Name: _________________________________ 9.

The cash receipts journal is used to record:

a. Cash received from customers
Score: ______ b. Credit purchases
35 c. Cash payments to suppliers
d. Credit sales
1. What is the main purpose of accounting?
a. To prepare tax returns 10. A company paid rent in cash. This transaction would be
b. To record, summarize, and communicate financial recorded in which journal?
information a. Sales Journal
c. To track inventory b. Purchases Journal
d. To increase profits c. Cash Payments Journal
d. Cash Receipts Journal
2. The accounting equation is:
a. Assets + Liabilities = Owner's Equity 11. The balance sheet shows:
b. Assets = Liabilities - Owner's Equity a. Revenue and expenses
c. Assets = Liabilities + Owner's Equity b. The financial position at a point in time
d. Liabilities = Assets - Owner’s Equity c. Changes in owner’s equity
d. Cash flow activities
3. Which of the following is NOT a type of business
organization? 12. Which of the following is a current asset?
a. Sole Proprietorship a. Equipment
b. Partnership b. Accounts Receivable
c. Corporation c. Land
d. Taxation d. Buildings

4. An increase in revenue will: 13. Accounts Payable appears under which section of the
a. Decrease assets balance sheet?
b. Increase owner's equity a. Current Assets
c. Increase liabilities b. Owner’s Equity
d. Have no effect on financial statements c. Current Liabilities
d. Revenue
5. A debit entry to an asset account will:
a. Increase the asset 14. The balance sheet equation is:
b. Decrease the asset a. Revenue - Expenses = Net Income
c. Have no effect b. Assets = Liabilities + Owner’s Equity
d. Increase liabilities c. Liabilities = Assets - Owner’s Equity
d. Cash + Revenue = Assets
6. Which of the following is NOT one of the five special
journals? 15. An increase in a liability account is recorded as a:
a. Sales Journal a. Debit
b. Purchases Journal b. Credit
c. General Journal c. Asset
d. Cash Receipts Journal d. Expense

7. The sales journal is used to record: 16. The income statement reports:
a. Cash sales a. Assets and liabilities
b. Credit sales b. Revenues and expenses
c. All types of sales c. Cash flow activities
d. Purchases d. Owner’s investments

8. Which journal records purchases made on account? 17. Net income is calculated as:
a. Cash Receipts Journal a. Revenue - Expenses
b. Purchases Journal b. Revenue + Liabilities
c. Sales Journal c. Revenue - Owner’s Equity
d. General Journal d. Assets - Liabilities
18. Which of the following is NOT an expense? 27. Which accounts are closed at the end of the
a. Salaries Expense accounting period?
b. Rent Expense a. Assets and Liabilities
c. Accounts Payable b. Revenues and Expenses
d. Utilities Expense c. Capital and Drawings
d. Cash and Accounts Payable
19. Gross profit is calculated as:
a. Net Sales - Cost of Goods Sold 28. The final step in the accounting cycle is:
b. Total Revenue - Total Expenses a. Posting to the ledger
c. Assets - Liabilities b. Preparing financial statements
d. Revenue - Taxes c. Preparing the post-closing trial balance
d. Recording transactions
20. Which of the following accounts appears on the
income statement? 29. Which of the following accounts is NOT closed at the
a. Accounts Payable end of the period?
b. Rent Expense a. Rent Expense
c. Owner’s Capital b. Sales Revenue
d. Cash c. Cash
d. Service Revenue
21. Which account represents the owner’s investment in a
business? 30. The post-closing trial balance contains:
a. Capital a. Temporary accounts
b. Accounts Payable b. Only revenue and expense accounts
c. Revenue c. Only permanent accounts
d. Expenses d. Only owner's equity accounts

22. Owner's equity increases when: 31. A journal entry consists of:
a. The business borrows money a. Only debits
b. The business makes a profit b. Only credits
c. The business incurs expenses c. A debit and a credit
d. The business pays off debt d. No specific format

23. Withdrawals by the owner are recorded in: 32. The normal balance of an asset account is:
a. Revenue a. Debit
b. Expenses b. Credit
c. Drawings c. Either debit or credit
d. Accounts Payable d. None of the above

24. A decrease in owner’s equity is caused by: 33. Recording depreciation is an example of:
a. Revenue a. Accrued revenue
b. Additional investments b. Adjusting entry
c. Net loss c. Closing entry
d. Purchase of assets d. Trial balance

25. Retained earnings represent: 34.What is the purpose of adjusting entries?

a. Money borrowed from a bank a. To correct mistakes
b. The owner's personal expenses b. To record unearned revenue
c. Accumulated profits not distributed as dividends c. To ensure accounts follow the accrual basis of
d. Assets owned by the company accounting
d. To close the books
26. A trial balance is used to:
a. Record transactions 35. The cash account is classified as a (n):
b. Verify that total debits equal total credits a. Asset
c. Prepare tax returns b. Liability
d. Determine net income c. Revenue
d. Expense