THEORIES

1. It is known as the language of business

a. Accounting b. English c. Financial Statements d.
All of these
2. Which of the following describes "Credit"?
I. It always decreases asset accounts
II. It is always on the right side of the T-account, regardless when the account is an asset,
liability or equity
III. It is the normal balance of all contra accounts
IV. It is used to close all revenue accounts for the period
a. I only b. II only c. I, II d. I, II, III e.
All of these
3. Select the incorrect equation. If Assets= Liabilities + Capital, then
a. Assets- Liabilities = Net Assets
b. Net Increase in Capital = Increase in Assets - Increase in Liabilities - Drawings
c. Change in Capital = Additional Investments + Net Income/loss for the period - Drawings
d. Assets Liabilities + Owner's Investments + Drawing + Net Income
e. Choices A and D are correct
4. If a company uses special journals, purchases of merchandise should be recorded using

a. Purchase journal only d. Voucher register

a. Purchase journal or Cash payments journal e. General journal
b. Cash payments journal only
5. They encompass the conventions, rules and procedures necessary to define what is
accepted
accounting practice
a. Generally Accepted Accounting Principles c. Conceptual Framework
b. Accounting Constraints d. Accounting Assumptions
6. Which type of accounts needs to be closed at the end of the accounting period?
a. Real accounts c. Mixed accounts e. Adjunct accounts
b. Nominal accounts d. Contra accounts
7. What function do general ledgers serve in the accounting process?

a. Classifying c. Reporting e. Communicating

b. Summarizing d. Recording
8. Under the income method, the adjusting entry for income not yet earned but already collected
or
recorded will
 a. Increase asset, increase in revenue d. Increase liability, increase in expenses
a. Decrease asset, increase in liability e. Increase in Cash, increase in revenue
b. Increase liability, decrease in revenue
9. After the accounts have been closed,

a. all the accounts will have zero balance

b. the real accounts will have zero balances
c. the revenue, expense, income summary and retained earnings accounts will have zero
balances
d. the revenue, expense and income summary accounts will have zero balances
e. adjusting entries will have to be journalized
10. Which of the following account titles appear in the Income Statement columns of the
worksheet?
a. Unearned Fees c. Accumulated Depreciation e. Owner, Drawing
b. Freight-out d. Accrued Expenses