Every adjustment entry affects at least one permanent accoun

Every adjustment entry affects:

at least one permanent account and one temporary account.

only a permanent account.

only a temporary account.

only a revenue account.

2 points   

QUESTION 2

The owner of a corporation is called a:

partner.

stockholder.

director.

manager.

2 points   

QUESTION 3

When a corporation is owned by a few persons or by a family, it is called a:

closely held corporation.

publicly held corporation.

partnership.

sole proprietorship.

2 points   

QUESTION 4

A distribution of cash to stockholders of a publicly held corporation is called:

net profit.

dividend.

revenue.

interest.

2 points   

QUESTION 5

The process of preparing and closing the accounts of an organization for an accounting period is called a/an:

journal entry.

posting entry.

adjusting entry.

closing entry.

2 points   

QUESTION 6

The adjusting entry for supplies should be:

debit supplies expenses, credit supplies.

debit supplies, credit supplies expenses.

debit sales, credit prepaid insurance.

debit supplies, credit expenses.

2 points   

QUESTION 7

The second part of stockholder equity is called:

retained earnings.

revenue.

net loss.

net capital.

2 points   

QUESTION 8

How many financial statements do corporations prepare?

Four

Five

Two

Three

2 points   

QUESTION 9

The Income Statement of a merchandising business has:

five sections.

four sections.

two sections.

three sections.

2 points   

QUESTION 10

The operating income is an excess of:

gross profit over operating expenses.

gross loss over operating expenses.

gross profit over cost of merchandise sold.

operating expenses over gross profit.

2 points   

QUESTION 11

An analysis that reports each dollar amount in a financial statement as a percentage of another amount is called:

vertical analysis.

horizontal analysis.

percentage analysis.

financial statement analysis.

2 points   

QUESTION 12

A statement that reports the changes in the retained earnings accounts during an accounting period is called the:

statement of changes in owner\'s equity.

statement of retained earnings.

statement of income.

statement of stockholders\' account.

2 points   

QUESTION 13

Which statement classifies activities as operating, investing, or financing?

Income statement

Cash flow statement

Statement of retained earning

Statement of stockholders

2 points   

QUESTION 14

Which account should you debit to close the net loss of a merchandise business?

Operating income account

Retained earnings account

Stockholders account

Income Statement Account

2 points   

QUESTION 15

The maximum number of shares a corporation may issue is called:

authorized capital stock.

preferred stock.

equity stock.

issued stock.

2 points   

QUESTION 16

Match the terms in column I with the descriptions in Column II.

Match the terms in column I with the descriptions in Column II.

           

comparability

           

horizontal analysis

           

vertical analysis

           

base period

           

preferred stock

           

authorized capital stock

           

earnings distributions

           

proxy

           

statements of stockholders\' equity

           

cost of goods sold

A.        

legal form to transfer voting rights

B.        

comparison of the same items for two or more accounting periods

C.        

accounting information to be compared between two fiscal periods

D.        

preference over common stock

E.        

the maximum number of shares a corporation may issue

F.        

changes in all stockholders\' equity accounts

G.        

period used for comparison

H.        

cost of goods sold

I.         

dividends

J.         

relationship of items from one period to another

		at least one permanent account and one temporary account.
		only a permanent account.
		only a temporary account.
		only a revenue account.

Solution

1.Every adjustment entry affects:

at least one permanent account and one temporary account.

Every adjustment entry has double effect

2. The owner of a corporation is called a:

stockholder.

3. When a corporation is owned by a few persons or by a family, it is called a:

closely held corporation.

4. A distribution of cash to stockholders of a publicly held corporation is called:

dividend.

5. The process of preparing and closing the accounts of an organization for an accounting period is called a/an:

posting entry.

6. The adjusting entry for supplies should be:

debit supplies, credit expenses.

7. The second part of stockholder equity is called:

retained earnings.

10. The operating income is an excess of:

gross profit over operating expenses.

11. An analysis that reports each dollar amount in a financial statement as a percentage of another amount is called:

vertical analysis.

12. A statement that reports the changes in the retained earnings accounts during an accounting period is called the

statement of changes in owner\'s equity.

13. Which statement classifies activities as operating, investing, or financing?

Cash flow statement

14. Which account should you debit to close the net loss of a merchandise business?

Retained earnings account

15. The maximum number of shares a corporation may issue is called:

authorized capital stock.

16. comparability     - relationship of items from one period to another         

horizontal analysis - comparison of the same items for two or more accounting periods

vertical analysis           

base period     - period used for comparison

preferred stock- preference over common stock

authorized capital stock   - the maximum number of shares a corporation may issue

earnings distributions  - dividends        

proxy          - legal form to transfer voting rights

statements of stockholders\' equity    - changes in all stockholders\' equity accounts      

cost of goods sold- cost of goods sold

debit supplies, credit expenses.