1) Personal Net Worth is defined as _______________________________> a) Total assets minus total equity b) Total liabilities minus total equity c) Total assets minus total liabilities d) Total liabilities minus total assets 2) In business, net worth is referred to as _________________. a) Cash b) Equity c) Ethics d) Assets 3) A sole proprietorship is a ___________ a) Business owned by partners b) Business owned by a corporation c) Business owned by 2 or more people d) Business owned by 1 person 4) Generally Accepted Accounting Principles (GAAP) ensures that __________________ a) Accountants don't steal from clients b) All companies follow the same set of guidelines and practices when reporting financial data c) Assets = Total Liabilities + Owner's Equity d) Accountants don't overcharge clients 5) The amount remaining after the value of a business' liabilities is SUBTRACTED FROM the value of the business' assets is called _____________ a) Personal Net Worth b) Owner's Equity c) Liability d) Ethics 6) Which is the correct display of the accounting equation? a) Assets = Liabilities + Owner's Equity b) Liabilities = Assets + Owner's Equity c) Assets = Liabilities - Owner's Equity d) Liabilities = Assets - Owner's Equity 7) An asset is ___________ a) Anything of value that you own b) Anything that you owe 8) A liability is _______________ a) Anything of value that you own b) Anything that you owe 9) Which of the following accounts is not an asset? a) Cash b) Accounts Payable c) Prepaid Insurance d) Accounts Receivable 10) Which of the following accounts is a liability? a) Prepaid Insurance b) Revenue c) Accounts Payable d) Owner's Equity 11) Which statement is correct regarding accounts receivable and accounts payable? a) Accounts receivable is money that you owe  b) Accounts Payable is money that is owed to you c) Accounts payable is an asset d) Accounts receivable is money that is owed to you 12) Anytime you see the phrase "due in _____ days" or "on account", which is true? a) Money has already been paid b) Money has not been paid yet 13) ____________ is an increase in equity resulting from the sale of goods or services. a) Expenses b) Accounts Receivable c) Revenue d) Accounts Payable 14) Anytime you make a sale or provide a service, your ___________ is increased, regardless of when you are paid. a) Cash b) Revenue c) Accounts Receivable d) Expenses 15) The ongoing costs associated with owning a business are called ___________. a) Expenses b) Equities c) Revenue d) Prepaid insurance 16) Prepaid Insurance is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 17) Accounts Payable is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 18) Supplies is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 19) Equipment is a(n) _____________ account. a) Asset b) Liability c) Revenue d) Expense e) Withdrawal f) Owner's Equity 20) What is the account called where the owner takes assets away from the business for personal use? a) Accounts Receivable b) Cash c) Withdrawals d) Expenses 21) If your business sells $300 worth of goods, which two accounts are affected? a) Cash and Revenue b) Cash and Accounts Receivable c) Revenue and Accounts Receivable 22) If your business provides a service on account for $150, which two accounts are affected? a) Accounts Receivable and Cash b) Revenue and Cash c) Accounts Payable and Revenue d) Accounts Receivable and Revenue 23) If you make a sale or provide service on account, do you owe them money, or do the customer owe you money? a) You owe them b) They owe you 24) If you buy $100 worth of supplies on account, which two accounts are affected? a) Supplies and revenue b) Supplies and Accounts Payable c) Supplies and Accounts Receivable d) Supplies and cash 25) If your business owes someone else money and then you make a payment on the amount you owe, what has happened? a) The amount you owe increased b) The amount you owe decreased 26) The normal balance side refers to the side that _____________. a) Increases b) Decreases 27) Which source document is used to document a sale on account? a) Check b) Receipt c) Sales Invoice d) Memo 28) What is a form on which a brief message is written to describe a transaction? a) Memo b) Sales Invoice c) Receipt d) Check 29) Which of the following are parts of a journal entry? a) Date b) Debit and Credit c) Source Document d) All of the above 30) A list of account titles and numbers showing the location of each account in a ledger is called __________. a) Journal b) T-Table c) Sales Invoice d) Chart of Accounts 31) All accounts that are the same classification in a chart of accounts should ______________. a) Start with different numbers b) Start with the same number c) Be the same number 32) If your business spends $400 on the electric bill, which two accounts are affected? a) Cash and Withdrawals b) Cash and Expenses c) Accounts Payable and Expenses d) Withdrawals and Expenses 33) If you take out $1000 from your business account, which two accounts are affected? a) Expenses and Cash b) Cash and Expenses c) Withdrawals and Revenue d) Cash and Withdrawals 34) What two accounts are affected when journalizing a bank service charge? a) Misc. Expenses and cash b) Accounts Payable and Cash c) Misc. Expense and Accounts Receivable d) Accounts Receivable and Cash 35) A check that a bank refuses to pay is called _____________. a) Unwanted Check b) Service Fee c) Dishonored Check d) Reconciled Check 36) True or False: It is illegal to alter a check, forge a check, or write a check with non-sufficient funds a) True b) False 37) If a customer writes you a bad check, what does the customer owe you once the bank notifies you that the check was bad? a) Both the original amount of the check PLUS the bank fee b) The original amount the check was written for c) The amount of the bank fee 38) Which two accounts are affected when you receive notice from the bank of a dishonored check? (remember the check was not any good and the customer now owes you)) a) Cash and Expenses b) Revenue and Accounts Receivable c) Cash and revenue d) Accounts Receivable and cash 39) What happens to the two affected accounts when you receive notice that a check was dishonored? (hint: the customer now owes you money) a) Accounts receivable goes up, cash goes down b) Cash goes up, Accounts Receivable goes down 40) On December 20th you received notice of a dishonored check from customer Peter Griffin for $200, plus a $50.00 fee. What has happened in this transaction? a) Cash goes down $200, Accounts Receivable goes down $200 b) Cash goes up $200, Accounts Receivable goes down $200 c) Cash goes down $250, Accounts Receivable goes up $250 d) Cash goes up $250, Accounts Receivable goes up $250 41) A small amount of cash kept on hand and used for making small payments and purchases is called _____________ a) Chump Change b) Petty Cash c) Misc. Cash d) Reserved cash 42) A "small" amount of money is considered ___________________ a) Any amount under $1000 b) Any amount under $500 c) Any amount under $250 d) What's considered "small" differs from business to business 43) Petty Cash is a(n) _______________ account a) Liability b) Owner's Equity c) Asset d) Expense 44) When first establishing a Petty Cash fund, which two accounts are affected? a) Cash and Petty Cash b) Cash and A/R c) Cash and Revenue d) Cash and Revenue 45) When there is a discrepancy between the amount of cash on hand and the amount of cash that SHOULD be on hand, this is referred to as ____________. a) Variable Cash b) Cash short/over c) Reserved Cash d) Petty Cash

Accounting Final Exam Review

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