Herzing University - ACCOUNTING AC107 MIDTERM Exam Results. 91% Grade: Download To Get An A+

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 Question 1 3 out of 3 points Generally accepted accounting principles (GAAP) are the procedures and guidelines to be followed in the process of preparing financial statements. Selected Answer... : Tru e Correct Answer: Tru e Response Feedback: Correct! The GAAP rules must be followed by accountants when preparing any accounting schedules and reports.  Question 2 3 out of 3 points The Financial Accounting Standards Board (FASB) is a non-governmental agency that creates the GAAP rules for accounting. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! The SEC, a government agency, has given FASB the task of creating the GAAP rules, but FASB is a nongovernmental agency.  Question 3 3 out of 3 points Stockholders own which type of business? Selected Answer: B. corporati on. Correct Answer: B. corporati on. Response Feedback: Correct! Corporations are owned by stockholders.  Question 4 3 out of 3 points If owner's equity and liabilities increased during the period, then assets must also have increased. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! Assets = liabilities and owner's equity. If we increased one side of the equation we must also have increased the other side in order for it to still be equal.  Question 5 3 out of 3 points When the owner withdraws cash from the business it will result in an increase in owner's equity. Selected Answer: Fals e Correct Answer: Fals e Response Feedback: Correct! Withdrawals by the owner reduce owner's equity.  Question 6 3 out of 3 points The balance sheet reports assets, liabilities and owner's equity on a specific date. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! The balance sheet reports assets, liabilities and owner's equity on the last day of the accounting period.  Question 7 0 out of 3 points Stephen purchased office supplies for $800 in cash. This transaction would Selected Answer: C. increase assets and increase liabilities. Correct Answer: B. increase one asset and decrease another asset. Response Feedback: Incorrect! The purchase of office supplies for cash will increase the asset Office Supplies and decrease the asset Cash.  Question 8 3 out of 3 points To debit an account is to enter an amount on the left column in the journal entry. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! When an amount is recorded in the left column of the journal or ledger, it is a debit. When it is recorded in the right column, it is a credit.  Question 9 0 out of 3 points Prepaid Insurance is an expense account. Selected Answer: Tru e Correct Answer: Fals e Response Feedback: Incorrect! Prepaid Insurance is an asset because the business owns the policy which will provide future economic benefits.  Question 10 3 out of 3 points Mary's business has performed services on account. The journal entry to record this transaction would include a debit to Cash and a credit to Service Revenue. Selected Answer: Fals e Correct Answer: Fals e Response Feedback: Correct! When services are provided on account, a revenue account is increased with a credit and Accounts Receivable is increased with a debit. The Cash account will not be increased until the customer pays the bill.  Question 11 3 out of 3 points The normal balance of the Owner, Capital account Selected Answer: C. is a credit balance. Correct Answer: C. is a credit balance. Response Feedback: Correct! The Owner, Capital account has a normal credit balance.  Question 12 3 out of 3 points The normal balance of the Accounts Receivable account is Selected Answer: A. a debit balance. Correct Answer: A. a debit balance. Response Feedback: Correct! The normal balance of Accounts Receivable is a debit balance.  Question 13 3 out of 3 points The balance sheet Selected Answer: D. shows that total assets = total liabilities and owner's equity. Correct Answer: D. shows that total assets = total liabilities and owner's equity. Response Feedback: Correct! The balance sheet shows that total assets = total liabilities and owner's equity.  Question 14 3 out of 3 points The purpose of the general journal is to provide a chronological record of all transactions completed by the business. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! The general journal is a diary-like record of business transaction in the order that they occurred.  Question 15 3 out of 3 points The purpose of the trial balance is to prove that the total of the debit balances and the total of the credit balances in the ledger accounts are equal. Selected Answer: Tru e Correct Answer: Tru e Response Feedback: Correct! The trial balance [Show More]

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