ACCOUNTING FOUNDATIONS BOOKKEEPING TEST WITH
ANSWERS #7
Which report is available to individuals outside of a business, and shows operating
activities, financing activities, and investing activities?
-Trial Balance
-Income Statement
-Balance Sheet
-Statement of Cash Flows - correct answer -Statement of Cash Flows
What is the purpose of a "trial balance"?
-to discover errors in bookkeeping
-the summary of a journal
-the summary of a ledger
-to see if debits equal credits - correct answer -to see if debits equal credits
In which account are debits increases and credits decreases?
-Asset accounts
-Equity accounts
-Liability accounts
-Payables accounts - correct answer -Asset accounts
Revenues and expenses are subcategories of _____ accounts.
-Assets
-Liabilities
-Sales Income
-Retained Earnings - correct answer -Retained Earnings
How would you accurately define a "journal"?
-a chronological record of all transactions of a business
-a term used in accounting for the T-Account used to enter debits and credits
-a record of all transactions of a business arranged by accounts
-computer software that replaces handwritten records in a business - correct answer -a
chronological record of all transactions of a business
Farmco purchases inventory on credit from Parts Suppliers, Inc. In which situation is
farmco likely to pay interest to Parts Suppliers?
-whenever farmco adds items to its purchase order that is issued to Parts Suppliers
-when farmco takes out a bank loan to finance purchases from Parts Suppliers
Attempted correct option
-when the time-payment plan with Parts Suppliers is over in two months
-whenever farmco buys products on credit from Parts Suppliers - correct answer -when
the time-payment plan with Parts Suppliers is over in two months
Farmco sold a tractor for $40,000 that they initially purchased for $30,000 cash from
John Deere. How is the $30,000 journalized?
ANSWERS #7
Which report is available to individuals outside of a business, and shows operating
activities, financing activities, and investing activities?
-Trial Balance
-Income Statement
-Balance Sheet
-Statement of Cash Flows - correct answer -Statement of Cash Flows
What is the purpose of a "trial balance"?
-to discover errors in bookkeeping
-the summary of a journal
-the summary of a ledger
-to see if debits equal credits - correct answer -to see if debits equal credits
In which account are debits increases and credits decreases?
-Asset accounts
-Equity accounts
-Liability accounts
-Payables accounts - correct answer -Asset accounts
Revenues and expenses are subcategories of _____ accounts.
-Assets
-Liabilities
-Sales Income
-Retained Earnings - correct answer -Retained Earnings
How would you accurately define a "journal"?
-a chronological record of all transactions of a business
-a term used in accounting for the T-Account used to enter debits and credits
-a record of all transactions of a business arranged by accounts
-computer software that replaces handwritten records in a business - correct answer -a
chronological record of all transactions of a business
Farmco purchases inventory on credit from Parts Suppliers, Inc. In which situation is
farmco likely to pay interest to Parts Suppliers?
-whenever farmco adds items to its purchase order that is issued to Parts Suppliers
-when farmco takes out a bank loan to finance purchases from Parts Suppliers
Attempted correct option
-when the time-payment plan with Parts Suppliers is over in two months
-whenever farmco buys products on credit from Parts Suppliers - correct answer -when
the time-payment plan with Parts Suppliers is over in two months
Farmco sold a tractor for $40,000 that they initially purchased for $30,000 cash from
John Deere. How is the $30,000 journalized?
