Q: Which of the following equations properly represents a derivation of the fundamental accounting equation?

$$\text{Assets} = \text{Liabilities} + \text{Owner's Equity}$$

Question 1

Which of the following is NOT a fundamental qualitative characteristic of accounting information?

Accepted Answer

Comparability.

Question 2

Which of the following equations properly represents a derivation of the fundamental accounting equation?

Accepted Answer

$$	ext{Assets} = 	ext{Liabilities} + 	ext{Owner's Equity}$$

Question 3

Which of the following transactions would have NO impact on stockholders' equity?

Accepted Answer

Purchase of land from the proceeds of a bank loan.

Question 4

Remington provided the following partial information about its balance sheet: Cash $$100, Accounts receivable 500$$, Stockholders' equity $$700, Accounts payable 200$$, Bank loans $1,000. Based on this information, how much are Remington's liabilities?

Accepted Answer

$1,200

Question 5

Gerald had beginning total stockholders' equity of $$160,000. During the year, total assets increased by 240$$,000 and total liabilities increased by $$120,000. Gerald's net income was 180$$,000. No additional investments were made; however, dividends did occur during the year. How much were the dividends?

Accepted Answer

$140,000

Question 6

Of the following account types, which would be increased by a debit?

Accepted Answer

Assets and expenses.

Question 7

A company receives $5,000 in advance for services to be performed in the future. Which journal entry correctly records this transaction?

Accepted Answer

Cash $$5,000; Unearned Revenue 5$$,000

Question 8

Blankenship Company pays its employees every Friday for work rendered that week. The payroll is typically $10,000 per week. What journal entry would Blankenship ordinarily record on the Friday payday?

Accepted Answer

Salary Expense $$10,000; Cash 10$$,000

Question 9

At the end of the current accounting period, Johnson Company failed to record utilities consumed during the period. Johnson will be billed for the utilities during the next accounting period. As a result, current period assets, liabilities, equity, and income, respectively, are:

Accepted Answer

Correct, understated, overstated, overstated

Question 10

Which of the following accounts would NOT be closed at the end of an accounting period?

Accepted Answer

Capital Stock

Question 11

Which of the following financial statements is prepared as of a specific date?

Accepted Answer

Balance Sheet

Question 12

Which of the following is NOT a primary objective of effective internal controls?

Accepted Answer

Assurance of elimination of business risk

Question 13

A bank reconciliation sometimes points to the need for adjusting entries. In general, the source of the adjustments is:

Accepted Answer

The reconciliation of the cash balance per the company records to the adjusted cash balance

Question 14

Malory Company provides the following information about the month-end bank reconciliation: Ending cash per company records $$7,283; Deposits in transit at month-end 345$$; Outstanding checks at month-end $$2,399; Customer check adjusted NSF 45. $$What is the correct (adjusted) ending cash balance?

Accepted Answer

$7,041

Question 15

ABC Corp. was notified by the bank that one of their customer checks deposited recently for $$70 did not clear the bank. The bank charged a non-sufficient check fee of 25. $$What journal entry should be recorded to ensure the company records are correct?

Accepted Answer

Accounts Receivable $$70; Miscellaneous Expense 25$$; Cash $95

Question 16

Which of the following best describes the basic sequence in the accounting process?

Accepted Answer

Transaction, source document, journal entry, post to ledger account, trial balance.

Question 17

Which of the following comments about debits and credits is TRUE?

Accepted Answer

The total dollar amount of debits must always equal the total dollar amount of credits in each journal entry.

Question 18

Which of the following is an example of an accrued expense?

Accepted Answer

Salaries owed but not yet paid.

Question 19

Current assets are those assets which management intends to convert into cash or consume within:

Accepted Answer

The longer of (a) or (b)

Question 20

Which of the following accounts should NOT be included in the Cash account on the balance sheet?

Accepted Answer

Travel advances to employees

Financial Accounting: Exam 1 Study Guide (Chapters 1–4)

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