III. Multiple Choice

1. Joe Brown invests $10, 000 into his new business. How would thejournal entry in this transaction be entered in the journal?(observe indention)

1. Cash                    10,000

      Brown, Capital       10,000

Invested cash in business

2. Cash                    10,000

Brown,Capital       10,000

Invested cash in business

3. Brown, Capital     10,000

       Cash                       10,000

Invested cash in business

4. Brown, Capital     10,000

Cash                       10,000

     Invested cash in business

2. Supplies                       500

     AccountsPayable                 500

What is the best explanation for thisjournal entry?

1. Purchased supplies with cash
2. Investment of supplies by owner
3. Purchased supplies on account
4. Paid accounts payable

3. Cash                            770

      FeesEarned               770

Received fees from customers.

Recording this transaction will?

1. Decrease cash and decrease revenues
2. Increase cash and increase revenues
3. Increase cash and decrease revenues
4. Increase revenues and decrease cash

4. Net income will result when

1. Revenues (credits) > expenses (debits)
2. Revenues (debits) > expenses (credits)
3. Expenses (credits) < revenues (debits)
4. Revenues (credits) = expenses (debits)

5. Which of the following will increase owner’s equity?

1. Expenses > revenues
2. The owner draws money for personal use
3. Revenues > expenses
4. Cash is received from customers on account

6. Cash                                       450

     UnearnedFees                    450

What is the best explanation for thisjournal entry?

1. Received cash for services performed
2. Received cash from services to be performed in the future
3. Paid cash in advance for services to be done
4. Paid cash for services to be performed

7. Equipment                                 14000

         Cash                                          4000

           NotePayable                          10000

What is the best explanation for thisjournal entry?

1. Purchased equipment, paid cash of $4000, with the remainder tobe paid in payments
2. Purchased equipment, paid cash of $4000, with the remainder tobe received in payments
3. Purchased equipment and paid cash for the entire amount
4. Purchased equipment on credit

8. The process of rewriting the information from the journal tothe ledger is called

1. Sliding
2. Transposing
3. Journalizing
4. Posting

9. The verification that the total dollar amount of the debitsequals the total dollar amount credits in the ledger is calleda?

1. Ledger
2. Trial balance
3. Account
4. Balance sheet

10. Of the following financial reports, which one is the one thatwill determine if the accounting equation is in balance?

1. Journal entry
2. Income statement
3. Trial balance
4. Account reconciliation

11. If the two totals of a trial balance are not equal, it could bedue to

1. Failure to record a transaction
2. Recording the same erroneous amount for both the debit andcredit parts of a transaction
3. An error in determining the account balances, such as a balancebeing incorrectly computed
4. Recording the same transaction more than once

12. The accounts in the ledger of Mickeys Park Co. are listed inalphabetical order. All accounts have normal balances.

Accounts Payable 500
Accounts Receivable 800
Investment 1000
Cash 1600
Withdrawals 200
Fees Earned 2,000
Insurance expense 100
Land 2000
Wages expense 400
Owner’s equity 1800

Preparing a trial balance, the total of the debits are

1. $5, 300
2. $10,600
3. $4, 100
4. $10, 400
5. $4, 700