$$\text{Assets} = \text{Liabilities} + \text{Stockholders' Equity}$$

Question 1

Which of the following best describes the accounting equation and its components?

Accepted Answer

$$	ext{Assets} = 	ext{Liabilities} + 	ext{Stockholders' Equity}$$

Question 2

A company purchases office supplies for $2,000 on account. Which accounts are affected and how?

Accepted Answer

Supplies increase (debit) by $$2,000; Accounts Payable increases (credit) by 2$$,000

Question 3

Which of the following transactions would NOT be recorded in the accounting records of a business?

Accepted Answer

The owner remodels her personal home using personal funds

Question 4

If a company performs services on account for $4,000, what is the effect on the accounting equation?

Accepted Answer

Assets increase by $$4,000; Stockholders' Equity increases by 4$$,000

Question 5

Which of the following accounts normally has a debit balance?

Accepted Answer

Expenses

Question 6

A business pays $2,500 in cash to settle an account payable. What is the journal entry?

Accepted Answer

Debit Accounts Payable $$2,500; Credit Cash 2$$,500

Question 7

Which of the following best describes the double-entry system in accounting?

Accepted Answer

Each transaction affects at least two accounts, with debits equaling credits

Question 8

A company declares and pays a $1,200 dividend. What is the effect on the accounting equation?

Accepted Answer

Assets decrease by $$1,200; Stockholders' Equity decreases by 1$$,200

Question 9

Which of the following is an example of a liability account?

Accepted Answer

Accounts Payable

Question 10

What is the correct journal entry for earning $3,000 of service revenue in cash?

Accepted Answer

Debit Cash $$3,000; Credit Service Revenue 3$$,000

Question 11

If a company starts the month with $$2,000 in cash, receives 5$$,000, and ends with $1,500, how much cash was paid out during the month?

Accepted Answer

$$5,500$$

Question 12

Which of the following best describes the purpose of a trial balance?

Accepted Answer

To verify that total debits equal total credits after posting

Question 13

Which of the following is NOT a component of stockholders' equity?

Accepted Answer

Notes Payable

Question 14

A company receives $10,000 cash from investors in exchange for common stock. What is the effect on the accounts?

Accepted Answer

Cash increases (debit) $$10,000; Common Stock increases (credit) 10$$,000

Question 15

Which of the following best describes the normal balance for a revenue account?

Accepted Answer

Credit

Question 16

A company pays $$1,100 for rent, 1$$,200 for salaries, and $400 for utilities in cash. What is the total effect on assets and expenses?

Accepted Answer

Assets decrease by $$2,700; Expenses increase by 2$$,700

Question 17

Which of the following is an example of supervised machine learning in accounting?

Accepted Answer

A program that predicts the next value in a sequence of transactions

Question 18

Which programming language is most commonly used for machine learning applications in accounting?

Accepted Answer

Python

Question 19

A company sells land for $22,000, which is the same amount it paid for the land. What is the effect on the accounting equation?

Accepted Answer

One asset (land) decreases by $$22,000; another asset (cash) increases by 22$$,000

Question 20

Which of the following best describes the purpose of a chart of accounts?

Accepted Answer

It lists all accounts and account numbers used by a company

Financial Accounting: Transaction Analysis and the Accounting Cycle

Study Guide - Practice Questions