Question

1. Multiple Choice ( 20 Marks)

A..	Properties or economic resources owned by a business, also described as probable future economic benefits, are called:
	A)	Assets.
	B)	Revenues.
	C)	Liabilities.
	D)	Owner's Equity.
	E)	Expenses.

B.	Net income is:
	A)	Assets minus liabilities.
	B)	The excess of revenues over expenses.
	C)	The excess of expenses over revenues.
	D)	Revenue.
	E)	The same as equity.
C.	The account used to record the transfers of assets from a business to its owner is:
	A)	A revenue account.
	B)	The withdrawals account.
	C)	The capital account.
	D)	An expense account.
	E)	A liability account.

D.	Of the following accounts, the one that normally has a debit balance is:
	A)	Accounts Payable.
	B)	Accounts Receivable.
	C)	Jack Frost, Capital.
	D)	Sales Revenue.
	E)	Unearned Revenue.

E.	The main purpose of adjusting entries is to:
	A)	Record external transactions and events.
	B)	Record internal transactions and events.
	C)	Recognize revenues received during the period.
	D)	Recognize expenses paid during the period.
	E)	Adjust assets to their market value.

F.	The Unadjusted Trial Balance columns of the work sheet show the balance in the Office Supplies account at $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns is:
	A)	$325 debit.
	B)	$325 credit.
	C)	$425 debit.
	D)	$750 debit.
	E)	$750 credit.

G.	Merchandise inventory:
	A)	Is a capital asset.
	B)	Is a current asset.
	C)	Can include supplies.
	D)	Is a type of long term investment.
	E)	Is an expense.
H.	An Accounts Payable Ledger is:
	A)	A subsidiary ledger that contains an account for each supplier that grants credit to the company.
	B)	A list of the balances of all the accounts in the Accounts Receivable ledger that is added to show the total amount of accounts receivable outstanding.
	C)	A book of original entry that is designed and used for recording only a specified type of transaction.
	D)	The ledger that contains the financial statement accounts of a business.
	E)	A subsidiary ledger that contains a separate account for each customer that grants credit on account to the company
I..	: The Matching Principle (GAAP) requires
	A)	That bad debt expenses be reported in the same accounting period as the sales they helped generate.
	B)	The use of the direct write-off method for bad debts.
	C)	The use of the allowance method of accounting for bad debts.
	D )	That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the direct write-off method for bad debts.
	E)	That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires the use of the allowance method of accounting for bad debts

Answer 1

A	Properties or economic resources owned by a business, also described as probable future economic benefitsProperties or economic resources owned by a business
	also described as probable future economic benefits are known as Assets
	So Option A is answer
B	Net Income =The excess of Revenue over expenses
	So Option B is answer
C	The account used to transfer of assets from a business to its owners is known as Withdrawl accounts
	So Option B is answer
D	Accounts Rceivable has a debit balance
	So Option B is answer
E	The main purpose of adjusting entries among the following options is to adjust assets to their market value
	So Option E is answer
F	Office supplies is an asset account, out of $750 the expenses charged to profit and loss account is $425
	So Office supplies balance in balance sheet is $325($750-$425)
	So Option A is answer
G	Meechandise Invenory is a Current Assets
	So Option B is answer
H	A Accounts Payable ledger is A subsidiary ledger that contains a separate account for each customer that grants credit on account to the company
	So Option E is answer
I	GAAP requires That bad debt expenses be reported in the same accounting period as the sales they helped generate and requires
	the use of the allowance method of accounting for bad debts
	So Option E is answer