Anytime an owner removes any asset for personal use it is recorded as:

1) Anytime an owner removes any asset for personal use it is recorded as:

A) a withdrawal.
B) payment of a liability.
C) an investment.
D) an expense.

2) The increase or decrease in the owner’s equity is reported on the:

A) statement of owner’s equity.
B) income statement.
C) balance sheet.
D) all of these

3) The purpose of the accounting process is to provide financial information on:

A) large corporations.
B) small businesses.
C) individuals.
D) All of these answers are correct.

4) Which of the following is not a business organization form?

A) Corporation
B) Sole proprietorship
C) Operation
D) Partnership

5) Owner’s withdrawals:

A) increase expenses.
B) increase liabilities.
C) increase assets.
D) decrease owner’s equity.

6) Cater Right, with total assets of $50,000, borrows $15,000 from the bank.
Which of the following is a True statement upon borrowing the money?

A) Total assets are now $35,000.
B) Owner’s equity is $15,000 more.
C) Total assets are now $50,000.
D) Total assets are now $65,000.

7) Mark paid $500 rent for the month. Identify the accounts affected.

A) Cash and Rent Expenses increase.
B) Cash and Capital increase.
C) Cash decreases, and Rent Expense decreases.
D) Cash decreases, and Rent Expense increases.

8) If Suite Dream Toys’ revenues are less than its expenses during the account-
ing period:

A) the business will incur a loss.
B) owner’s withdrawals decrease owner’s equity.
C) owner withdrawals decrease net income.
D) net income causes liabilities to decrease.

9) The financial statement that shows revenue and expenses for a period of time
is the:

A) statement of owner’s equity.
B) balance sheet.
C) statement of liabilities and capital.
D) income statement.

10) The purchase of a truck with a down payment was recorded as a pure cash
purchase. This error would cause:

A) liabilities were understated.
B) assets were overstated.
C) owner’s equity was overstated.
D) None of the above are correct.

11) The business provided services to a credit customer.

A) Assets and owner’s equity increase.
B) Assets and revenue increase.
C) Liabilities and owner’s equity increase.
D) None of the above are correct.

12) Which of the following transactions would cause an asset to increase and the
owner’s equity to increase?

A) The business bought supplies on account.
B) The owner invested cash in the business.
C) The business incurred an expense on credit.
D) The owner withdrew cash from the business.

13) Which of the following would result if the business provided services to a
customer collecting cash?

A) Cash would increase and Revenue would decrease.
B) Since the cash was collected there is no need to record this.
C) Cash would increase and Capital would increase.
D) Cash would increase and Revenue would increase.

14) A formal account that has columns for date, explanation, post reference,
debit, and credit is called the:

A) T account.
B) ledger.
C) chart of accounts.
D) standard account form.

15) A credit may signify a(n):

A) decrease in revenues.
B) decrease in assets.
C) decrease in capital.
D) decrease in liabilities.

16) A listing of all the accounts from the ledger with their ending balances is
called a:

A) normal balance.
B) trial balance.
C) footing.
D) chart of accounts.

17) Accounts Payable had a normal starting balance of $600. There were debit
postings of $350 and credit postings of $200 during the month. The ending
balance is:

A) $950 credit.
B) $450 debit.
C) $450 credit.
D) $750 debit.

18) The beginning balance in Cash was $400. Additional cash of $800 was
received. Checks were written for $900. The cash balance is:

A) $400.
B) $300.
C) $700.
D) $900.

19) Given the following list of accounts with normal balances, what are the trial
balance totals of the debits and credits?

Cash $500
Accounts Receivable 100
Capital 300
Withdrawals 100
Service Fees 700
Rent Expense 300

A) $800 debit, $800 credit
B) $1,200 debit, $1,200 credit
C) $900 debit, $900 credit
D) $1,000 debit, $1,000 credit

20) A credit to an asset account was posted to an owner’s equity account. This
error would cause:

A) assets were overstated.
B) owner’s equity was overstated.
C) liabilities were overstated.
D) Both a and c are correct.