1) If there is a controlling account, there is probably a subsidiary ledger. TRUE /FALSE2) If the terms of sale are 1/10, n/30, the buyer has ten days after the date of the invoice to take advantage of the cash discount.TRUE /FALSE3)Land is not subject to depreciation.TRUE /FALSE4)Withdrawals are considered as expenses of the business.TRUE /FALSE5)Owner’s equity generally means total assets of a company. TRUE /FALSE6) An annual accounting period is called a fiscal year. TRUE /FALSE7) Entries required to clear the balances of the temporary accounts at the end of the year are called closing entries. TRUE /FALSE8) Net pay less one or more deductions equals gross pay. TRUE /FALSE9) There is a ceiling on the total earnings for each employee that are subject to federal income tax. TRUE /FALSE10) Employees’ individual earnings records are not needed for salaried employees. TRUE /FALSE11) On a bank statement, an NSF check is frequently listed as a debit memorandum. TRUE /FALSE12) A credit memorandum on a bank statement indicates an addition to the bank balance.TRUE /FALSE13) Each petty cash payment is recorded separately in the journal. TRUE /FALSE14)When the petty cash fund is reimbursed, the Petty Cash account is debited for the amount paid out of the fund. TRUE /FALSE15) FOB Destination means that the buyer has the title to the merchandise and pays for the freight charges. TRUE /FALSETable 1: The accounts and their balances as of Dec. 31 of this year for MMD Company are:Accounts Payable = $32,400; Accounts Receivable = 4,200; Advertising Expense = $960; Cash = $11,100; Equipment = $51,000; Income from services = $19,200; Insurance Expense = $480; Owner’s Capital = $33,480; Owner, Drawing = $4,800; Rent Expense= $2,850; Supplies = $3,120; Utilities Expense = $1,770; Wages Expense = $4,800.16) Using Table 1, the amount of the Total Liabilities is ______________.17) Using Table 1, the amount of Net Income is _____________.18) Using Table 1, the amount of Total Owner’s Equity as of Dec. 31 is ______________.19)A business company purchased Land for investment on account. What will be the effect of this transaction on the accounts?Debit a liability account and credit an asset accountDebit an asset account and credit an expense accountDebit an expense account and credit an asset accountDebit an asset account and credit a liability accountDebit an asset account and credit a revenue account20) A company had purchases of inventory for $96,000. Purchases Returns and Allowances were $2,000 and Freight In was $4,000. If the beginning inventory was $50,000 and the ending inventory was $40,000, the cost of merchandise sold is$108,000$88,000$128,000$112,000None of the above21) A business company purchased an office equipment on Jan. 1 of this year for $3,800. The equipment is estimated to have a useful life of 8 yrs. and a trade-in value of $200 at the end of its life. Using the straight-line method, the amount of depreciation expense for the first year is:$500$450$475$400none of the above22) If an accountant fails to make an adjusting entry at the end of the accounting period to record expired insurance, the omission will causetotal revenue to be understatedtotal expenses to be understatedtotal assets to be understatedtotal liabilities to be understatednone of the above23) Which of the following items is not listed on the bank reconciliation?Outstanding ChecksDeposits in TransitPetty Cash FundNSF ChecksBank service charge24) A withdrawal of cash by the owner may be consideredan increase in a liability and a decrease in Cashan increase in an expense and a decrease in Casha decrease in owner’s equity and a decrease in Casha decrease in liability and a decrease in Cashnone of the above25) A purchase of supplies on account should be recorded asAn increase in Supplies and an increase in CashAn increase in Liabilities and a decrease in SuppliesAn increase in Supplies and a decrease in LiabilitiesAn increase in Cash and a decrease in SuppliesAn increase in Supplies and an increase in Liabilities
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