Exam I Review QuestionsName___________________________________MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1)The field of accounting that focuses on providing information for external decision makers is________.1)A)nonmonetary accountingB)financial accountingC)managerial accountingD)cost accounting2)Which of the following is a major reason why corporate ownership is popular in the United States?2)A)The life of a corporation is limited by the death of the owner.B)A corporation is usually managed by the owners.C)Most corporations are small or medium-sized.D)Stockholders have limited liability for the debts of the corporation.3)As per the ________, the entity will remain in operation for the foreseeable future.3)A)economic entity conceptB)going concern assumptionC)cost principleD)monetary unit assumption4)Thirty years ago, Star Grocer Corporation had purchased a building for its grocery store by paying$30,000. Based on inflation estimates, the amount of the building has been adjusted in theaccounting records. The building is now reported at $75,000 in Star Grocer's financial statements.Which of the following concepts or principles of accounting is being violated?4)A)revenue realization conceptB)cost principleC)economic entity assumptionD)going concern assumption5)The economic resources of a business such as furniture, building, and land are its ________.5)A)liabilitiesB)dividends.C)assetsD)revenues6)Vista Camera Services started the year with total assets of $80,000 and total liabilities of $40,000.The revenues and the expenses for the year amounted to $120,000 and $70,000, respectively. Duringthe year, the company did not issue any common stock, but it distributed dividends of $60,000.Calculate Vista's net income for the year.6)A)$80,000B)$120,000C)$70,000D)$50,0007) ________ is the capital earned by profitable operations that is not distributed to stockholders.7)A)Common StockB)AssetsC)Retained earningsD)Dividend8)Hamilton Lawn Services incurred $500 as labor expense and promised to pay the labor agencywithin 30 days. Which of the following accounts would increase as a result of this transaction?8)A)Retained EarningsB)Accounts PayableC)CashD)Accounts Receivable9)The assets of Moon Company are $150,000 and liabilities are $90,000. The equity will be ________.9)A)$240,000B)$60,000C)$180,000D)$300,000110)Accord Corporation had originally purchased land for $20,000. It later sold it for $20,000 in cash.Which of the following is true of the effect of the sale on the accounting equation?10)A)assets increase by $20,000; equity increases by $20,000B)assets and equity increase by $40,000C)the amount of total assets remains the sameD)assets increase and liabilities decrease by $20,00011)Following is a list of account balances of Wilson Mowing Services as of December 31 of the first yearof operation:Accounts receivable $ 5,000Accounts payable 4,000Salary expense 5,000Repairs expense 1,000Truck 10,000Equipment 8,000Notes payable 8,200Cash 7,500Supplies expense 1,600Service revenue 32,000Gasoline expense 3,800Salary payable 200What is the amount of total liabilities at the end of the year?11)A)$24,100B)$21,200C)$12,400D)$12,20012)Nuptial Inc. paid the rent for the current month in cash. Which of the following account titles willbe debited?12)A)Rent payableB)Rent revenueC)Rent expenseD)Prepaid rent13)Which of the following accounts decreases with a credit?13)A)Accounts PayableB)Notes PayableC)CashD)Common Stock14)The Salaries Payable account is a(n) ________.14)A)asset account with a normal credit balanceB)liability account with a normal credit balanceC)liability account with a normal debit balanceD)asset account with a normal debit balance15)Which of the following statements is true of revenue?15)A)Revenues decrease stockholders' equity; so a revenue account's normal balance is a creditbalance.B)Revenues increase stockholders' equity; so a revenue account's normal balance is a debitbalance.C)Revenues increase stockholders' equity; so a revenue account's normal balance is a creditbalance.D)Revenues decrease stockholders' equity; so a revenue account's normal balance is a debitbalance.216)Journalizing a transaction involves ________.16)A)preparing a summary of account balancesB)recording the data only in the journalC)calculating the balance in an account using journal entriesD)posting the account balances in the chart of accounts17)The accounting process of transferring a transaction from the journal to the ledger is called________.17)A)sourcingB)postingC)journalizingD)compounding18)A business purchases equipment for $8,000 cash. Which of the following accounts will be debited?18)A)EquipmentB)Common StockC)Accounts PayableD)Cash19)A business pays $500 cash for office supplies. Which of the following accounts will be debited?19)A)Office SuppliesB)Accounts PayableC)Utilities ExpenseD)Cash20)Which of the following journal entries would be recorded if Christy Jones Inc. issued stock to thepublic and received $3000?20)A)Common Stock 3,000 Cash 3,000B)Cash 3,000 Common Stock 3,000C)Accounts Payable 3,000 Cash 3,000D)Common Stock 3,000 Accounts Payable 3,00021)Sharon Foods Inc. reported the following transactions for September, 2015.A) The business received $25,000 cash and issued common stock. It was credited to CommonStock.B) The business purchased office equipment for $11,500 for which $2,500 cash was paid and thebalance was put on a note payable.C) Paid insurance expense of $1,800 cash.D) Paid a utility bill for $900 cash.E) Paid $2,000 cash for September rent.F) The business had sales of $12,000 in September. Of these sales, 60% were cash sales, and thebalance was credit sales.G) The business paid $8,000 cash for office furniture.What are the total liabilities at the end of September, 2015?21)A)$9,000B)$8,000C)$1,800D)$11,500322)A business has the following transactions:·The business received $20,000 cash and issued common stock to stockholders.·The business purchases $500 of office supplies on account.·The business purchases $2,000 of furniture on account.·The business renders services to various clients totaling $10,000 on account.·The business pays out $2,000 for salaries expense and $3,000 for Rent Expense.·The business pays $500 to supplier for the office supplies purchased earlier.·The business collects $3,000 from one of its clients for services rendered earlier in the month.At the end of the month, all