97 Test Bank for Financial Accounting 2nd Edition
Kemp
Multiple Choice Questions
The order in which accounts appear in the chart of accounts is:
1.
2.
3.
4.

A) liabilities, assets, revenues, stockholders' equity, expenses.
B) stockholders' equity, expenses, revenue, liabilities, assets.
C) assets, stockholders' equity, revenues, expenses, liabilities.
D) assets, liabilities, stockholders' equity, revenues, expenses.

How does an account receivable differ from a note receivable?
1.
2.
3.

A) A note receivable is an asset while an account receivable is not.
B) An account receivable is a written pledge while a note receivable is not.
C) An account receivable is always an amount due from the company's
customers while a note receivable is always an amount due from a bank.
4. D) Notes receivable are written pledges while accounts receivable are not.

Payment of a telephone bill which was not previously recorded
represents a(n):
1.
2.
3.
4.

Dividends are paid with cash to shareholders. Dividends are in
what category of the chart of accounts?
1.
2.

A) Revenue
B) Assets


3.
4.

C) Stockholders' equity
D) Liabilities

Which of the following is TRUE regarding the accounts supplies
payable and supplies expense?
1.

A) These account titles both mean the same thing and are used
interchangeably.
2. B) Supplies payable represents the cost of supplies bought on account but
not yet paid for, while supplies expense represents the cost of the supplies
which have been paid for.
3. C) Supplies payable represents the cost of supplies bought on account but
not yet paid for, while supplies expense represents the cost of supplies used
to deliver goods or services to customers.
4. D) Supplies expense represents the cost of supplies bought on account but
not yet paid for, while supplies payable represents the cost of supplies used
to deliver goods or services to customers.


A) Liabilities
B) Revenues
C) Expenses
D) Assets

The stockholders' equity accounts dividends, revenues and
expenses have normal balances of:
1.
2.
3.
4.

A) credit, debit, and debit, respectively.
B) debit, credit, and credit, respectively.
C) debit, credit, and debit, respectively.
D) credit, credit, and credit, respectively.

Collection of money from a cash customer represents a(n):


1.
2.
3.
4.

A) liability.
B) expense.
C) revenue.
D) stock.


A) credit, credit, and credit, respectively.
B) debit, credit, and debit, respectively.
C) debit, debit, and credit, respectively.
D) credit, debit, and debit, respectively.

Accounts payable, taxes payable, and notes payable:
1.
2.
3.

A) increase on the debit side, decrease on the credit side and are assets.
B) decrease on the debit side, increase on the credit side and are liabilities.
C) increase on the debit side, decrease on the credit side and are
expenses.
4. D) decrease on the debit side, increase on the credit side and are
revenues.

Which of the following is an expense account?
1.
2.
3.
4.

A) Prepaid Insurance
B) Advertising
C) Accounts Payable
D) Cash

Which is NOT a part of stockholders' equity?

A) accrued assets.
B) accrued liabilities.
C) accrued revenues.
D) accrued notes.

All payables are listed as:
1.
2.
3.
4.

A) assets.
B) liabilities.
C) stockholders' equity.
D) revenue.

Monies owed to a company on a written promise to pay a fixed
amount of money by a certain date would be called a(n):
1.
2.
3.
4.

A) note payable.
B) note receivable.
C) account payable.
D) account receivable.

Dividends, Accounts Receivable, and Buildings have normal
balances of:


4.

D) Professional Fees

Dividends, revenues, and expenses all:
1.
2.
3.
4.

A) start with the same chart of account number.
B) start with different chart of accounts numbers.
C) appear in the chart of accounts under assets.
D) appear in the chart of accounts under liabilities.

Which of the following would start with a 2 in the chart of
accounts?
1.
2.
3.
4.

A) Income Taxes Payable and Salaries Payable
B) Common Stock and Dividends
C) Cash and Accounts Receivable
D) Sales and Service Revenue

Land, Cash, Office Equipment and Accounts Receivable belong to
what category of accounts?

C) assets.
D) liabilities.

A type of company asset in which a customer owes the company
money would be a:
1.
2.
3.
4.

A) dividend.
B) receivable.
C) payable.
D) sale.

