MULTIPLE CHOICE

PART II MULTIPLE-CHOICE QUESTIONS (30 Points) 1. a. Although debits increase assets, they also increase revenues b. increase expenses increase owner's equity d. increase liabilities c. 2. a. The right side of a T account is the increase side b. decrease side c. credit side d. debit side 3. a. b. A compound entry is an entry affecting more than one account an entry involving multiple transactions an entry involving more than one date an entry increasing and decreasing the same account c. d. a. The trial balance shows the income earned during the year b. shows the total amount of assets C. shows the accuracy of the general ledger d. is the first financial statement prepared 1. Select the accounts affected by the following transaction: TJ Rex invests $50,000 to open a music store. Assets and Owner's Equity b. Assets and Liabilities C. Liabilities and Owner's Equity d. Capital and Owner's Equity 2. Select the accounts affected by the following transaction: TJ Rex uses credit to buy musical instruments to sell in the store. . Assets and Owner's Equity b. Assets and Liabilities C. Liabilities and Owner's Equity d. Capital and Owner's Equity 3. Select the accounts affected by the following transaction: TJ Rex provides guitar lessons for $25 cash. . Cash and Accounts Payable b. Cash and Revenue C. Accounts Receivable and Revenue d. Cash and Expenses 4. Select the accounts affected by the following transaction: TJ Rex receives $100 for previous lessons provided on account. . Cash and Accounts Receivable b. Cash and Revenue C. Accounts Receivable and Revenue d. Cash and Expenses 5. Select the accounts affected by the following transaction: TJ Rex receives the utility bill but will wait and pay it next month. Cash and Accounts Receivable b. Cash and Revenue C. Accounts Receivable and Revenue d. Accounts Payable and Expenses 10. Which financial statement illustrates the accounting equation? a. Statement of Owner's Equity b. Income Statement C. Balance Sheet d. Statement of Cash Flows