Question

QUESTION 1 U.S. Government Treasury bonds provide low return andlow risk to investors.

True False

QUESTION 2 Willow Rentalspurchased office supplies on credit. The general journal entry madeby Willow Rentals will include a:

Credit to Cash. Debit to AccountsReceivable.

Debit to AccountsPayable.

Credit to AccountsPayable.

Credit to CommonStock.

QUESTION 3 The general journal isknown as the book of final entry because financial statements areprepared from it.

True False

QUESTION 4 If a company purchasesequipment costing $4,500 on credit, the effect on the accountingequation would be:

Assets increase $4,500 andliabilities increase $4,500.

Equity increases $4,500 andliabilities decrease $4,500.

Liabilities decrease $4,500 andassets increase $4,500.

Equity decreases $4,500 andliabilities increase $4,500.

Assets increase $4,500 andliabilities decrease $4,500.

QUESTION 5 An example of anoperating activity is:

Paying wages.

Borrowing money from abank.

Selling stock.

Purchasing officeequipment.

Paying off a loan.

QUESTION 6 On May 31, the Cashaccount of Bottle’s R Us had a normal balance of $5,000. DuringMay, the account was debited for a total of $12,200 and creditedfor a total of $11,500. What was the balance in the Cash account atthe beginning of May?

A $4,300 creditbalance.

A $5,700 debitbalance.

A $0 balance.

A $5,700 creditbalance.

A $4,300 debitbalance.

QUESTION 7 A company’s formalpromise to pay (in the form of a promissory note) a future amountis a(n):

Note payable.

Credit account.

Prepaid expense.

Account receivable.

Unearned revenue.

QUESTION 8 Which financialstatement reports an organization’s financial position at a singlepoint in time?

Trial balance.

Statement of retainedearnings.

Cash flow statement. Incomestatement.

Balance sheet.

QUESTION 9 If a company purchasesequipment paying cash, the journal entry to record this transactionwill include a debit to Cash.

True False

QUESTION 10 Investing activitiesinvolve the buying and selling of assets such as land and equipmentthat are held for long-term use in the business.

True False