97 Free Test Bank for Financial Accounting 2nd Edition
Kemp Multiple Choice Questions - Page 2


A T-account has a $759 credit balance. This account is most likely
NOT:
1.
2.
3.
4.

A) Accounts Payable.
B) Sales Revenue.
C) Accounts Receivable.
D) Common Stock.

2.
3.
4.

A) debit balance of $253.
B) credit balance of $253.
C) debit balance of $363.
D) credit balance of $110.

The fact that each transaction has a dual effect on the accounting
equation provides the basis for what is called:
1.
2.
3.
4.

A) single-entry accounting.
B) double-entry accounting.
C) compound-entry accounting.
D) multiple-entry accounting.

A T-account has a $382 debit balance. This account is most
likely:
1.
2.
3.
4.

A) Income Taxes Payable.
B) Common Stock.

3.
4.

A) decrease.
B) increase.
C) the right side of an account.
D) the left side of an account.

A T-account has a $388 credit balance. This account is most
likely:
1.
2.
3.
4.

A) an expense.
B) a dividend account.
C) an asset.
D) a stock account.

T-accounts aid in separating:
1.
2.
3.
4.

A) increases and decreases in an account.
B) the equality of the credits.
C) the equality of debits and credits in the accounting equation.
D) the balances of all of the accounts.

2.
3.
4.

A) Accounts Receivable.
B) Bicycle Repair Revenue.
C) Wages Payable.
D) Common Stock.

Credit means:
1.
2.
3.
4.

A) decrease.
B) increase.
C) the right side of an account.
D) the left side of an account.

An example of accounts with normal credit balances would be:
1.
2.
3.
4.

A) revenues.
B) assets.
C) expenses.
D) dividends.

decrease with debits.
3. C) The bank has decreased the company's assets and assets decrease
with debits.
4. D) The bank has increased its' liability to the company and liabilities
increase with debits.


A T-account has a $922 credit balance. This account is most
likely:
1.
2.
3.
4.

A) Office Equipment.
B) Rent Expense.
C) Dividends.
D) Sales Revenue.

ARCO pays wages in the amount of $13,579. This transaction
includes a:
1.
2.
3.
4.

A) debit to Cash.
B) credit to Wages Expense.
C) credit to Cash.
D) credit to Revenue.


A) A debit side, a credit side, and a balance
B) A debit side, a credit side, and a total column
C) A title, a current date, and a balance
D) A title, a debit side, and a credit side

The difference between the total debits and total credits of an
account is called a:
1.
2.
3.
4.

A) trial balance.
B) sub-total.
C) ruling.
D) balance.

A T-account has a $509 debit balance. This account is most likely
NOT:
1.

A) Common Stock.


2.
3.
4.

B) Land.


A) Account
B) T-account
C) Debit
D) Credit

97 Free Test Bank for Financial Accounting 2nd Edition
Kemp Multiple Choice Questions - Page 3
The columns on a trial balance represent:
1.
2.
3.
4.

A) revenues and expenses.
B) debits and credits.
C) common stock and dividends.
D) subtotals and totals.

The information from the general journal is transferred to the:
1.
2.
3.
4.

A) balance sheet.
B) income statement.
C) general ledger.
D) statement of retained earnings.



A) chart of accounts.
B) balance sheet.
C) general ledger.
D) general journal.

Motor Work, Inc.'s trial balance contains the following balances:
Cash $367 Accounts payable $267 Revenue $632 Accounts
receivable $429 Expenses $103 What is the amount of total
debits for this trial balance?
1.
2.
3.
4.

A) $ 899
B) $ 735
C) $1798
D) $ 796

A trial balance will determine if:
1.
2.
3.
4.

A) an entry was recorded twice.
B) an entry was posted twice.
C) debits equal credits.
D) the right accounts were debited or credited.


A) debit to Office Equipment and a credit to Cash.
B) credit to Cash and a debit to Office Equipment Expense.
C) debit to Office Equipment and a credit to Accounts Payable.
D) debit to Accounts Payable and a credit to Cash.


The second step in recording a transaction in the general journal
is to record the:
1.
2.
3.
4.

