1.

At the end of the fiscal year, an adjusting entry is made that increases both interest expense and
interest payable. This entry is an application for which accounting principle?
a. Full disclosure
b. Materiality
c. Matching
d. Going concern
e. Realization

2. Who is responsible for the preparation and integrity of financial statements?

a. A cost accountant
b. Management
c. An auditor
d. A bookkeeper
e. The FASB

6. In addition to the balance sheet, the income statement, and the statement of cash flows, a complete
set of financial statements must include:
a. an auditor's opinion.
b. a ten-year summary of operations.
c. a note disclosure of such items as accounting policies.
d. historical common-size (percentage) summaries.
e. a list of corporate officers.

9. Which of these statements is not true?

a. Transactions must be recorded in a journal.
b. All transactions could be recorded in the general journal.
c. Companies use a number of special journals to record most transactions.
d. Special journals are designed to improve record- keeping efficiency.
e. The form of the journals are the same from industry to industry.

10. Which of these statements is not true?

a. Asset, liability, and stockholders' equity accounts are referred to as permanent accounts.
b. Revenue, expense, and dividend accounts are described as temporary accounts.
c. Temporary accounts are closed at the end of the period to retained earnings.
d. The balance sheet will not balance until the temporary accounts are closed to retained
earnings.
e. With double-entry, each transaction is recorded twice.

12. Which of the following is a permanent account?

a. Dividend Income
b. Advertising expense
c. Building
d. Selling expense
e. Insurance expense

13. Which of the following is a temporary account?

a. Advertising expense
b. Land

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c. Building
d. Accounts payable
e. Bonds payable

15. If liabilities total $70,000 and stockholders' equity totals $50,000, then total assets must be:
a. $20,000.
b. $80,000.
c. $120,000.
d. $30,000.
e. $30,000.

16. Tiffin Company had retained earnings of $50,000 at the end of last year. For the current year,
income was $20,000 and dividends $15,000. What is the balance in retained earnings at the end of the
current year?
a. $85,000
b. $45,000
c. $55,000
d. $60,000
e. none of the answers are correct

17. Smith Company had retained earnings of $60,000 at the end of the current year. For the current
year, income was $30,000 and dividends $10,000. What was the balance in retained earnings at the end
of the prior year?
a. $30,000
b. $40,000
c. $60,000
d. $30,000
e. $70,000

At December 31, 2018, the accounting records of Braun Corporation contain the following items:
Accounts Payable $ 16,000
Accounts Receivable $ 40,000
Land $ 240,000
Cash ?
Capital Stock ?
Equipment $ 120,000
Building $ 180,000
Notes Payable $ 190,000
Retained Earnings $ 160,000
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72) If Cash at December 31, 2018, is $86,000, Capital Stock is:
A) $260,000. B) $300,000. C) $620,000. D) $168,000.

73) If Cash at December 31, 2018, is $26,000, total owners' equity is:
A) $160,000. B) $366,000. C) $606,000. D) $400,000.

74) If Cash at December 31, 2018, is $66,000, total assets amounts to:
A) $606,000. B) $806,000. C) $662,000. D) $646,000.

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At December 31, 2018, the accounting records of Hercules Manufacturing, Inc. contain the following
items:
Accounts Payable $ 12,000
Accounts Receivable $ 30,000
Land $ 90,000
Cash $ 7,000
Building 250,000
Equipment $ ?
Notes Payable $ 135,000
Capital Stock $ 188,000
Retained Earnings ?
-
75) If total assets of Hercules Manufacturing, Inc. are $556,000, Equipment is carried in Hercules
Manufacturing accounting records at:
A) $377,000. B) $179,000. C) $150,000. D) $ 90,000.

76) If total assets of Hercules Manufacturing, Inc. are $556,000, Retained Earnings at December 31,
2018, must be:
A) $811,000. B) $180,000. C) $221,000. D) $335,000.

77) If Retained Earnings at December 31, 2018, is $140,000, total assets amounts to:
A) $ 98,000. B) $377,000. C) $475,000. D) $188,000.

78) If Retained Earnings at December 31, 2018, is $100,000, Equipment is carried in Hercules
Manufacturing, Inc. accounting records at:
A) $ 42,000. B) $ 58,000. C) $ 43,500. D) $345,000.

79) Assume that the Equipment shown above was acquired by the business five years ago and has a
book value of $156,000, but has a current appraised value of $200,000. Hercules Manufacturing's
Retained Earnings at December 31, 2018, amounts to:
A) $533,000. B) $345,000. C) $198,000. D) $356,000.

