Accounts Basics - Multiple Choice questions
1. An accounting time period that is one year in length, but does not begin on January 1, is referred to as
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.
2. The revenue recognition principle dictates that revenue should be recognized in the accounting records
a. when cash is received.
b. when it is earned.
c. at the end of the month.
d. in the period that income taxes are paid.
3. The matching principle matches
a. customers with businesses.
b. expenses with revenues.
c. assets with liabilities.
d. creditors with businesses.
4. Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns
5. The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:
|
|
Income Statement
|
Balance Sheet
|
|
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
|
Totals
|
$58,000
|
$48,000
|
$34,000
|
$44,000
|
The net income (or loss) for the period is
a. $48,000 income.
b. $10,000 income.
c. $10,000 loss.
d. not determinable.
Use the following information for questions 6-10
The income statement for the month of June, 2008 of Delgado Enterprises contains the following information:
|
Revenues
|
$7,000
|
|
Expenses:
|
|
|
Wages Expense
|
$2,000
|
|
Rent Expense
|
1,000
|
|
Supplies Expense
|
300
|
|
Advertising Expense
|
200
|
|
Insurance Expense
|
100
|
|
Total expenses
|
3,600
|
|
Net income
|
$3,400
|
6. The entry to close the revenue account includes a
a. debit to Income Summary for $3,400.
b. credit to Income Summary for $3,400.
c. debit to Income Summary for $7,000.
d. credit to Income Summary for $7,000.
7. The entry to close the expense accounts includes a
a. debit to Income Summary for $3,400.
b. credit to Rent Expense for $1,000,
c. credit to Income Summary for $3,600.
d. debit to Wages Expense for $2,000.
8. After the revenue and expense accounts have been closed, the balance in Income Summary will be
a. $0.
b. a debit balance of $3,400.
c. a credit balance of $3,400.
d. a credit balance of $7,000.
9. The entry to close Income Summary to Retained Earnings includes
a. a debit to Revenue for $7,000.
b. credits to Expenses totaling $3,600.
c. a credit to Income Summary for $3,400
d. a credit to Retained Earnings for $3,400.
10. At June 1, 2008, Delgado reported retained earnings of $35,000. The company had no dividends during June. At June 30, 2008, the company will report retained earnings of
a. $35,000.
b. $42,000.
c. $38,400.
d. $31,600.