Multiple Choice Questions
1. The journal entry to record the purchase of supplies on account
a. Debits Supplies and credits Accounts Payable.
b. Credits Supplies and debits Cash.
c. Credits Supplies and debits Accounts Payable.
d. Debits Supplies Expense and credits Supplies.
2. If the credit to record the purchase of supplies on account is not posted,
a. Expenses will be overstated.
b. Liabilities will be understated.
c. Stockholders equity will be understated.
d. Assets will be understated.
3. The journal entry to record a payment on account will
a. Debit Cash and credit Expenses.
b. Debit Accounts Payable and credit Retained Earnings.
c. Debit Accounts Payable and credit Cash.
d. Debit Expenses and credit Cash.
4. If the credit to record the payment of an account payable is not posted,
a. Expenses will be understated.
b. Liabilities will be understated.
c. Cash will be understated.
d. Cash will be overstated.
5. Which statement is false?
a. A trial balance is the same as a balance sheet.
b. A trial balance can verify the equality of debits and credits.
c. A trial balance can be taken at any time.
d. A trial balance lists all the accounts with their current balances.
6. A business’s receipt of a $120,000 building, with a $60,000 mortgage payable, and issuance of $60,000 of common stock will
a. Increase stockholders equity by $60,000.
b. Increase assets by $60,000.
c. Decrease assets by $60,000.
d. Increase stockholders equity by $120,000.
7. Gartex, a new company, completed these transactions. What will Gartexs total assets equal?
(1) Stockholders invested $54,000 cash and inventory worth $27,000.
(2) Sales on account, $15,000.
a. $66,000
b. $69,000
c. $96,000
d. $54,000