Section A.

i. Choose the correct answer.

MULTIPLE CHOICE QUESTIONS 1. Accountants refer to an economic event as a a. purchase. b. sale. C. transaction. d. change in ownership. 2. The starting point of the accounting process is a. communicating information to users. b. identifying economic events. C. recording economic events. d. None of these answers are correct. 3. Communication of economic events is the part of the accounting process that involves A. identifying economic events. b. quantifying transactions into dollars and cents. C. preparing accounting reports. d. recording and classifying information. 4. The accounting process is correctly sequenced as a. identification, communication, recording. b. recording, communication, identification. C. identification, recording, communication. d. communication, recording, identification. 5. Which of the following would not be considered an external user of accounting data for the GHI Company? a. Internal Revenue Service Agent. b. Management. C. Creditors. d. Customers. 6. Which of the following would not be considered internal users of accounting data for a company? A. The president of a company. b. The controller of a company. C. Creditors of a company. d. Salesmen of the company. 7. The basic accounting equation may be expressed as Assets = Equities. b. Assets - Liabilities = Stockholders' Equity. C. Assets = Liabilities + Stockholders' Equity. d. All of these answers are correct. Liabilities of a company are owed to a. debtors. b. benefactors. C. creditors.10) Credits a. Decrease both assets and liabilities b. Decrease assets and increase liabilities C. Increase both assets and liabilities d. Increase assets ad decrease liabilities 11) The normal balance of any account is the a. Left side b. Right side C. Side which increase that account d. Side which decreases that account 12) Which of the following represents the expanded basic accounting equation? a. Assets = Liabilities + Owner's Capital + Owner's Drawings - Revenues -Expenses b. Assets + Owner's Drawings + Expenses = Liabilities + Owners Capital + Revenues c. Assets - Liabilities - Owner's Drawings = Owner's Capital + Revenues - expenses Assets = revenues + expenses - Liabilities 13) Which of the following correctly identifies normal balance of account a. Assets Debits Liabilities Credit Owner's equity Credit Revenues Debit Expenses Credit b. Assets Debit Liabilities Credit Owner's Equity Credit Revenues Credit Expenses Credit C. Assets credit Liabilities Debit Owner's Equity Debit Revenues Credit Expenses Debit d. Assets Debit Liabilities Credit Owner's equity Credit Revenues Credit Expenses Debit 14) Which account below is not a subdivision of owner's equity? a. Drawings b. Revenues C. Expenses d. Liabilities 2