Question 1 Land is purchased by making a cash down payment of $40,000 and signing a note payable for the balance of $130,000. The journal entry to record this transaction in the accounting records of the purchaser includes: a)A credit to Land for $40,000. b)A debit to Cash for $40,000. c)A debit to Land for $170,000. d)A debit to Note Payable for $130,000.
Question 1
Land is purchased by making a cash down payment of $40,000 and signing a note payable for the balance of $130,000. The
a)A credit to Land for $40,000.
b)A debit to Cash for $40,000.
c)A debit to Land for $170,000.
d)A debit to Note Payable for $130,000.
Qestion 2
The accounting principle that assumes that a company will operate in the foreseeable future is:
a)Going concern.
b)Objectivity.
c)Liquidity.
d)Disclosure.
Question 3
Total assets must always equal total liabilities plus total owners' equity.
a)True
b)False
Question 4
In which of the following situations would the largest amount be recorded as an expense of the current year? (Assume accrual basis accounting.)
a)$4,000 is paid in January for equipment with a useful life of four years.
b)$1,800 is paid in January for a two-year fire insurance policy.
c)$1,200 cash dividends are declared and paid.
d)$900 is paid to an attorney for legal services rendered during the current year.
Question 5
Which of the following is not a correct form of the
(a) Assets = Claims
(b) Assets = Liabilities + Owner Equity
(c) Assets – Liabilities = Owner’s Equity
(d) Assets + Owner’s Equity = Liabilities
Question 6
Each year, the accountant for Southern Real Estate Company adjusts the recorded value of each asset to its market value. Using these market value figures on the balance sheet violates:
a)The accounting equation.
b)The stable-dollar assumption.
c)The business entity concept.
d)The cost principle.
Question 7
The cash account of Grande Home Improvement Store shows the following: a debit on June 1 for $25,000; a credit on June 5 for $10,000, a debit on June 16 for $14,000, and a credit on June 27 for $8,000. What is the balance in the cash account at the end of June?
a)$39,000 debit.
b)$21,000 debit.
c)$18,000 credit.
d)$21,000 credit.
Question 8
Bruno's Pizza Restaurant makes full payment of $8,300 on an account payable to Stella's Cheese Co. Stella's would record this transaction with a:
a)Debit to Accounts Payable for $8,300.
b)Credit to Cash for $8,300.
c)Credit to
d)Credit to Accounts Payable for $8,300.
Question 9
Eton Corporation purchased land in 1998 for $190,000. In 2014, it purchased a nearly identical parcel of land for $430,000. In its 2014 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the:
a)Cost principle.
b)Principle of the business entity.
c)Objectivity principle.
d)Going-concern assumption.
Question 10
Accounting entries involve a minimum of __ accounts.
a)3
b)2
c)5
d)Unlimited
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