Master Accounting with Practice Multiple-Choice Questions Guide
School
Addis Ababa University**We aren't endorsed by this school
Course
ACCOUNTING ACCT
Subject
Accounting
Date
Dec 11, 2024
Pages
1
Uploaded by UltraMandrillPerson1139
1.Which of the following is nota step in the accounting process?(a) Identification. (c) Recording.(b) Economic entity. (d) Communication.2.Which of the following statements about users of accounting information is incorrect?(a) Management is an internal user.(b) Taxing authorities are external users.(c) Present creditors are external users.(d) Regulatory authorities are internal users.3. The historical cost principle states that:(a) assets should be initially recorded at cost and adjusted when the fair value changes.(b) activities of an entity are to be kept separate and distinct from its owner.(c) assets should be recorded at their cost.(d) only transaction data capable of being expressed in terms of money be included in the accounting records.4.Which of the following statements about basic as-sumptions is correct?(a) Basic assumptions are the same as accounting principles.(b) The economic entity assumption states that there should be a particular unit of accountability.(c) The monetary unit assumption enables account-ing to measure employee morale.(d) Partnerships are not economic entities.5. The three types of business entities are:(a) proprietorships, small businesses, and partner-ships.(b) proprietorships, partnerships, and corporations.(c) proprietorships, partnerships, and large businesses.(d) financial, manufacturing, and service companies.6.Net income will result during a time period when:(a) assets exceed liabilities.(b) assets exceed revenues.(c) expenses exceed revenues.(d) revenues exceed expenses.7.As of December 31, 2017, Stoneland AG has assets of €3,500 and equity of €2,000. What are the liabilities for Stoneland AG as of December 31, 2017?(a) €1,500. (b) €1,000. (c) €2,500. (d) €2,000.8. Performing services on account will have the follow-ing effects on the components of the basic accounting equation:(a) increase assets and decrease equity.(b) increase assets and increase equity.(c) increase assets and increase liabilities.(d) increase liabilities and increase equity.9.Which of the following events is notrecorded in the accounting records?(a) Equipment is purchased on account.(b) An employee is terminated.(c) A cash investment is made into the business.(d) The company pays a cash dividend.PRACTICE MULTIPLE-CHOICE QUESTIONS10. During 2017, Gibson Company’s assets decreased $50,000 and its liabilities decreased $90,000. Its equity therefore:(a) increased $40,000. (c) decreased $40,000.(b) decreased $140,000. (d) increased $140,000.11.Payment of an account payable affects the compo-nents of the accounting equation in the following way:(a) decreases equity and decreases liabilities.(b) increases assets and decreases liabilities.(c) decreases assets and increases equity.(d) decreases assets and decreases liabilities.12. Which of the following statements is false?(a) A statement of cash flows summarizes informa-tion about the cash inflows (receipts) and out-flows (payments) for a specific period of time.(b) A statement of financial position reports the as-sets, liabilities, and equity at a specific date.(c) An income statement presents the revenues, ex-penses, assets, and liabilities for a specific period of time.(d) A retained earnings statement summarizes the changes in retained earnings for a specific period of time.13. On the last day of the period, Jim Otto Company buys a $900 machine on credit. This transaction will affect the:(a) income statement only.(b) statement of financial position only.(c) income statement and retained earnings state-ment only.(d) income statement, retained earnings statement, and statement of financial position.14. The financial statement that reports assets, liabilities, and equity is the:(a) income statement.(b) retained earnings statement.(c) statement of financial position.(d) statement of cash flows.15.Services performed by a public accountant include:(a) auditing, taxation, and management consulting.(b) auditing, budgeting, and management consulting.(c) auditing, budgeting, and cost accounting.(d) internal auditing, budgeting, and management consulting.
