20 MCQ The income statement is used to report

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Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. The income statement is used to report

A. results of operations for a specific period.

B. the financial position for a specific period.

C. the financial position on a specific date.

D. results of operations for a specific date.

2. A T-account has which major parts?

A. A title, a debit side, and a credit side

B. A debit side, a credit side, and a balance

C. A debit side, a credit side, and a total column

D. A title, a current date, and a balance

3. Supplies on hand were $900 at the start of the year. At the end of the year, it was determined that $350 of supplies had been used. What is the adjusting entry for supplies?

A. Debit supplies expense, $350; credit supplies, $350.

B. Debit supplies, $550; credit supplies expense, $550.

C. Debit supplies expense, $550; credit supplies, $550.

D. Debit supplies, $350; credit supplies expense, $350.

4. Accounts payable, taxes payable, and notes payable

A. decrease on the debit side, increase on the credit side, and are liabilities.

B. increase on the debit side, decrease on the credit side, and are assets.

C. increase on the debit side, decrease on the credit side, and are expenses.

D. decrease on the debit side, increase on the credit side, and are revenues.

5. Casey’s is famous for its submarine sandwiches. At the end of 2009, Casey’s total assets were $345,000, and total liabilities were $129,500. How much was Casey’s stockholders’ equity?

A. Some other number

B. $215,500

C. $345,000

D. $474,500

6. Rick lists his building at current replacement value, rather than the price he paid for the building. Which principle is Rick violating?

A. Going concern

B. Reliability

C. Entity

D. Cost

7. By definition, which type of organization has stockholders?

A. Corporations

B. Partnerships

C. Sole proprietorships

D. Limited liability companies

8. The closing entries show a debit to retained earnings of $350 and a credit to retained earnings of $750.

There was also a credit to dividends payable of $100. This company had a

A. net income of $400.

B. net loss of $400.

C. net income of $500.

D. net loss of $500

9. Which business form is similar to a corporation in regard to owner liability?

A. Limited liability company

B. Limited liability corporation

C. Partnership

D. Sole proprietorship

10. A cash payment was made to pay for delivery expenses but was mistakenly charged to advertising expenses. Which effect will this have on the balance of the trial balance?

A. Advertising expense will be correct.

B. Cash will be correct.

C. The trial balance will still balance.

D. Delivery expense will be understated.

11. Interest revenue would be an example of a/an

A. accrued revenue.

B. accrued expense.

C. deferred expense.

D. deferred revenue.

12. The total revenues of $6,500, total expenses of $3,500, and dividends of $500 were recorded in the closing entries. The net change in retained earnings for the month was

A. $6,000.

B. $3,000.

C. $3,500.

D. $2,500.

13. Collecting rent from a client three months in advance would be an example of a/an

A. accrued expense.

B. deferred revenue.

C. accrued revenue.

D. deferred expense.

14. Which account would not appear on a post-closing trial balance?

A. Common stock

B. Sales tax payable

C. Dividends

D. Accounts receivable

15. The balance sheet is used to report

A. the financial position on a specific date.

B. results of operations for a specific period.

C. the financial position for a specific period.

D. results of operations for a specific date.

16. Which financial statement illustrates the accounting equation?

A. Statement of cash flows

B. Balance sheet

C. Income statement

D. Statement of retained earnings

17. The unadjusted trial balance for depreciation expense shows a $780 balance. The expense was adjusted by $235. The adjusted trial balance figure for depreciation expense is now a

A. $1,015 debit.

B. $545 debit.

C. $545 credit.

D. $1,015 credit.

18. The account “Cash” had the following changes: increase of $250, decrease of $75, increase of $113, and decrease of $35. The final balance is a

A. debit balance of $363.

B. credit balance of $110.

C. debit balance of $253.

D. credit balance of $253.

19. Beginning retained earnings are $65,000; sales are $29,500; expenses are $33,000; and dividends paid

are $3,500. How much is the net income or loss for the company?

A. ($7,000)

B. ($3,500)

C. $26,000

D. $0

20. The adjusted trial balance for supplies was $333. The unadjusted trial balance for supplies was $509.

The amount of supplies expense would be a

A. $176 credit.

B. $333 debit.

C. $509 debit.

D. $176 debit.

End of exam

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