ACCOUNTING I
1. A special journal used to record all transactions involving cash receipts or increases is called:
a. cash receipts journal
b. sales journal
c. cash payments journal
d. purchases journal
Competency: Journalizing
Task: Journalize and record business transactions in a general journal and/or cash journal.
2. What is the second step in the closing process?
a. close income summary to the owner's capital account
b. close credit balances in revenue accounts to income summary
c. close debit balances in expense accounts to income summary
d. close withdrawals to the owner's capital account
Competency: Journalizing
Task: Journalize adjusting and closing entries for a business.
3. Expenditures that add to the utility of fixed assets for more than one accounting period are
called:
a. current expenditures
b. capital expenditures
c. revenue expenditures
d. committed expenditures
Competency: Account Classification
Task: Differentiate fixed assets, intangible assets, and current assets.
4. Those things that one wants to accomplish are called:
a. financial wants
b. financial values
c. financial goals.
d. financial needs
Competency: Account Classification
Task: Differentiate between current and long-term liabilities.
5. The _____________ is a multiple step procedure that results in the preparation and analysis of
the major financial statements.
a. financial management process
b. accounting cycle
c. financial performance
d. double-entry method
Competency: Terminology, Concepts, and Practices
Task: Identify the steps in the accounting cycle.
6. Owner's equity is the amount remaining after:
a. the amount of expenses is subtracted from the amount of revenue
b. the amount of liabilities is subtracted from the amount of assets
c. the cost of merchandise sold is subtracted from the total revenue earned
d. the amount of liabilities is added to the amount of assets
Competency: Terminology, Concepts, and Practices
Task: Define general accounting terms such as asset, liability, account payable, capital,
income, expense, etc.
7. When the perpetual inventory system is used, the inventory sold is shown on the income
statement as:
a. net purchases
b. purchases returns and allowances
c. cost of merchandise sold
d. purchases
Competency: Income Statement
Task: Prepare and income statement that reports the results of operations for an entity
8. A trial balance is prepared to:
a. prove that no errors were made in posting to the ledger
b. summarize the account balances to help prepare financial statements
c. prove that there were no errors made in recording transactions into the journal
d. prove that each account balance is correct
Competency: Worksheet
Task: Prepare trial balance, income statement, and balance sheet sections of the worksheet.
9. When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at:
a. a premium
b. a discount
c. their face value
d. their maturity value
Competency: Types of Ownership
Task: Explain the characteristics associated with corporations.
10. The method of determining depreciation that yields successive reductions in the periodic
depreciation charge over the estimated life of the asset is called:
a. units-of-production
b. declining-balance
c. time-valuation
d. straight-line
Competency: Depreciation
Task: Identify the appropriate method for calculating depreciation.
Accounting I Answer Key
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A
C
B
C
B
B
C
B
B
B
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