Multiple choice questions based on business accounts.
1. A corporation and its' owners are distinct entities:
a.From a legal standpoint
b.From an accounting standpoint
c.From an accounting and legal standpoint
d.None of the above
2. After analyzing a transaction, it is recorded in:
a.The general ledger
b.The general journal
c.T-accounts
d.Trial balance
3. The account used by corporations to record owner investments is:
a.Capital
b.Retained Earnings
c.Capital Stock
d.Drawings
4. Which of the following accounts is debited for increases?
a.Capital
b.Retained Earnings
c.Capital Stock
d.Dividends
5. The account used by corporations to record reinvested profits is:
a.Capital
b.Retained Earnings
c.Capital Stock
d.Drawings
6. Which of the following accounts is debited for decreases?
a.Capital
b.Cash
c.Dividends
d.Drawings
7. To record the repayment of a loan to a creditor:
a.Notes Payable must be credited
b.Cash must be debited
c.Notes Payable must be debited
d.Both a and b are correct
8. Owner investments in corporations are recorded by:
a.Debiting Capital; crediting Cash
b.Debiting Cash; crediting Capital
c.Debiting Capital Stock; crediting Cash
d.Debiting Cash; crediting Capital Stock
9. To record the sale of goods to customers on credit:
a.Accounts Payable must be debited
b.Accounts Payable must be credited
c.Accounts Receivable must be debited
d.Accounts Receivable must be credited
10. The distribution of cash to investors of corporations are recorded by:
a.Debiting Drawings; crediting Cash
b.Debiting Cash; crediting Drawings
c.Debiting Dividends; crediting Cash
d.Debiting Cash; crediting Dividends