Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following equations represents the
balance sheet?
a. | Assets + Liabilities = Shareholders’
Equity | b. | Assets = Liabilities = Shareholders’
Equity | c. | Assets = Liabilities - Shareholders’
Equity | d. | Assets = Liabilities + Shareholders’
Equity |
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2.
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Earnings are the result of the difference
between:
a. | Revenue and assets. | b. | Revenue and liabilities. | c. | Liabilities and
expenses. | d. | Revenue and expenses.
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3.
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What is the result of recording the initial
investment by shareholders?
a. | An equal increase in both assets and shareholders’
equity. | b. | An increase in assets and a decrease in
shareholders’ equity. | c. | An equal increase
in both assets and liabilities. | d. | A decrease in
assets and an increase in liabilities.
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4.
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A service is sold for 250 CU on 10 March. The
service is carried out in March; it is invoiced on 10 April and paid for on 31 May. When is the
transaction recognized?
a. | On 10 March | b. | On 10 April | c. | On 31
March | d. | On 31 May
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5.
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What is the result of recording debt
reimbursement?
a. | An increase in both cash and
liabilities | b. | An increase in
both cash and shareholders’ equity | c. | A decrease in both
cash and shareholders’ equity | d. | A decrease in both
cash and liabilities |
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6.
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The accrual principle means that revenue is
recorded in the income statement at the time of the transaction and not at the time the cash is
received.
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7.
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A revenue:
a. | Is a decrease in shareholders’
equity. | b. | Is a decrease or an increase in shareholders’
equity. | c. | Has no impact on shareholders’
equity. | d. | Is an increase in shareholders’
equity. |
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8.
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How do we describe the process of adjusting the
value of an asset by recognizing that it is consumed in a way that does not completely eliminate the
resource?
a. | Adjustment | b. | Valuation | c. | Depreciation | d. | Waning |
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9.
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Retained earnings are equivalent to available
cash.
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10.
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What is the ratio between current assets and
current liabilities called?
a. | Return on assets | b. | Return on investment | c. | Current
ratio | d. | Cash ratio
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