BUS251Chapter 3 Quiz.docx

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Department
Business Administration
Course
BUS 251
Professor
Anne Mac Donald
Semester
Fall

Description
BUS 251 Chapter 3 1. The basic accounting equation, Assets = Liabilities + Shareholders' Equity, is true throughout the entire accounting period. True A. False B. 2. The accounting system measures, records, and aggregates the effects of numerous economic events on a company. A. True B. False 3. When a company incurs a cost, it records an expense. True A. False B. 4. Sales revenue is a permanent account? A. True B. False 5. Dividends declared are an expense of the business and thus reduce retained earnings. A. True B. False 1. The journal entry to record the purchase, on account, of $10,000 inventory is: A. DR Inventory $10,000 and CR Cash $10,000. B. DR Cash $10,000 and CR Inventory $10,000. DR Inventory $10,000 and CR Accounts Payable $10,000. C. DR Accounts Payable $10,000 and CR Inventory $10,000. D. 2. Which of the following is a permanent account? A. Sales revenue. B. Retained earnings. C. Cost of goods sold. D. Amortization expense. 3. All of these steps must be completed in the accounting cycle, and in this order, before financial statements can be prepared: A. journalize transactions, post to the ledger, prepare closing entries. B. analyze transactions, journalize transactions, prepare closing entries. C. journalize transactions, post to the ledger, prepare and post adjusting entries. D. post to the ledger, journalize transactions, prepare and post adjusting entries. 4. Consider the following journal entries: i) An entry to record interest owing on a bank loan at the end of the period. The interest is not yet paid, and is previously unrecorded. ii) An amortization entry to reflect the use of long-lived equipment during the period. iii) An entry to correct an error that was discovered in the trial balance, when a $100 debit was incorrectly posted to inventory rather than accounts receivable. Which of the foregoing are examples of adjusting entries? A. i & ii B. i & iii C. ii & iii i, ii, & iii D. 5. A company's shares are traded on the Toronto Stock Exchange. At a minimum, they must publish their financial statements: A. monthly. B. quarterly. C. annually. D. Company's management has complete freedom to choose the frequency of reporting. An example of a contra asset account is: 6. A. Accumulated amortization Amortization expense B. Prepaid insurance C. Insurance expense D. 7. On an income statement, sales revenue less cost of goods sold expense is called: A. gross profit or gross margin. B. income from continuing operations. C. operating income. D. net income. 8. A debit: A. increases an asset and decreases
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