Question 1

Which of the following best describes the effect on the accounting equation when a company purchases $3,700 of supplies on account?

Accepted Answer

Assets increase by $$3,700; Liabilities increase by 3$$,700.

Question 2

A company pays $1,900 on account to a supplier. Which accounts are affected and how?

Accepted Answer

Cash is credited $$1,900; Accounts Payable is debited 1$$,900.

Question 3

Which of the following journal entries correctly records the issuance of $50,000 of common stock for cash?

Accepted Answer

Cash is debited $$50,000; Common Stock is credited 50$$,000.

Question 4

If a company provides $3,000 of services on account, which accounts are affected and how?

Accepted Answer

Accounts Receivable is debited $$3,000; Service Revenue is credited 3$$,000.

Question 5

Which of the following is the correct formula for the accounting equation?

Accepted Answer

$$Assets = Liabilities + Stockholders'\ Equity$$

Question 6

A company declares and pays a $2,100 dividend. What is the effect on the financial statements?

Accepted Answer

Cash decreases by $$2,100; Retained Earnings decreases by 2$$,100.

Question 7

Which of the following accounts normally has a credit balance?

Accepted Answer

Accounts Payable

Question 8

What is the effect of paying $2,700 in expenses (rent, salaries, utilities) on the accounting equation?

Accepted Answer

Assets decrease by $$2,700; Retained Earnings decrease by 2$$,700.

Question 9

Which of the following best describes the normal balance of the Dividends account?

Accepted Answer

Debit

Question 10

A company sells land for $22,000 cash. What is the correct journal entry?

Accepted Answer

Cash is debited $$22,000; Land is credited 22$$,000.

Question 11

Which of the following is NOT recorded as a business transaction?

Accepted Answer

A stockholder pays $30,000 out of personal funds to remodel their home.

Question 12

Which of the following is the correct sequence for the flow of accounting data?

Accepted Answer

Transaction occurs → Transaction analyzed → Journal entry made → Posting to ledger

Question 13

If the sum of the credits in an account exceeds the sum of the debits, the account has:

Accepted Answer

A credit balance

Question 14

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

Accepted Answer

Accounts Payable

Question 15

Which of the following is the correct formula for calculating the ending balance of an account?

Accepted Answer

$$	ext{Ending Balance} = 	ext{Beginning Balance} + 	ext{Increases} - 	ext{Decreases}$$

Question 16

A company’s trial balance shows total debits of $$61,800 and total credits of 61$$,800. What does this indicate?

Accepted Answer

The ledger is in balance, but errors may still exist.

Question 17

Which of the following best describes the use of machine learning in accounting?

Accepted Answer

Automatically classifying transactions into the correct general ledger accounts.

Question 18

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

Accepted Answer

Python

Question 19

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

Accepted Answer

Training a model to recognize and categorize travel expenses based on labeled examples.

Question 20

If a company’s trial balance is out of balance by $$900, and dividing by 9 yields 100$$, what type of error is most likely?

Accepted Answer

A transposition error, such as writing $$2,100 as 1$$,200.

Transaction Analysis and the Accounting Equation: A Comprehensive Guide

Study Guide - Practice Questions