At December 31, 2018 the accounting records of Gordon, Inc. contain the following items:
Accounts Payable $ 2,500
Accounts Receivable $ 18,750
Land $ 30,000
Cash ?
Building $ 31,250
Equipment $ 40,000
Notes Payable?
Capital Stock $ 12,500
Retained Earnings $ 125,000

80) If the Notes Payable is $10,000, the December 31, 2018 cash balance is:
A) $ 60,000. B) $160,000. C) $ 30,000. D) $ 20,000.

81) If the Notes Payable balance is $25,000, then the total assets of Gordon, Inc. at December 31, 2018

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amount to:
A) $ 27,500. B) $152,500. C) $120,000. D) $165,000.

82) If the Cash balance at December 31, 2018 is $67,500, the Notes Payable balance is:
A) $118,750. B) $ 47,500. C) $137,500. D) $140,000.

83) Refer to the information above. If the Cash balance at December 31, 2018 is $62,500 then Total
Liabilities amounts to:
A) $ 42,500. B) $140,000. C) $ 45,000. D) $182,500.

84) Which of the following is correct if at the end of Crystal Imports' first year of operations, Assets are
$800,000 and Owners' Equity is $720,000?
A) The owner(s) must have invested $800,000 to start the business.
B) The business must be operating profitably.
C) Liabilities are $80,000.
D) Liabilities are $1,520,000.

85) During the current year, the assets of Wheatley's increased by $362,000, and the liabilities increased
by $260,000. The owners' equity in the business must have:
A) Decreased by $102,000. B) Decreased by $622,000.
C) Increased by $102,000. D) Increased by $622,000.

86) The total liabilities of Hogan's Company on the balance sheet are $270,000; this amount is equal to
three-fourths of the total assets. What is the amount of owners' equity?
A) $202,500. B) $ 90,000. C) $360,000. D) $630,000.

87) Thirty percent of the total assets of Shanahan Corporation have been financed through borrowing.
The total liabilities of the company are $600,000. What is the amount of owners' equity?
A) $ 180,000. B) $2,000,000. C) $1,400,000. D) $2,600,000.

88) A transaction caused a $60,000 increase in both total assets and total liabilities. This transaction
could have been which of the following?
A) Purchase for office equipment for $60,000 cash.
B) Purchase of office equipment for $120,000, paying $60,000 cash and issuing a note payable for the
balance.
C) Repayment of a $60,000 bank loan.
D) Investment of $60,000 cash in the business by the owner.

89) If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be
used in a business:
A) Total assets are increased. B) Total liabilities are decreased.
C) Total assets are decreased. D) The owners' equity is increased.

90) If during the current year, liabilities of Corbett's Store increased by $220,000 and owners' equity
increased by $160,000, then:
A) Assets at the end of the year total $380,000.
B) Assets at the end of the year total $60,000.
C) Assets increased during the year by $380,000.

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D) Assets decreased during the year by $60,000.

91) If during the current year, liabilities of Hayden Travel decreased by $50,000 and owners' equity
increased by $75,000, then:
A) Assets at the end of the year total $125,000.
B) Assets at the end of the year total $25,000.
C) Assets increased during the year by $25,000.
D) Assets decreased during the year by $125,000.

92) At the end of the current year, the owners' equity in Barclay Bakery is $246,000. During the year, the
assets of the business had increased by $120,000 and the liabilities had increased by $72,000. Owners'
equity at the beginning of the year must have been:
A) $198,000. B) $174,000. C) $284,000. D) $438,000.

93) At the end of the current year, the owners' equity in Durante Co. is $360,000. During the year, the
assets of the business had increased by $68,000 and the liabilities had increased by $118,000. Owners'
equity at the beginning of the year must have been:
A) $410,000. B) $310,000. C) $546,000. D) $174,000.

94) During the current year, the assets of Quality Stairs increased by $175,000 and the liabilities
decreased by $15,000. If the owners' equity in the business is $475,000 at the end of the year, the
owners' equity at the beginning of the year must have been:
A) $335,000. B) $285,000. C) $665,000. D) $615,000.

95) An expense is best defined as:

A) Any payment of cash for the benefit of the company.
B) Past, present, or future payments of cash required to generate revenues.
C) Past payments of cash required to generate revenues.
D) Future payments of cash required to generate revenues.

96) A revenue transaction may result in all of the following except:

A) An increase in assets.
B) An increase in owners' equity.
C) A positive cash flow in either the past, present, or future.
D) An increase in liabilities.

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