A) explanation of the entry.
B) account(s) to be credited and the amount(s).
C) date of the entry.
D) account(s) to be debited and the amount(s).

The trial balance:
1.

A) lists only the accounts, with their balances, which are used to prepare
the balance sheet.
2. B) lists only the accounts, with their balances, which are used to prepare
the income statement.
3. C) lists account names but no balances.
4. D) lists all accounts, with their balances, on a given date.

The ________ keeps a running balance of an individual account.

B) debit to Cash and a credit to Accounts Payable.
C) debit to Cash and a credit to Accounts Receivable.
D) debit to Cash and a credit to Sales Revenue.

Once you post the transaction to the general ledger, you must go
back to the general journal and fill in:
1.
2.
3.
4.

A) the date.
B) the amount debited or credited.
C) the posting reference column with the account number of the posting.
D) the account name that was involved in the transaction.

On the trial balance, which account balances should be listed in
the credit column?


1.
2.
3.
4.

A) Liabilities, Retained Earnings, and revenues
B) Assets, Retained Earnings, and expenses
C) Liabilities, Common Stock, and expenses
D) Assets, Dividends, and expenses


B) crediting account(s) that are affected.
C) posting the debits and credits to the accounts.
D) entering the date of the transaction.

A cash payment was made to pay for delivery expenses, but was
mistakenly charged to Advertising Expense. What effect will this
have on the trial balance?
1.
2.
3.
4.

A) Advertising Expense will be understated.
B) Delivery Expense will be overstated.
C) The trial balance will still balance.
D) Cash will be overstated.

Binford Corporation purchased a $600 two-year insurance policy
for cash. The journal entry would require a:
1.
2.
3.
4.

A) debit to Prepaid Insurance and a credit to Cash.
B) debit to Insurance Expense and credit to Cash.
C) debit to Insurance Expense and a credit to Accounts Payable.
D) debit to Insurance Expense and a credit to Retained Earnings.

On the trial balance, which account balances should be listed in


A) General journal
B) General ledger
C) Trial balance
D) Bank statement

Mackay, Inc. paid one of its creditors $678 on their balance due.
The journal entry would require a:
1.
2.
3.
4.

A) debit to Cash and a credit to Accounts Payable.
B) debit to Cash and a credit to Accounts Receivable.
C) credit to Cash and a debit to Accounts Receivable.
D) debit to Accounts Payable and credit to Cash.

Apex Corporation purchased $350 of office supplies on account
and treated the supplies as a prepaid expense. The journal entry
would require a:
1.
2.
3.
4.

A) debit to Office Supplies Expense and a credit to Cash.
B) debit to Office Supplies and a credit to Cash.
C) debit to Office Supplies and a credit to Accounts Payable.
D) debit to Office Supplies Expense and a credit to Office Supplies.

2.
3.
4.

A) explanation of the entry.
B) account(s) to be credited and the amount(s).
C) date of the entry.
D) account(s) to be debited and the amount(s).

Allied, Inc. sold season tickets for $7,000 on account. The journal
entry would be to:
1.
2.
3.
4.

A) debit Cash and credit season Ticket Sales Revenue.
B) debit Accounts Receivable and credit season Ticket Sales Revenue.
C) debit Cash and credit Accounts Payable.
D) debit Cash and credit Accounts Receivable.

The account "Salaries Expense" began with a zero balance and
then had the following changes: increase of $450, decrease of
$175, increase of $600, and an increase of $350. The final
balance is a:
1.
2.
3.
4.


transactions is referred to as:
1.
2.
3.
4.

A) transaction analysis.
B) the accounting cycle.
C) journalizing.
D) the accounting period.


A $375 purchase of supplies on account was recorded by debiting
Supplies for $375 and crediting Cash for $375. The entry needed
to correct this error is:
1.
2.
3.
4.

A) Debit Accounts Payable for $375 and credit Cash for $375.
B) Debit Accounts Receivable for $375 and credit Cash for $375.
C) Debit Cash for $375 and credit Accounts Payable for $375.
D) Debit Cash for $375 and credit Accounts Receivable for $375.

The third step in recording a transaction in the general journal is
to record the:
1.
2.
3.