[click here for answer]

1-D ;  2-D;  3-B;   4-D;   5-A;    6-C;   7-A;   8-C;  9-B;  10- C

11-D;  12-B;  13-D;  14-A;  15- A.

  Answer to Accounting Test Question No.2: 

1. FALSE;  2. TRUE;  3. FALSE;   4. FALSE;  5. FALSE;  6. FALSE;  7. TRUE

8. TRUE;  9. FALSE;   10.TRUE;  11.TRUE;  12. TRUE;  13 FALSE

1.     The accounting process involves all of the following EXCEPT:

         a. Analyzing and interpreting financial reports

b. Communicating financial information to users by preparing financial reports

c. Identifying economic transactions that are relevant to the business

d. Recording non-transaction economic events.

e. Recording transaction of economic events.

2.    Which of the following is an internal user of accounting for a company:

         a. Creditor

b. Customer

c. Investor

d. Production manager

e. Inland Revenue

3.      One of the following statements about users of accounting information is incorrect. The incorrect statement is:

         a. debtors are external users

b. investor is an internal user

c. management is an internal user

d. present creditors are external users

e. regulatory authorities are external users

4.    Which of the following statements about an account is true?

        a. In its simplest form, an account consists of two parts.

b. The left side of an account is the credit or decrease side.

c. There are separate accounts for specific assets and liabilities but only one account for owner’s equity items

d. An account is an individual accounting record of increases and decreases in specific asset, liability, and owner’s equity items.

e. Is an information system that identifies, records and communicates the non-economic events of an organization to interested users.

5.    A qualitative characteristics of accounting information do not include:

        a. accuracy

b. comparability

c. consistency

d. relevancy

e. reliability

6.      A credit may signify the following EXCEPT:

         a. An increase in a liability account

b. A decrease in cash account

c. An increase in an asset account

d. An increase in the owner’s capital account

7. The type of account with a normal debit balance is

         a. An asset

b. A revenue

c. A liability

d. An owner’s capital account

8. The journal entries to record the payment of account payable by cash is:

         a. Debit cash, credit account payable

b. Debit account receivable, credit account payable

c. Debit account payable, credit account receivable

d. Debit account payable, credit cash

9. One of the entries in recording the payment of note payable account is:

         a. Credit note payable account

b. Debit note payable account

c. Credit owner’s capital account

d. None of the above.

10. Liability, debts owed to outsiders, includes all of the following EXCEPT:

         a. Notes payable

b. Wages payable

c. Account receivables

         d. Account payable

11.   What would be the effect on the basic of accounting equation if Mr A as the owner of the company withdraw cash from the business and use the money to entertain his family members?

         a. Increase assets and decrease owner’s equity

b. Increase owner’s equity and decrease assets

c. The effect whether increase or decrease will be both on asset

d Decrease assets and decrease owner’s equity

12.   Which of the following events are NOT considered as business transaction?

         a. Pay rental in advance $1000

b. Received bank statement which showed debit balance of $12,000

c. Purchase supplies on account $5,000

d Receive invoice from supplier for the purchase of raw materials last week for $3,000

13.  Which of the following would be the best EXPLANATION for ledger?

         a. An accounting record in which transactions are initially recorded in chronological order

b. A list of accounts and their balances at a given time

c. A statement that summarizes the company’s assets and liabilities

d A list of accounts and the account numbers that identify their location in the ledger.

14.   Asset is a

         a. Resource owned by the business entity

b. Debts owned to outsiders

c. The owner’s right to the assets of the business

d None of the above.

15.  Which is the statement that BEST explained owner’s equity statement?

        a. Is a comprehensive statement which detail the causes of equity to increase or decrease since it starts the business

b. Is a statement which details the causes of equity to increase or decrease for certain period of time

c. Is a statement which details the equity planning to be incurred in the future

d Is a comprehensive statement regarding the equity planning in the past, current and future.

Accounting Test Question No 2

TRUE OR FALSE

1. The example of internal accounting user is a bank that has lent money to the business

         True False

2. Three types of businesses that operate for profit are manufacturing, merchandising and service business

          True. False

3. Independence is one of the characteristic of qualitative account information

         True. False

4. Accounting depends on concepts and principles that are independent from particular users

         True. False

5. Debit always increase account balances

        True. False

6. The statement that reports the financial position of the company is called Income Statement

        True. False

7. Financial accounting is governed by Generally Accepted Accounting Principles (GAAP)

         True. False

8. Bring personal asset into business will increase asset and increase owner’s equity

         True. False

9. Unearned revenue is one of the examples for asset account

         True. False

10. An example of liability account is a bank overdraft

         True. False

11. Owner’s equity is decreased by withdrawing made by the owner

           True False

12. The form listing the title and balances of the accounts in the ledger on a given date is the trial balance.

   True False