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Unformatted text preview: ACCT 2101 Financial Accounting Sample Exam 2 Part I: Multiple Choice Answers ( Please write your multiple choice answers here! ) 1. _____ 6. _____ 2. _____ 7. _____ 3. _____ 8. _____ 4. _____ 9. _____ 5. _____ 10. _____ 1 I. Multiple choices Choose the one best answer for each of the following questions. Please write your answers in the space provided on the cover page. 1. If expenses are paid in cash, then a. liabilities will increase. b. assets will decrease. c. stockholders’ equity will increase. d. liabilities will decrease. 2. If a company buys a $700 machine on credit, this transaction will affect the: a. income statement and retained earnings statement only. b. income statement only. c. income statement, retained earnings statement, and balance sheet. d. balance sheet only. 3. A credit is not the normal balance for which account listed below? a. Common Stock account b. Revenue account c. Liability account d. Dividends account 4. Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the same manner? a. Salary expense and notes payable b. Common stock and rent expense c. Prepaid rent and advertising expense d. Service revenue and equipment 5. During January 2007, Handy Services Inc. paid a cash dividend of $2,000. This transaction a. reduces stockholders' equity by $2,000. b. increases stockholders' equity by $2,000. c. reduces net income by $2,000. d. increases expenses by $2,000 6. A trial balance will not balance if a. a correcting journal entry is posted twice. b. a $50 cash dividend is debited to dividends for $500 and credit to cash for $50....
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- Spring '08
- Financial Accounting, Generally Accepted Accounting Principles, Double-entry bookkeeping system, Service Revenue, Miller Company