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1) In the sellers's records, the sale of merchandise on account would: a)Increase assets and increase expenses b)Increase assets and decrease liabilities c)Increase assets and increase paid-in capital d)Increase assets and decrease revenues 2)In an advertiser's records, a newspaper ad submitted and published this week with the agreement to pay for it next week would: a)Decrease assets and decrease expenses b)Increase liabilities and increase expenses c)Decrease assets and increase revenue d)Increase assets and decrease liabilities 3)In the buyer's records, the purchase of merchandise on account would: a)Increase assets and incease expenses b)Increase assets and increase liabilites c)Increase liabilites and increase paid-in capital d)Have no effect on total assets 4)A newspaper ad submitted and published this week, with the agreement to pay for it next week would, in the newspaper's records: a)Increase assets and increase revenues b)Increase assets and decrease liabilites c)Increase assets and increase expenses d)Have no effect on total assets 5)The current assets of most companies are usually made up of: a)assets that are currently used in the operations of the company b)cash and asssets expected to be converted to cash within a year c)a very small portion (less than 10%) of the total assets of the entity d)cash, marketable securities, and accounts and notes receivable 6)Which of the following is the correct balance sheet presentation for current assets: a)Cash, inventories, account receivables, prepaid expenses b)Cash equivalents, cash, other current assets, accounts receivable c)Accounts receivable, inventories, prepaid expenses, other current assets d)Marketable securites, cash, notes receivable, prepaid expenses 7)The principal reason for reconciling the cash balance per books with the balance shown on the bank statement is to: a)Determine the amount of cash in the account actually available to the entity b)satisy generally accepted accounting principles c)Verify the amount of petty cash on hand d)Determine whether or not the entity as issued an NSF check 8)For which of the following reconciling items would an adjusting entry be necessary? a)A deposit in transit b)An error by the bank c)Outstanding checks d)A bank service charge 9)When a manufacturer invests in short-term marketable securities: a)The return on investment is more important than the risk involved b)The securities are likely to have a maturity date more than a year in the future c)The market value of the securities is likely to fluctuate significantly d)Risk avoidance is of great importance 10)An expanded version of the accounting equation could be a)A+Rev=L+OE-Exp b)A-L=Paid-in Capital-Rev-Exp c)A=L+Paid-in Capital+Beginning Retained Earnings+Rev-Exp d)A=L+Paid-in Capital-Rev+Exp

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