CHAPTER 2 QUIZ-FINANCIAL ACCOUNTING
NAME:_________________
1 When a company receives a product previously ordered, a recordable
transaction has occurred.
a. True b. False
2 Purchase requisitions are recognized in the accounting records.
a. True b. False
3 A purchase is recognized in the accounting records when
a. an order is placed with the seller.
b. title transfers from the seller to the buyer.
c. the buyer receives the bill from the seller.
d. the purchase requisition is sent to the purchasing department.
4 Which of the following is not a measurement issue in accounting?
a. How to classify the items of a business transaction
b. What value to place on a business transaction
c. When to record a business transaction
d. Where to record a business transaction
5 Which of the following business events is not a transaction?
a. Signing a contract
b. Paying wages
c. Purchasing a service
d. Receiving goods
6 Which of the following accounts has a normal credit balance?
a. Advertising Fees Earned
b. Automotive Equipment
c. Dividends
d. Interest Expense
7 Which of the following accounts is decreased with a debit?
a. Accounts Receivable
b. Rent Expense
c. Dividends
d. Accounts Payable
CHAPTER 2 QUIZ-FINANCIAL ACCOUNTING
NAME:
8 Which account does not affect retained earnings?
a. Dividends
b. Sales Revenue
c. Rent Expense
d. Common Stock
9 When collection is made on Accounts Receivable,
a. total assets remain the same.
b. total assets decrease.
c. stockholders’ equity increases.
d. total assets increase.
10 Payment on a portion of Accounts Payable will
a. decrease net income.
b. increase total liabilities.
c. decrease total liabilities.
d. increase total assets.
11 A dividend will reduce which of the following accounts?
a. Common Stock
b. Accounts Payable
c. Dividends
d. Retained Earnings
12 Which of the following accounts is a liability?
a. Unexpired Insurance
b. Prepaid Insurance
c. Unearned Insurance Fees
d. Insurance Expense
13A transaction in which six months’ rent is paid in advance results in
which of the following journal entries?
a. Rent Revenue 211 Debit; Cash 211 Credit
b. Prepaid Rent 211 Debit; Cash 211 Credit
c. Rent Receivable 211 Debit; Cash 211 Credit
d. Rent Expense211 Debit; Cash 211 Credit
CHAPTER 2 QUIZ-FINANCIAL ACCOUNTING
NAME:
14When a magazine company receives advance payment for a subscription,
what is the required journal entry to be recorded?
a. Cash 211 Debit; Unearned Subscriptions Revenue 211 Credit
b. Accounts Receivable 211 Debit; Unearned Subscriptions Revenue
211 Credit
c. Cash 211 Debit; Subscriptions Revenue 211 Credit
d. Subscriptions Revenue 211 Debit; Cash 211 Credit
15Here is the trial balance for Sebastian Corporation:
If the trial balance showed a balance of $14,000 in the Dividends account
and a balance of $22,000 in the Wages Expense account, what would be
the amount of Advertising Fees Earned for the period?
a. $78,000
b. $108,000
c. $48,000
d. $98,000
CHAPTER 2 QUIZ-FINANCIAL ACCOUNTING
NAME:
16The process of transferring journal entry information from the journal
to the ledger is called
a. journalizing.
b. analyzing.
c. footing.
d. posting.
17The purpose of the ledger is to
a. update each account.
b. record chronologically the day’s transactions.
c. make sure that all accounts have credit balances at all times.
d. compile all source documentation materials that support each
transaction.
18Short Exercise 2-4
Indicate whether each account below has a normal debit or a normal
credit balance. Answer with a “D” or a “C”. You must get 10 of 12 correct
to receive credit.
a. Automobiles
_________________
b. Accounts Payable
_________________
c. Common Stock
_________________
d. Insurance Expense
_________________
e. Rent Expense
_________________
f. Revenues Earned
_________________
g. Dividends
_________________
h. Retained Earnings
_________________
i. Land
_________________
j. Interest Payable
_________________
k. Notes Receivable
_________________
l. Equipment
_________________
CHAPTER 2 QUIZ-FINANCIAL ACCOUNTING
NAME:
19Which of the following accounts probably would be listed after the
others in a chart of accounts?
a. Retained Earnings
b. Unearned Art Fees
c. Art Fees Earned
d. Prepaid Rent
20 Which of the following accounts should be credited in a journal entry?
a. Wages Payable, when it has been decreased
b. Dividends, when it has been decreased
c. Accounts Receivable, when it has been increased
d. Wages Expense, when it has been increased
