Multiple Choice Questions
58.The accounting process begins with:
A. Analysis of business transactions and source documents.
B. Preparing financial statements and other reports.
C. Summarizing the recorded effect of business transactions.
D. Presentation of financial information to decision-makers.
E. Preparation of the trial balance.
59.All of the following statements regarding a sales invoice are true except:
A. A sales invoice is a type of source document.
B. A sales invoice is used by sellers to record the sale and for control.
C. A sales invoice is used by buyers to record purchases and monitor purchasing activity.
D. A sales invoice gives rise to an entry in the accounting process.
E. A sales invoice does not provide objective evidence about a transaction.
60.A business's source documents may include all of the following except:
A. Sales tickets.
B. Ledgers.
C. Checks.
D. Purchase orders.
E. Bank statements.
61.A business's source documents:
A. include the ledger.
B. Provide objective evidence that a transaction has taken place.
C. must be in electronic form.
D. are prepared internally to ensure accuracy.
E. include the chart of accounts.
62.A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n):
A. Journal.
B. Posting.
C. Trial balance.
D. Account.
E. Chart of accounts.
63.An account used to record the stockholders' investments in a business is called a(n):
A. Dividends account.
B. Common stock account.
C. Revenue account.
D. Expense account.
E. Liability account.
64.Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:
A. A revenue account.
B. The dividends account.
C. The common stock account.
D. An expense account.
E. A liability account.
65.Identify the statement below that is correct.
A. When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
B. Promises of future payment by the customer are called accounts receivable.
C. Increases and decreases in cash are always recorded in the common stock account.
D. An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
E. Accrued liabilities include accounts receivable.
66.Unearned revenues are generally:
A. Revenues that have been earned and received in cash.
B. Revenues that have been earned but not yet collected in cash.
C. Liabilities created when a customer pays in advance for products or services before the revenue is earned.
D. Recorded as an asset in the accounting records.
E. Increases to stockholders equity.
67.Prepaid expenses are generally:
A. Payments made for products and services that do not ever expire.
B. Classified as liabilities on the balance sheet.
C. Decreases in equity.
D. Assets that represent prepayments of future expenses.
E. Promises of payments by customers.
