Ⅰ.Matching each of the following statements with its proper term.

1. Temporary account ( )

2. Working papers ( )

3. Fiscal year ( )

4. Accrual accounting ( )

5. Posting

6. General ledger ( )

7. Liquidity ( )

8. Withdrawals ( )

9. CPA ( )

10. Transaction ( )

11. Accounting cycle ( )

12. Closing entries ( )

13. Reversing entry ( )

14. Accounting equation( )

15. Double entry accounting( )

16. T account ( )

17. Chart of accounts( )

18. Account form ( )

19. Business entity concept ( )

20. Financial accounting ( )

A. Assets taken from the business by the owner for personal use.

B. The annual accounting period adopted by a business.

C. Convertibility to cash

D. Assets=liabilities+ owner’s equity.

E. Documents that help accountants organize their work.

F. An condition or directly affects its results of accounting event or condition that directly changes an entity’s financial operation.

G. The idea that revenues are recorded (recognized) when earned and that expenses are recorded when incurred.

H. The book that contains the individual account (or control account), grouped

according to the five elements of financial statements.

I. Transferring data from the journal to the ledger.

J. An expert accountant licensed by the state.

K. The entries that transfer the balances of the revenue, expense, and dividends accounts to the retained earnings account.

L. The opposite of an adjusting entry, journalized to facilitate routine bookkeeping entries.

M. The process that begins with analyzing and journalizing transactions and ends with the post-closing balance.

N. The simplest form of account.

O. Income statement accounts

P. A system of accounting for recording .transactions, based on recording increases and decreases in accounts so that debits equals credits.

Q. A list of accounts in the ledger

R. The branch of accounting concerned with providing external users with financial information needed to make decisions.

S. An concept of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.

T. The form of balance sheet that resembles the basic format of the accounting equation, with assets on the left side and the liabilities and owner’s equity sections on the right side.

Ⅱ、Multiple choice questions

1. A profit-making business that is a separate legal entity and in which ownership is divided into shares of stock is known as a: ( )

A. proprietorship B. partnership

C. service business D. corporation

2. The resources owned by a business is called :( )

A. assets B. liabilities C. the account equation D. owner’s equity

3. A list of assets, liabilities, and owner’s equity of a business entity as of a specific date is :( )

A. a balance sheet

B. an income statement

C. a retained earning statement

D. a statement of cash flows

4. A debit may signify ( )

A. an increase in an asset account

B. a decrease in an asset account

C. an increase in a liability account

D. an increase in a capital stock account

5. The type of account with a normal credit balance is ( )

A. an asset B. a revenue C. a dividends D. an expense

6. The receipt of cash from customers in payment of their accounts would be recorded by a ( )

A. debit to Cash; credit to Accounts Receivable

B. debit to Accounts Receivable; credit to Cash

C. debit to Cash; credit to Accounts payable

D. debit to Accounts payable; credit to Cash

7. Which of the following accounts would be classified as a current asset on the balance sheet? ( )

A. office equipment B. accumulated depreciation C. land D. accounts receivable

8. Which of the following accounts would not be closed to the income summary account at the end of a period?( )

A. fees earned B. rent expense C. wages expense D. accumulated depreciation

9. What is the maturity value of a 90-day, 12% note for $10000?( )

A. $8800 B. $10300 C.$10000 D.$11200

10. Which of the following is an example of intangible asset?( )

A. patens B. copyrights C. goodwill D. all of the above

Ⅲ. True-False

1. The income summary account can be found in the statement of owner’s equity. ( )

2. Closing entries convert real and nominal accounts to zero balances. ( )

3. The worksheet is prepared after the formal adjusting entries have been made in the journal. ( )

4. A calendar year refers to any twelve month period. ( )

5. The cash basis of accounting often violates the matching rule. ( )

6. Adjusting entries help make financial statements comparable from one period to the next. ( )

7. Payment of accounts payable will be recorded in the purchase journal. ( )

8. In all journal entries, at least one account must be increased, and another decreased. ( )

9. The presentation of the owner’s equity section is same for three types of business organization. ( ).

10. For a given account, total debits must always equal total credits. ( )

11. Internal reporting (i.e., management accounting) must follow GAAP in all respects. ( )

12. Generally accepted accounting principles are not like laws of math and science; they are guidelines which define correct accounting practice at the time. ( )

13. The various steps in the accounting cycle occur with equal frequency. ( )

14. The credit side of an account implies something favorable. ( )

15. Transactions are initially recorded in a ledger account. ( )

16. The net income for a period in the income statement will increase the balance of owner’s equity. ( )

17. Failure to include a warehouse’s merchandise in ending inventory results in an

overstated net income. ( )

18. The statement of owner’s equity links a company’s income statement to its balance sheet. ( )

19. The existence of Accounts Receivable on the balance sheet indicates that the company has one or more creditors. ( )

20. Financial statements are the end products of the accounting process. ( ) Ⅳ. Integrated questions ( 50)

Simmons Inc., whose accounting year ends on June 30, had the following balances in its ledger at June 30 of the current year (under a periodic system):

Cash $3500 Accounts Receivable 11000 Inventory 20000 Prepaid insurance 1200 Office Supplies on Hand 500 Furniture and Fixtures 7000 Accumulated depreciation- Furniture and Fixtures 1100 Delivery Equipment 6000 Accumulated depreciation- Delivery Equipment 1800 Accounts Payable 8500 Notes payable 6500 Capital Stock 15000 Retained Earnings 10400 Sales 110000 Sales Returns and allowances 800 Sales Discounts 1900

Purchases 71000

Purchases Discounts 700 Transportation In 3000 Sales Salaries Expense 9000 Delivery Expense 2000 Advertising Expense 3800 Rent Expense 3600 Office Salaries Expense 10300 Utilities Expense 400

During the year, the accounting department prepared monthly statements using worksheets, but no adjusting entries were made in the journals and ledgers. Data for the year-end adjustments are as follows:

(1)Inventory, June 30 $16800

(2)Prepaid insurance, June 30 400

(3)Office Supplies on Hand 320

(4)Depreciation Expense for year, Furniture and Fixtures 700

(5)Depreciation Expense for year, Delivery Equipment 900

(6)Accrued Sales Salaries, June 30 300

(7)Accrued Office Salaries, June 30 200

Required:

(a)Prepare a Balance Sheet.

(b) Make the closing entries in a general journal.

Purchases Returns and allowances 1000

Ⅴ.Translation (15)

(a) To meet the needs of the external users, a framework of accounting standards, principles and procedures known as “general accepted accounting principle” have been developed to insure the relevance and reliability of the accounting information contained in these external financial reports.(P3 )

(b)Once the appropriate adjusting entries have been made and posted to the ledger accounts, an income statement and a balance sheet may be prepared directly from the account balances.(P73)

(c)The general journal is a relatively simple record in which any type of business transaction can be recorded. In contrast to the general journal, a special journal is designed to record a specific type of frequently occurring business transaction.(P44)

(d)One of the most important functions of accounting is to accumulate and report financial information that shows an organization’s financial position and the results of its operations to its interested users.(P3)

(e)There are three basic financial statements which are the end products of financial accounting: Balance Sheet, Income Statement and the Statement of Cash Flows.(P11)

(f)The plan of organization and all of the coordinate methods and measures adopted within a business to safeguard its assets, check accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.(P92)

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