PA review - This is the Principle of Accounting Final Exam Practice Materials. This is made PDF

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This is the Principle of Accounting Final Exam Practice Materials. This is made based on the practical test in Western Sydney University...

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1. A private accountant can perform many activities in a business organization but would not work in a. accounting information systems. b. external auditing. c. budgeting. d. tax accounting. 2. The chart of accounts is a a. list of accounts and their balances at a given time. b. listing of the accounts and the account numbers which identify their location in the ledger. c. device used to prove the mathematical accuracy of the ledger. d. required step in the recording process. 3. If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income. a. F b. T 4. GAAP stands for a. Generally Accepted Auditing Procedures. b. Generally Accepted Accounting Principles. c. Generally Accepted Auditing Principles. d. Generally Accepted Accounting Procedures. 5. The information for preparing a trial balance on a worksheet is obtained from a. business documents. b. financial statements. c. general ledger accounts. d. general journal entries. 6. Which one of the following is not a justification for adjusting entries? a. Adjusting entries are necessary to ensure that the revenue recognition principle is followed. b. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. c. Adjusting entries are necessary to ensure that the expense recognition principle is followed. d. Adjusting entries are necessary to bring the general ledger accounts in line with the budget. 7. The owner's drawings account is a permanent account whose balance is carried forward to the next accounting period. a. F b. T 8. An account consists of

a. a title, a left side, and a debit balance. b. a title, a debit balance, and a credit balance. c. a title, a right side, and a debit balance. d. a title, a debit side, and a credit side. 9. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction? a. The sale of store equipment. b. The purchase of a new computer. c. Payment of income taxes. d. The appointment of a new CPA firm to perform an audit. 10. Which of the following companies would be least likely to use a worksheet to facilitate the adjustment process? a. Small company with few accounts b. All companies, since worksheets are required under generally accepted accounting principles c. Large company with numerous accounts d. Small company with numerous accounts 11. A small company may be able to justify using a cash basis of accounting if they have a. sales under $1,000,000. b. no accountants on staff. c. all sales and purchases on account. d. few receivables and payables. 12. Under the double-entry system, revenues must always equal expenses. a. F 13. A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet. a. F b. T 14. Income will always be greater under the cash basis of accounting than under the accrual basis of accounting. a. T b. F 15. Haselhof Company purchases equipment for $2,400 and supplies for $700 from Behrman Co. for $3,100 cash. The entry for this transaction will include a a. debit to Equipment $2,400 and a debit to Supplies Expense $700 for Behrman. b. credit to Cash for Behrman. c. debit to Equipment $2,400 and a debit to Supplies $700 for Haselhof. 16. Expenses sometimes make their contribution to revenue in a different period than when they are paid. When salaries and wages are incurred in one period and

paid in the next period, this often leads to which account appearing on the balance sheet at the end of the time period? a. Salaries and Wages Payable. c. Due to Employer. d. Due from Employees. 17. Liabilities of a company would not include a. salaries and wages payable. b. accounts payable. c. cash. d. notes payable. 18. The assumption that the unit of measure remains sufficiently constant over time is part of the a. economic entity assumption. b. monetary unit assumption. c. historical cost principle. d. cost principle. 19. Closing entries are journalized and posted a. before the financial statements are prepared. b. at the end of each interim accounting period. c. at management's discretion. d. after the financial statements are prepared. 20. The expense recognition principle matches a. expenses with revenues. b. creditors with businesses. c. assets with liabilities. d. customers with businesses. 21. In a service-type business, revenue is considered recognized a. when cash is received. b. when the service is performed. c. at the end of the year. d. at the end of the month. 22. The left side of an account is a. blank. b. the balance of the account. c. the debit side. d. a description of the account. 23. Orange County Shop follows the revenue recognition principle. Orange County services a bicycle on July 31. The customer picks up the bike on August 1 and mails the payment to Orange County on August 5. Orange County receives

the check in the mail on August 6. When should Orange County show that the revenue was recognized? a. July 31 b. August 5 c. August 1 d. August 6 24. Sources of increases to owner's equity are a. purchases of merchandise. b. withdrawals by the owner. c. additional investments by owners. d. expenses. 25. During 2016, its first year of operations, Aida's Bakery had revenues of $65,000 and expenses of $35,000. The business had owner's drawings of $22,000. What is the amount of owner's equity at December 31, 2016? a. $8,000 credit b. $30,000 credit c. $0 d. $22,000 debit 26. The hiring of a new company president is an economic event recorded by the financial information system. a. T b. F 27. An account is a part of the financial information system and is described by all except which one of the following? a. An account may be part of a manual or a computerized accounting system. b. An account has a title. c. An account has a debit and credit side. d. An account is a source document. 28. The balance of the depreciation expense account will appear in the income statement debit column of a worksheet. a. T b. F 29. At October 1, 2016, Medina Co. had an accounts payable balance of $50,000. During the month, the company made purchases on account of $35,000 and made payments on account of $48,000. At October 31, 2016, the accounts payable balance is a. $63,000. b. $133,000. c. $37,000. d. $33,000.

30. The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same. a. F b. T 31. Which of the following statements is not true? a. Expenses have normal debit balances. b. Expenses increase owner's equity. c. Expenses are a negative factor in the computation of net income. d. Expenses decrease owner's equity. 32. The time period assumption states that the economic life of a business entity can be divided into artificial time periods. a. T b. F 33. Revenues are a. gross increases in owner's equity resulting from business activities. b. actual or expected cash outflows. c. the cost of services used during the period. d. the cost of assets consumed during the period. 34. Accountants refer to an economic event as a a. purchase. b. change in ownership. c. sale. d. transaction. 35. Financial statements are the major means of communicating accounting information to interested parties. a. F b. T

1.B 2.B 3.B 4.B 5.C 6.D 7.A 8.D 9.D 10.A 11.D 12.A 13.A 14.B 15.C 16.A 17.C 18.B 19.D 20.A 21. B 22.C 23.A 24.C 25.A (65,000 – 35,000) – 22,000 = 8,000 26.B 27.D 28.A 29.C 50,000 + 35,000 – 48,000 = 37,000 30.A 31.B 32.A 33.A 34.D 35.B...