​1) Accounting: A. processes data into reports and communicates the data to decision makers. B. is often called the language of business. C. measures business activities. D. is all of the above. 2) Assets include​ cash, land, and accounts payable. True False 3) A prepaid expense is an asset. True False 4) The primary objective of financial reporting is to provide information A. on the cash flows of the company. B. to the federal government. C. useful for making investment and credit decisions. D. about the profitability of the enterprise. 5) Each transaction has either an equal effect on both the left - and right- sides of the accounting​ equation, or an offsetting effect​ (both positive and​ negative) on the same side of the equation. True False 6) During​ February, assets increased by $ 87,000 and liabilities increased by $ 31,000. Stockholders' equity must have A. increased by $ 56,000. B. decreased by $ 56,000. C. increased by $ 118,000. D. decreased by $ 118,000 7) Thompson Instruments had retained earnings of $ 340,000 at December​ 31, 2015. Net income for 2016 totaled $ 185,000, and dividends for 2016 were $ 85,000. How much retained earnings should Thompson report at December​ 31, 2016? A. $ 425,000 B. $ 340,000 C. $ 525,000 D. $ 440,000 8) Purchasing a laptop computer on account will A. increase total assets. B. have no effect on​ stockholders' equity. C. increase total liabilities. D. All of the listed choices are correct. 9) Performing a service on account will A. increase total assets. B. increase​ stockholders' equity. C. increase total liabilities. D. accomplish both a and b. 10) Receiving cash from a customer on account will A. decrease liabilities. B. have no effect on total assets. C. increase​ stockholders' equity. D. increase total assets. 11) Which of the following is not an asset​ account? A. Salary Expense B. Common Stock C. Service Revenue D. None of the listed accounts is an asset. 12) The journal entry to record the purchase of supplies on account A. debits Supplies Expense and credits Supplies. B. credits Supplies and debits Cash. C. credits Supplies and debits Accounts Payable. D. debits Supplies and credits Accounts Payable. 13) On January 1 of the current​ year, Bambi Company paid $ 1,500 in rent to cover six months ​(January long dash June). Bambi recorded this transaction as​ follows: Journal Entry Date Accounts Debit Credit Jan 1 Prepaid Rent 1,500 Cash 1,500 Bambi adjusts the accounts at the end of each month. Based on these​ facts, the adjusting entry at the end of January should include A. a debit to Prepaid Rent for $ 1,250. B. a credit to Prepaid Rent for $ 250. C. a debit to Prepaid Rent for $ 250. D. a credit to Prepaid Rent for $ 1,250. 14) On January 1 of the current​ year, Bamber Company paid $ 1,500 in rent to cover six months​ (January -​ June). Bamber recorded this transaction as​ follows: Journal Entry Date Accounts Debit Credit Jan 1 Prepaid Rent 1,500 Cash 1,5.

1. 1) Accounting:
A. processes data into reports and communicates the data to
decision makers.
B. is often called the language of business.
C. measures business activities.
D. is all of the above.
2) Assets include cash, land, and accounts payable.
True
False
3) A prepaid expense is an asset.
True
False
4) The primary objective of financial reporting is to provide
information
A. on the cash flows of the company.
B. to the federal government.
C. useful for making investment and credit decisions.
D. about the profitability of the enterprise.
5) Each transaction has either an equal effect on both the left -
and right- sides of the accounting equation, or an offsetting
effect (both positive and negative) on the same side of the
equation.
True
False
6) During February, assets increased by $ 87,000 and liabilities
increased by $ 31,000. Stockholders' equity must have
A. increased by $ 56,000.
B. decreased by $ 56,000.
C. increased by $ 118,000.

2. D. decreased by $ 118,000
7) Thompson Instruments had retained earnings of $ 340,000 at
December 31, 2015.
Net income for 2016 totaled $ 185,000, and dividends for 2016
were $ 85,000.
How much retained earnings should Thompson report at
December 31, 2016?
A. $ 425,000
B. $ 340,000
C. $ 525,000
D. $ 440,000
8) Purchasing a laptop computer on account will
A. increase total assets.
B. have no effect on stockholders' equity.
C. increase total liabilities.
D. All of the listed choices are correct.
9) Performing a service on account will
A. increase total assets.
B. increase stockholders' equity.
C. increase total liabilities.
D. accomplish both a and b.
10) Receiving cash from a customer on account will
A. decrease liabilities.
B. have no effect on total assets.
C. increase stockholders' equity.
D. increase total assets.
11) Which of the following is not an asset account?
A. Salary Expense
B. Common Stock
C. Service Revenue

3. D. None of the listed accounts is an asset.
12) The journal entry to record the purchase of supplies on
account
A. debits Supplies Expense and credits Supplies.
B. credits Supplies and debits Cash.
C. credits Supplies and debits Accounts Payable.
D. debits Supplies and credits Accounts Payable.
13) On January 1 of the current year, Bambi Company paid $
1,500 in rent to cover six months
(January long dash June). Bambi recorded this transaction as
follows:
Journal Entry
Date
Accounts
Debit
Credit
Jan
1
Prepaid Rent
1,500
Cash
1,500
Bambi adjusts the accounts at the end of each month. Based on
these facts, the adjusting entry at the end of January should
include
A. a debit to Prepaid Rent for $ 1,250.
B. a credit to Prepaid Rent for $ 250.

