Multiple Choice Questions
60. The accounting process begins with:
A. Analysis of business transactions and source documents.
B. Preparing financial statements and other reports.
C. Summarizing the recorded effect of business transactions.
True / False Questions
1. Accounting records are also referred to as the books. TRUE
3. Preparation of a trial balance is the first step in the analyzing and recording
4. Source documents provide evidence of business transactions and are th
119. A department store has budgeted cost of goods sold for August of $60,000 for its women's
coats. Management wants to have $12,000 of coats in inventory at the end of the month to
prepare for the winter season. Beginning inventory in August was $8,000.
Length of time covered by financial statements; also called reporting period.
Accrual Basis Accounting
Accounting system that recognizes revenues when earned and expenses
when incurred; the basis for GAAP.
Chapter 002 Analyzing and Recording Transactions
132. Match the following definitions and terms by placing the letter that identifies the best
definition in the blank space next to the term.
a. Decrease in an asset and expense account,
1. Although it is possible to find an exception to the following
statement, the vast majority of adjusting entries follow which
pattern described below?
a . One of the accounts debited or credited is an income statement
account while the second account de
159. Given the table below, indicate the impact of the following errors made during the
adjusting entry process. Use a "+" followed by the amount for overstatements, a "-" followed by
the amount for understatements, and a "0" for no effect. The first one
168. For each of the independent cases below, identify the principle of internal control that is
violated, and recommend what should be done to remedy the violation.
1. In order to save money, Regal Company has decided to drop its property insurance on as