ACCT 2113 1st Edition Test Review 1 Self-Study QuestionsChapter 11. Based on the introductory section of this chapter, which course is most like financial accounting?a) College algebrab) Foreign languagec) Molecular biologyd) Physical education2. Financial accounting serves which primary functions?a) Measures business activitiesb) Communicates business activities to interested partiesc) Makes business decisions on behalf of interested partiesd) Both a. and b. are functions of financial accounting3. Financing activities of a company include which of the following?a) Selling products or services to customersb) Using cash to purchase long-term assets such as machineryc) Borrowing money from the bankd) Paying salaries to employees4. Investing activities of a company include which of the following?a) Paying salaries to workersb) Using cash to purchase long-term assets such as equipmentc) Issuing common stock to investorsd) Borrowing money from the bank5. Which financial statement conveys a company’s ability to generate profits in the current period?a) Income statementb) Statement of cash flowsc) Balance sheetd) Statement of stockholders’ equity6. Which financial statement shows that a company’s resources equal claims to those resources?a) Income statementb) Statement of stockholders’ equityThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.c) Balance sheetd) Statement of cash flows7. Why does financial accounting have a positive impact on our society?a) It entails a detailed transaction record necessary for filing taxes with the Internal Revenue Service (IRS)b) It allows investors and creditors to redirect their resources to successful companies and away from unsuccessful onesc) It prevents competitors from being able to steal the company’s customersd) It provides a system of useful internal reports for management decision making8. The body of rules and procedures that guide the measurement an communication of financial accounting and information is known as:a) Standards of Professional Compliance (SPC)b) Code of Ethical Decisions (COED)c) Rules of Financial Reporting (RFP)d) Generally Accepted Accounting Principles (GAAP)Chapter 21. Which of the following transactions causes an increase in total assets?a) Pay workers’ salaries for the current monthb) Receive cash payment from a customer billed in the previous periodc) Issue common stock in exchange for cashd) Purchase office equipment for cash2. Which of the following causes an increase in stockholders’ equity?a) Pay dividends to stockholdersb) Obtain cash by borrowing from a local bankc) Provide services to customers on accountd) Purchase advertising on a local radio station3. Which of the following causes the accounting equation not to balance?a) Increase assets; increase liabilitiesb) Decrease assets; increase expensesc) Increase assets; increase dividendsd) Decrease liabilities; increase revenues4. A debit is used to increase which of the following accounts?a) Utilities expenseb) Accounts payablec) Service revenued) Common stock5. A credit is used to increase which of the following accounts?a) Dividendsb) Insurance expensec) Cashd) Service revenue6. Providing services to customers on account for $100 is recorded as:a) Accounts receivable……..100Service revenue……………………..100b) Cash……………………………….100Accounts receivable…………………100c) Service revenue…………….100Accounts receivable…………………100d) Service expense…………….100Accounts payable…………………….1007. Posting is the process of:a) Analyzing the impact of the transaction on the accounting equationb) Obtaining information about external transactions from source documentsc) Transferring debit and credit information from the journal to individual accounts in the general ledgerd) Listing all accounts and their balances at a particular date and showing the equality of total debits and total credits8. A trial balance can best be explained as a list of:a) The income statement accounts used to calculate net incomeb) Revenue, expense, and dividend accounts used to show the balances of components of retained earningsc) The balance sheet accounts used to show the equality of the accounting equationd) All accounts and their balances at a particular dateChapter 31. On May 5, Johnson Plumbing receives a phone call from a customer needing a new water heater and schedules a service visit for May 7. On May 7, Johnson installs the new water heater. The customer pays for services on May 10. According to the revenue recognition principle, on which date should Johnson record service revenue?a) May 5 (date of phone call)b) May 7 (date of service)c) May 10 (date of cash receipt)d) Evenly over the three dates2. On January 17, Papa’s Pizza signs a contract with Bug Zappers for exterminating services related to a recent sighting of cockroaches in the restaurant. Papa’s pays for the extermination on January 29, and Bug Zappers sprays for bugs on February 7. According to the matching principle, on which date should Papa’s Pizza record the extermination expense?a) January 17 (date of the contract)b) January 29 (date4 of cash payment)c) February 7 (date of extermination service)d) Evenly over the three dates3. Refer to the information in self-study question 1. Using cash-basis accounting, on which date should Johnson record service revenue?a) May 5 (date of phone call)b) May 7 (date of service)c) May 10 (date of cash receipt)d) Evenly over the three dates4. Refer to the information in self-study question 2. Using cash-basis accounting, on which date should Papa’s Pizza record the extermination expense?a) January 17 (date of the contract)b) January 29 (date of the cash payment)c) February 7 (date of the extermination service)d) Evenly over the three dates5. Which of the following is not a characteristic of adjusting entries?a) Reduce the balances of revenue, expense, and dividend accounts to zerob) Allow for proper application of the revenue recognition principle (revenues) or the matching principle (expenses)c) Are part of accrual-basis accountingd) Are recorded at the end of the accounting period6. Ambassador Hotels purchases one year of fire insurance coverage on December 1 for $24,000 ($2,000 per month), debiting prepaid insurance. On December 31, Ambassador would record the following