Question : 61. A T-account a device or convention for organizing and accumulating : 1230514

61. A T-account is a device or convention for organizing and accumulating the accounting entries of transactions that affect an individual account.  Which of the following is true?  
A. Increases in assets appear on the left side, and decreases in assets appear on the right side of T-accounts.
B. Increases in liabilities appear on the right side, and decreases in liabilities appear on the left side of T-accounts.
C. Increases in shareholders’ equity appear on the right side, and decreases in shareholders’ equity appear on the left side of T-accounts
D. all of the above are true
E. none of the above are true

62. The equation that describes the relationship between the balance sheet and the income statement through the Retained Earnings account is as follows:  
A. Retained Earnings (beginning) – Net Income = Retained Earnings (ending)
B. Retained Earnings (beginning) + Net Income + Dividends = Retained Earnings (ending)
C. Retained Earnings (beginning) – Net Income – Dividends = Retained Earnings (ending)
D. Retained Earnings (beginning) – Net Income + Dividends = Retained Earnings (ending)
E. Retained Earnings (beginning) + Net Income – Dividends = Retained Earnings (ending)

63. The closing process involves: 
A. reducing to zero the balance in each income statement account
B. debiting the revenue accounts
C. crediting the expense accounts
D. transferring to Retained Earnings the differences between total revenues and total expenses
E. all of the above

64. The last step in the accounting record-keeping process is: 
A. Making adjusting journal entries to the accounts to correct errors and to reflect the financial statement impacts of items that occur because of usage or the passage of time.
B. Preparing the income statement for the period from amounts in the income statement accounts.
C. Closing the temporary income statement accounts to retained earnings.
D. Preparing the balance sheet from amounts in the balance sheet accounts.
E. Preparing the statement of cash flows from balance sheet amounts and from details of transactions affecting the cash account.

65. The first step in the accounting record-keeping process is: 
A. Recording each transaction in a file or other record in the form of a journal entry
B. Posting the amounts from the journal entries to individual balance sheet and income statement accounts in a general ledger.
C. Making adjusting journal entries to the accounts to correct errors and to reflect the financial statement impacts of items that occur because of usage or the passage of time.
D. Preparing the income statement for the period from amounts in the income statement accounts.
E. Preparing the balance sheet from amounts in the balance sheet accounts.

66. Assets are classified as current for reporting purposes when 
A. shares of common stock in a company’s important supplier are acquired to ensure continued availability of raw materials
B. shares of common stock in another company are acquired to diversify operations
C. expenditures are made in developing new technologies or advertising products
D. they are reasonably expected to be turned into cash or to be sold or consumed during the normal operating cycle of the business
E. they are reasonably expected to be turned into cash or to be sold or consumed within the next three years

67. The stockholders’ equity of a firm can be defined as 
A. net current assets
B. net noncurrent assets
C. a residual interest
D. total assets plus total liabilities
E. the owners’ claim to the assets and liabilities

68. Before preparing the balance sheet and income statement, an accountant would use what accounting record to first record the firm’s transactions? 
A. the trial balance
B. the adjusting entry
C. the general ledger
D. the subsidiary ledger
E. the journal

69. The accounting system uses a device called an account. An account 
A. is created each time a transaction takes place
B. accumulates the increases and decreases that occur during the period for a single item
C. is created only for income statement items
D. is created only for balance sheet items
E. is created only for statement of cash flows items

70. In a modern corporate environment, the trial balance is prepared from the 
A. financial statements
B. computerized accounting systems
C. journals
D. subsidiary ledgers
E. chart of accounts