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Final Review 3
Test Description: Review for your final here
Instructions: Answer all questions to get your test result.
1) GAAP is a way to communicate financial information in a form understood by those interested in the operations and financial condition of the business.
A
True
B
False
2) Service businesses are not intended to operate at a profit.
A
False
B
True
3) After each transaction, the basic accounting equation should remain in balance.
A
False
B
True
4) A business transaction affects at least two accounts.
A
True
B
False
5) Assets + Liabilities = Owner's Equity is another way to express the basic accounting equation.
A
False
B
True
6) All of the following account titles are asset titles except ____.
A
Cash in Bank
B
Accounts Payable
C
Equipment
D
Office Furniture
7) A business transaction that involves a purchase on account is considered to be a(n) ____.
A
credit transaction
B
cash transaction
C
expense transaction
D
investment transaction
8) Each of the following is a business expense except a payment for ____.
A
utility bills
B
equipment
C
advertising
D
monthly rent
9) The purchase of a desk on account will increase Office Furniture and will also increase ____.
A
cash in bank
B
accounts receivable
C
accounts payable
D
Marie Krabish, Capital
10) The word equities refers to claims against the assets of a business by ____.
A
owners only
B
customers only
C
both creditors and owners
D
creditors only
11) The increases and decreases caused by business transactions are recorded in specific accounts.
A
False
B
True
12) The free enterprise system is based on the right to own property.
A
True
B
False
13) One of the purposes of accounting is to provide financial information about property and the rights to that property.
A
False
B
True
14) The owner's claims to the assets of a business are liabilities.
A
False
B
True
15) A creditor has a financial claim to the assets of a business.
A
True
B
False
16) An account is a record of only the increases in the balance of a specific item such as cash or equipment.
A
False
B
True
17) The total financial claims do not have to equal the total cost of the property.
A
False
B
True
18) The top of the T account is used for account titles. Credits are entered on the left side of the T; debits, on the right.
A
True
B
False
19) A credit to an account always increases it; a debit to an account always decreases it.
A
False
B
True
20) An asset account appears on the right side of the accounting equation and is also increased on the right side of its T account.
A
True
B
False
*select an answer for all questions
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