4. C. a debit to Prepaid Rent for $ 250.
D. a credit to Prepaid Rent for $ 1,250.
14) On January 1 of the current year, Bamber Company paid $
1,500 in rent to cover six months (January - June). Bamber
recorded this transaction as follows:
Journal Entry
Date
Accounts
Debit
Credit
Jan
1
Prepaid Rent
1,500
Cash
1,500
Bamber's adjusting entry at the end of February included a debit
to Rent Expense in the amount of $ 250. What effect does the
adjusting entry have on Bamber's net income for February?
A. Decrease by $ 500
B. Increase by $ 500
C. Decrease by $ 250
D. Increase by $ 250

5. 15) An adjusting entry recorded June salary expense that will be
paid in July. Which statement best describes the effect of this
adjusting entry on the company's accounting equation?
A. Assets are not affected, liabilities are increased, and
stockholders' equity is increased.
B. Assets are decreased, liabilities are not affected, and
stockholders' equity is decreased.
C. Assets are decreased, liabilities are increased, and
stockholders' equity is decreased.
D. Assets are not affected, liabilities are increased, and
stockholders' equity is decreased.
16) All of the following are internal control procedures except
A. Sarbanes-Oxley reforms.
B. adequate records.
C. assignment of responsibilities.
D. internal and external audits.
17) Requiring that an employee with no access to cash do the
accounting is an example of which characteristic of internal
control?
A. Competent and reliable personnel
B. Monitoring of controls
C. Assignment of responsibility
D. Separation of duties
18) In a bank reconciliation, an EFT cash payment is
A. deducted from the bank balance.
B. deducted from the book balance.
C. added to the book balance.
D. added to the bank balance.
19) If a bookkeeper mistakenly recorded a $ 34deposit as $ 43,
the error would be shown on the bank reconciliation as a
A. $ 9 addition to the book balance.

6. B. $ 43 deduction from the book balance.
C. $ 43 addition to the book balance.
D. $ 9 deduction from the book balance.
20) In a bank reconciliation, interest revenue earned on your
bank balance is
A. deducted from the book balance.
B. added to the bank balance.
C. added to the book balance.
D. deducted from the bank balance.
21) Which of the following is included in the calculation of the
quick (acid-test) ratio?
A. Cash and accounts receivable
B. Inventory and prepaid expenses
C. Prepaid expenses and cash
D. Inventory and short-term investments
22) A company with net credit sales of $ 1,017,000, beginning
net receivables of $ 90,000,
and ending net receivables of $ 120,000, has days' sales
outstanding of (Round interim calculations to two decimal
places, XX.XX and the days' sales outstanding (DSO) up to the
next whole day.)
A. 48 days.
B. 41 days.
C. 38 days.
D. 44 days.
23) Riverview Software began January with $ 3,700 of
merchandise inventory. During January,
Riverview made the following entries for its inventory
transactions:

7. Inventory
6,600
Accounts Payable
6,600
Accounts Receivable
7,300
Sales Revenue
7,300
Cost of Goods Sold
5,200
Inventory

8. 5,200
How much was Riverview's inventory at the end of January?
A. $ 5,100
B. $ -0-
C. $ 6,600
D. $ 10,300
24) Leading Edge Frame Shop wants to know the effect of
different inventory costing methods on its financial statements.
Inventory and purchases data for June follow:
Units
Unit Cost
Total Cost
Jun
1
Beginning inventory
2,400
$18.00
$43,200
4
Purchase
1,500
$18.30
27,450
9
Sale
(1,800)
If Leading Edge Frame Shop uses the LIFO method, cost of

9. goods sold will be
A. $ 27,450.
B. $ 32 ,850.
C. $ 32,700.
D. $ 32,400
.
25) Two financial ratios that clearly distinguish a discount
chain such as Walmart from a high-end retailer such as Gucci
are the gross profit percentage and the rate of inventory
turnover. Which set of relationships is most likely for Gucci?
Gross profit percentage Inventory
turnover
A. High High
B. Low Low
C. Low High
D High Low
26) Sales are $ 500,000 and cost of goods sold is $ 320,000.
Beginning and ending inventories are
$ 28,000 and $ 38,000, respectively. How many times did the
company turn its inventory over during this period?
A. 9.7 times
B. 6.4 times
C. 15.2 times
D. 5.5 times