ing Packet B Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The communication stage of accounting is accomplished by a. storing data. b. reporting to decision makers. c. processing data. d. recording data. ____ 2. Which of the following transactions does not involve an exchange of value? a. Payment of a debt b. Purchase of a building on credit c. Borrowing money d. Loss from theft ____ 3. Which of the following forms of organization are considered to be separate entities by accountants ? a. Partnerships only b. Sole proprietorships only c. Corporations only d. Sole proprietorships, partnerships, and corporations ____ 4. Standards for state and local governments are established by the a. IRS. b. IASB. c. GASB. d. AICPA. ____ 5. An auditor maintains no direct financial interest in the company he or she is auditing. The principle being followed is a. independence. b. integrity. c. objectivity. d. due care. ____ 6. When a business reports an asset at an inflated dollar amount, it has violated the measurement issue of a. recognition. b. valuation. c. classification. d. realization. ____ 7. A purchase is recognized in the accounting records when a. payment is made for the item purchased. b. the purchase requisition is sent to the purchasing department. c. title transfers from the seller to the buyer. d. the buyer receives the seller’s bill. ____ 8. The withdrawal of cash by the owner will a. decrease net income.. b. increase liabilities. c. not affect total assets d. decrease owner’s equity. ____ 9. Which of the following gives the correct sequence of accounting procedures? a. Financial statements, trial balance, ledger, journal b. Financial statements, journal, ledger, trial balance c. Journal, ledger, trial balance, financial statements d. Ledger, trial balance, journal, financial statements ____ 10. The general journal does not have a column titled a. Description. b. Account Balance. c. Date. d. Post. Ref. ____ 11. Which of the following terms does not mean the same as the others? a. Footing b. Folio c. LP d. Post. Ref. ____ 12. The Post. Ref. column in the general journal is used to show that an amount has been posted to the ledger when which of the following is placed in it? a. An X b. Journal number c. Journal page number d. Account number ____ 13. Which of the following accounts probably would be listed before the others in a chart of accounts? a. Insurance Expense b. Grace Peterson, Withdrawals c. Notes Payable d. Accumulated Depreciation, Buildings ____ 14. When a credit sale takes place, a. a revenue account will increase. b. liabilities will increase. c. one asset account will increase and another will decrease. d. assets will be unaffected. ____ 15. Retailers often end their fiscal years . a. during the slack season b. during the peak of the busy season. c. at different times each year, depending on the tax consequences. d. on June 30. ____ 16. Which of the following is an application of accrual accounting? a. Depreciating a building as quickly as allowed by income tax regulations b. Recording utilities expense in the accounting period covered by the monthly bill c. Expensing a machine in its entirety when purchased d. Recording revenue at the time payment is received ____ 17. Which of the following is a condition required by the SEC for the recognition of revenue? a. Completion of goods manufactured b. Execution of a promissory note c. Price in excess of $100 d. Reasonable assurance of collection ____ 18. Use this information to answer the following question. The trial balance for Sanchez Company appears as follows: Sanchez Company Trial Balance December 31, 2010 Cash $ 200 Accounts Receivable 500 Prepaid Insurance 50 Supplies 150 Office Equipment 400 Accumulated DepreciationOffice Equipment $ 200 Accounts Payable 300 Maria Sanchez, Capital 600 Service Revenue 500 Sal…
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