1) What is Accounting Equations? a) Assets= Liabilities + Equity b) Assets= Equity - Liabilities 2) Which of the following account is an assets a) Accounts Receivable b) Accounts Payable 3) Which financial statement shows a company’s financial position at a specific date?t  a) Balance Sheet b) Income Statement 4) Which of the following increases owner’s equity? a) Revenue b) Expense 5) Which account is increased by a debit? a) Cash b) Service Revenue 6) Which financial statement shows profitability over a period of time? a) Balance Sheet b) Income Statement 7) Which of the following is a liability account? a) Equipment b) Accounts Payable 8) What is the normal balance of an asset account? a) Credit b) . Debit 9) Which of the following is considered an expense? a) Capital b) Rent Expense 10) Which account is increased by a credit? a) Cash b) . Service Revenue 11) Where are transactions first recorded? a) Ledger b) Journal 12) What do you call the process of transferring journal entries to the ledger? a) Posting b) Journalizing 13) In a journal entry, a debit is always recorded on the: a) Left side ✅ b) Right side 14) Which is an example of a source document? a) Sales Invoice ✅ b) Chart of Accounts 15) What is used to identify the location of an account in the ledger? a) Account Number b) Transaction Number 16) Which statement is prepared to check the equality of debits and credits? a) Income Statement b) Trial Balance 17) Which entry is made at the end of the period to update accounts? a) Closing Entry b) Adjusting Entry 18) What kind of account is Depreciation Expense? a) Expense b) Asset 19) Which account is used to record expired insurance? a) Insurance Expense b) Prepaid Insurance 20) Accrued revenues are: a) Earned but not yet received b) Received before earned 21) Which accounts are closed at the end of the period? a) Temporary accounts b) Permanent accounts 22) Which is a temporary account? a) Cash b) Rent Expense 23) What account is used to summarize net income or loss during closing? a) Income Summary b) Owner's Capital 24) After closing entries, what is the balance of revenue accounts? a) Zero b) Carried over 25) The worksheet is used to: a) Record business transactions b) Prepare financial statements 26) Which statement reports revenues and expenses? a) Balance Sheet b) Income Statement 27) What does the Statement of Owner's Equity show? a) Changes in capital b) Business transactions 28) Which account appears in the balance sheet? a) Utilities Expense b) Equipment 29) Net income is transferred to a) . Owner’s Capital b) Owner’s Drawings 30) Which shows a company’s liquidity? a) Balance Sheet b) Income Statement 31) What type of business buys and sells goods? a) Merchandising Business b) Service Business 32) What is the primary income source for a merchandising business? a) Sales Revenue b) Service Fees 33) What is the term for the cost of goods sold to customers? a) Cost of Goods Sold b) Operating Expenses 34) Which account is used to record returns by customers? a) Sales Returns and Allowances b) Purchases 35) What type of inventory system updates records continuously? a) Perpetual b) Periodic 36) What does a purchase discount represent? a) Charge for late payment b) Deduction for early payment 37) What is FOB Destination a) Seller pays for freight b) Buyer pays for freight 38) What is deducted from sales to get net sales? a) Sales Returns and Discounts b) Cost of Goods Sold 39) The term 2/10, n/30 means: a) 2% discount if paid in 10 days b) 10% discount if paid in 2 days 40) Which is not an operating expense? a) Salaries Expense b) Purchases 41) The account “Merchandise Inventory” is: a) Asset b) Expense 42) Which is subtracted from Gross Sales to compute Net Sales? a) Purchases b) Sales Returns 43) What is the formula for Gross Profit a) Net Sales – Cost of Goods Sold b) Revenue – Operating Expenses 44) Which is included in the Multi-step Income Statement? a) . Gross Profit b) Owner's Drawings 45) The single-step income statement presents: a) Operating and non-operating sections separately b) Total revenues and total expenses 46) Which freight term adds to the cost of inventory? a) FOB Shipping Point b) FOB Destination 47) A sale made on account increases a) Accounts Receivable b) Accounts Payable 48) Which transaction decreases equity? a) Investment b) Drawings 49) Which of the following is not included in a Trial Balance? a) Income Statement Totals b) Equipment 50) The periodic inventory system updates inventory: a) After every sale b) At the end of the period

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