2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Chapter 1—Asset, Liability, Owner's Equity, Revenue, and Expense Accounts

MULTIPLE CHOICE

1.The purchase of an asset (like Equipment) on account will a.increase total liabilities and decrease total assets.b.have no effect on total assets or total liabilities.c.increase total assets and increase total liabilities.d.increase total assets and increase owner's equity.e.increase total assets and decrease owner's equity.ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 2.Amounts owed by a business are referred to as a.assets.b.equities.c.liabilities.d.capital.e.expenses.ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge 3.Which of the following equations is the fundamental accounting equation?a.Assets − Liabilities = Owner's Equity b.Assets = Liabilities + Owner's Equity c.Assets + Liabilities = Owner's Equity d.Assets − Owner's Equity = Liabilities e.Assets + Owner's Equity = Liabilities ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Application 4.When an owner deposits cash in an account in the name of the business, it is an increase to a.Cash and Accounts Receivable.b.Cash and Drawing.c.Cash and Capital.d.Cash and Accounts Payable.e.Cash and Rent Expense.ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 5.Which of the following is not considered an account?a.Equipment b.Revenues c.Accounts Payable College Accounting A Career Approach, 12e Cathy Scott (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.d.Cash e.Accounts Receivable ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge 6.If an owner invests her computer and printer in the business, there is an increase to a.Cash and Capital.b.Computer Equipment and Drawing.c.Cash and Drawing.d.Computer Equipment and Capital.e.Computer Equipment and Cash.ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-2 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 7.The owner of a business invested $5,000 in the business. What are the effects on the fundamental accounting equation?a.Assets increase $5,000; liabilities, no effect; owner's equity increases $5,000 b.Assets increase $5,000; liabilities decrease $5,000; owner's equity increases $5,000 c.Assets increase $5,000; liabilities increase $5,000; owner's equity, no effect d.Assets increase $5,000; liabilities, no effect; owner's equity decreases $5,000 e.Assets decrease $5,000; liabilities, no effect; owner's equity increases $5,000 ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 8.The purchase of an asset for cash will a.increase total assets and decrease total liabilities.b.have no effect on total assets or total liabilities.c.increase total assets and increase total liabilities.d.increase total assets and increase total owner's equity.e.increase total assets and decrease total owner's equity.ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 9.Over a period of time, if total assets increase by $27,000 and total liabilities increase by $7,000, then owner's equity will be increased by a.$7,000.b.$34,000.c.$27,000.d.$20,000.e.none of these.ANS: D PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions 2 / 4

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.KEY: Bloom's: Application

• When the rent for the business is paid with a check,
• Cash is decreased and Rent Expense is decreased.
• Cash is decreased and Rent Income is increased.
• Cash is decreased and Rent Expense is increased.
• Cash is decreased and Accounts Payable is decreased.
• Cash is increased and Rent Expense is decreased.

ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• A business received $600 cash from charge customers to apply on account. The effect of the transaction

is an increase in an asset and a(n)

• increase in revenue.
• decrease in capital.
• decrease in a liability.
• decrease in an asset.
• increase in capital.

ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-2 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• Which of the following is a form of revenue?
• A check paying a mortgage
• A credit purchase invoice
• Credit sales to charge customers
• A cash purchase invoice
• A check paying utilities

ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension

• The purchase of supplies for cash will
• increase Supplies and decrease Cash.
• increase Supplies Expense and decrease Cash.
• decrease Cash and increase Accounts Payable.
• increase Supplies Expense and increase Accounts Payable.
• decrease Cash and increase Capital.

ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• Which of the following transactions does not include an increase to expenses?
• Received and paid the phone bill
• Paid monthly rent
• Received cash for services performed
• Paid the week's wages 3 / 4

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• Bought advertising for cash

ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• The owner’s right, claim, or financial interest is referred to as
• assets.
• business entity.
• equity.
• revenues.

ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge

• S. Storm has $20,000 invested in his business and the business owes creditors $8,000. Determine the

amount of assets in the business.

• $28,000
• $12,000
• $14,000
• None of the answers listed

ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• Rob Cougar Landscaping has assets of $70,000 and equity of $30,000. Determine the amount of

liabilities in the business.

• $100,000
• $50,000
• $40,000
• None of the answers listed

ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 1-1 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• The deposit of cash by the owner in the name of the business would involve
• increasing an asset and increasing a liability.
• increasing an asset and increasing owner’s equity.
• decreasing an asset and increasing owner’s equity.
• increasing an asset and increasing revenue.

ANS: B PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 1-1 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application

• Clean and Fresh Laundromat has assets of $120,000 and liabilities of $35,000. Determine the amount of

owner’s equity.

• $42,500
• / 4