D102 Financial Accounting - Set 2 - Part 1

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: Which account normally has a debit balance?

Sales

Dividends

Accounts Payable

Accumulated Depreciation

Question 2: How does a company record the payment of salaries to its employees?

Debit salaries expense, credit cash

Debit cash, credit salaries expense

Debit salaries expense, credit accounts payable

Debit accounts payable, credit cash

Question 3: What is the effect on the accounting equation when a company borrows cash by signing a note payable?

Decreases assets, decreases liabilities

Increases assets, increases liabilities

Increases assets, increases equity

Decreases assets, decreases equity

Question 4: How are revenues typically recorded with debits and credits?

As a debit

As a credit

As a debit when earned and as a credit when received

As a credit when earned and as a debit when received

Question 5: On September 1, a company received $12,000 in advance for services to be provided over the next year. What is the correct adjusting entry at the end of December?

Debit cash, credit unearned revenue

Debit unearned revenue, credit service revenue

Debit service revenue, credit unearned revenue

Debit accounts receivable, credit service revenue

Question 6: Which of the following is classified as a long-term liability?

Accounts payable

Accrued expenses

Bonds payable

Salaries payable

Question 7: Which inventory costing method assumes the first items purchased are the first to be sold?

FIFO

LIFO

Weighted-average

Specific identification

Question 8: What type of account is accumulated depreciation?

Expense account

Contra-asset account

Liability account

Asset account

Question 9: What is the proper accounting treatment for a cash dividend declared but not yet paid?

Debit dividends, credit cash

Debit dividends payable, credit cash

Debit dividends, credit dividends payable

Debit retained earnings, credit dividends payable

Question 10: Which financial statement reports the financial position of a company at a specific point in time?

Income statement

Balance sheet

Statement of cash flows

Statement of retained earnings

Question 11: Which method of depreciation results in the same depreciation expense each year?

Units of production

Declining balance

Straight-line

Double declining balance

Question 12: What type of asset is a patent classified as?

Tangible asset

Intangible asset

Current asset

Financial asset

Question 13: What is the formula for calculating net income?

Revenues - Expenses

Revenues - Cost of Goods Sold

Assets - Liabilities

Cash Inflows - Cash Outflows

Question 14: Which principle requires that expenses be recognized in the same period as the related revenues?

Revenue recognition principle

Matching principle

Cost principle

Consistency principle

Question 15: Which account is closed at the end of the accounting period?

Equipment

Retained earnings

Sales revenue

Accounts payable

Question 16: On December 31, a company recognized $2,000 in wages earned by employees but not yet paid. What is the correct adjusting entry?

Debit wages expense, credit wages payable

Debit wages expense, credit cash

Debit cash, credit wages payable

Debit wages payable, credit wages expense

Question 17: How are research and development costs typically treated?

Expensed when incurred

Capitalized as an intangible asset

Expensed over the life of the project

Expensed only when the project is completed

Question 18: What does a debit entry to an asset account represent?

An increase

A decrease

No effect

A transfer to equity

Question 19: Which account is used to record the costs of purchasing inventory?

Sales

Cost of Goods Sold

Accounts payable

Retained earnings

Question 20: When does an accountant prepare a trial balance?

After closing the books

Before journalizing transactions

Before preparing the financial statements

After the financial statements are prepared

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