# Financial Accouting Midterm Practice Part 2

57 Questions | Total Attempts: 93  Settings  Financial Accouting Midterm Practice Part 2Questons 1-36 from Quiz 3

• 1.
Which of the following best represents the expanded accounting equation?
• A.

Assets = Liabilities + Common Stock - Revenues - Expenses + Dividends

• B.

Assets - Liabilities - Common Stock = Revenues - Expenses - Dividends

• C.

Assets - Liabilities = Revenues - Exports - Dividends

• D.

Assets - Liabilities = Revenues - Expenses + Dividends

• 2.
A trial balance will not balance if
• A.

A \$500 payment on accounts payable is debited to Accounts Payable for \$50 and credited to Cash for \$50

• B.

A \$350 payment of rent is debited to Rent Expense for \$350 and credited to Cash for \$35

• C.

A transaction is not posted at all

• D.

A journal entry is posted twice

• 3.
Recognizing expense results in a(n)
• A.

Decrease to the expense account

• B.

Increase to the expense account

• C.

Increase in retained earnings

• D.

Decrease to the revenue account

• 4.
The current ratio and the quick ratio are both relative measures of a compnay's liquidity. They differ in how they are computed because
• A.

The current ratio is considered to be a more conservative measure of a company's liquidity

• B.

The quick ratio is considered to be a more conservative measure of a company's liquidity

• C.

The current ratio is considered to be a more accurate measure of a company's liquidity

• D.

The quick ratio also measures profitability

• 5.
In a T-account, the left side is called the
• A.

Increase side

• B.

Decrease side

• C.

Credit side

• D.

Debit side

• 6.
All of the following are components of a journal entry except
• A.

Trial balance

• B.

Explanation

• C.

Debit entry

• D.

Credit entry

• 7.
The Dividends account is increased with a debit because dividends
• A.

Are declared an asset

• B.

Reduce liabilities

• C.

Result in a decrease in equity, so debiting Dividends would have the effect of decreasing Owner's Equity

• D.

Are an expense

• 8.
A company purchases a piece of equipment for \$8,000 in exchange for \$4,000 cash and a \$4,000 note payable. Which of the following journal entries represents the appropriate method for recording this transaction?
• A.

Cash \$4,000 Note Payable \$4,000 Equipment \$8,000

• B.

Equipment \$8,000 Cash \$4,000 Accounts Payable \$4,000

• C.

Equipment \$8,000 Cash \$4,000 Note Payable \$4,000

• D.

Equipment \$8,000 Cash \$8,000

• 9.
In recording accounting transactions, evidence that a transaction has taken place is obtained from
• A.

The Internal Revenue Service

• B.

The Securities and Exchange Commission

• C.

Source documents

• D.

The Board of Directors

• 10.
Which of the following accounts is an asset?
• A.

Supplies

• B.

Dividends

• C.

Accounts Payable

• D.

Service Revenue

• 11.
The usual sequence in the steps in the accounting cycle is
• A.

Posting - journalize - analyze - trial balance

• B.

Journalize - analyze - posting - closing

• C.

Journalize - posting - analyze - closing

• D.

Analyze - journalize - posting - trial balance

• 12.
When a company prepares its trial balance, which sequence of accounts below represents the proper order in which the accounts should be listed?
• A.

Assets Expenses Liabilities Revenues Equity Dividends

• B.

Assets Liabilities Equity Dividends Revenues Expenses

• C.

Assets Dividends Equity Expenses Liabilities Revenues

• D.

Assets Revenues Equity Liabilities Expenses Dividends

• 13.
The trial balance does all of the following except
• A.

Help identify which accounts need to be closed

• B.

Verify that accounts with debit balances equal accounts with credit balances

• C.

Verify all of the accounts that will be used in the financial statements

• D.

Ensure there are no errors in the accounting records

• 14.
If a journal entry has been posted, the accounting equation is out of balance, then one might conclude that
• A.

• B.

The company owes a tax liability

• C.

The transaction was posted to the wrong accounts

• D.

The income statement will show a net loss

• 15.
___________ refers to the process of transferring amounts from the journal entries to general ledger accounts.
• A.

Balancing

• B.

Journalizing

• C.

Analyzing

• D.

Posting

• 16.
Recognizing an expense results in a(n)
• A.

Decrease to the expense account

• B.

Increase to the expense account

• C.

Increase in retained earnings

• D.

Decrease to the revenue account

• 17.
If a company manager wants to determine the amount that the company owes to suppliers, to which account would the manager look to determine the amounts owed?
• A.

Accounts Payable

• B.

Unearned Revenue

• C.

Supplies Expense

• D.

Accounts Receivable

• 18.
The normal balance of an asset account is
• A.

A credit balance

• B.

Always the same as the normal balance of the equity accounts

• C.

A debit balance

• D.

Dependent upon the financial condition of the entity

• 19.
Which of the following entries shows revenues earned and billed but not yet collected?
• A.

Accounts Receivable XXX Revenue XXX

• B.

Revenue XXX Accounts Receivable XXX

• C.

Accounts Receivable XXX Cash XXX

• D.

Cash XXX Accounts Receivable XXX

• 20.
One way to compute the quick ratio is
• A.

(Current Assets - Inventory) / Current Liabilities

• B.

Net Income / Net Sales

• C.

Current Inventory / Current Liabilities

• D.

Current Assets / Current Liabilities

• 21.
If Jennings Corporation has Net Sales of \$15,750, Interest income of \$675, Research and Development Expenses of \$4,125, Selling Expenses of \$3,246, Interest Expense of \$438, and Office Expenses of \$975, what is Jennings Corporation's Operating Income (Loss)?
• A.

\$7,641

• B.

\$10,651

• C.

\$7,404

• D.

\$6,291

• 22.
The record of a single transaction that is entered into a company's journal is known as
• A.

Credit

• B.

T-account posting

• C.

Debit

• D.

Journal entry

• 23.
If liabilities are paid in cash, then
• A.

Assets will increase

• B.

Liabilities will increase

• C.

Owner's equity will decrease

• D.

Assets will decrease

• 24.
The quick ratio measures the company's
• A.

Short-term profits

• B.

Ability to cover its long-term obligations

• C.

Ability to meet its short-term debts with its most liquid assets

• D.

Ability to meet all of its short-term obligations

• 25.
Which of the following entries represents payment for wages?
• A.

Cash XXX Salaries Expense XXX

• B.

Accounts Payable XXX Cash XXX

• C.

Wages Expense XXX Cash XXX

• D.

Cash XXX Salaries Payable XXX

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