Question 1

Which of the following accounts would appear on the balance sheet, and is classified as a liability?

Accepted Answer

Accounts payable

Question 2

Given the following transaction: 'Purchased supplies and furniture on account, $$500 and 1$$,500.' What is the total increase in assets as a result of this transaction?

Accepted Answer

$2,000

Question 3

Which equation correctly represents the basic accounting equation?

Accepted Answer

$$Assets = Liabilities + Owner's Equity$$

Question 4

If a business pays $1,100 for rent expense in cash, what is the effect on the accounting equation?

Accepted Answer

Decrease assets and decrease owner's equity

Question 5

Which of the following accounts is NOT considered an asset?

Accepted Answer

Utilities expense

Question 6

A trial balance is prepared to:

Accepted Answer

Verify that total debits equal total credits

Question 7

If a company receives $22,000 for services rendered, what is the journal entry?

Accepted Answer

Debit Cash $$22,000; Credit Service Revenue 22$$,000

Question 8

Which account would be found on the income statement?

Accepted Answer

Repair and maintenance expense

Question 9

If the owner withdraws $2,300 from the business, what is the effect on owner's equity?

Accepted Answer

Owner's equity decreases by $2,300

Question 10

Which of the following is the correct formula to calculate net income?

Accepted Answer

$$Net\ Income = Revenues - Expenses$$

Question 11

A business has the following balances: Cash $$12,000, Accounts Receivable 15$$,000, Building and Equipment $$245,000, Accounts Payable 8$$,320, Mortgage Payable $210,000. What is the total owner's equity if there are no other assets or liabilities?

Accepted Answer

$$53,680$$

Question 12

Which of the following transactions would NOT affect the trial balance totals?

Accepted Answer

Transferring funds between two asset accounts

Question 13

If a company has revenues of $$49,700 and expenses of 3$$,270, what is the net income?

Accepted Answer

$$46,430$$

Question 14

Which account is increased by a credit entry?

Accepted Answer

Service revenue

Question 15

What is the effect on the accounting equation when a business purchases equipment for cash?

Accepted Answer

Increase equipment, decrease cash; total assets unchanged

Question 16

Which of the following is a real account?

Accepted Answer

Land

Question 17

If a business receives a utility bill for $130 but does not pay it immediately, what is the effect on the accounts?

Accepted Answer

Increase utilities expense and increase accounts payable

Question 18

Which of the following is NOT a step in preparing a trial balance?

Accepted Answer

Calculate net income

Question 19

If a business owner invests $33,000 cash into the business, what is the effect on the accounting equation?

Accepted Answer

Increase assets and increase owner's equity by $33,000

Question 20

Which of the following accounts would be closed at the end of the accounting period?

Accepted Answer

Service revenue

Business Environment and Recording Business Transactions: Study Notes

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