit Computer Equipment. d. Debit Computer Equipment and credit Cash. 26.The system of recording debit and credit parts of a transaction is known as: a. The accounting equation c. The accounting cycle.

b. Post-closing trial balance d. Double-entry accounting

27.An account is opened at the beginning of a fiscal period for each account listed on the: a. General ledger

b. General journal.

c. Chart of accounts.

28.The trial balance is: a. the listing of all accounts. b. a listing of all accounts with their balances. c. a place where a running balance of an account is kept. d. the book of original entry. 29.What is the correct order of accounting process? a. ledger, journal, trial balance, balance sheet, income statement b. journal, trial balance, ledger, balance sheet, income statement c. journal, ledger, trial balance, balance sheet, income statement d. journal, ledger, trial balance, income statement, balance sheet 30.The trial balance makes sure that: a. the proper accounts are affected. b. each account has the appropriate dollar amount balance. c. the debits equal the credits in the journal. d. the debits equal the credits in the ledger. e. none of the above

d. Trial balance....