Question

1. Multiple Choice Questions. ONLY ONE answer is correct. (2' X 10 = 20) 1. Which of the following does not describe accounting? a. Language of business. b. Is an end rather a means to an end. c. Useful for decision making. d. Used by business, government, nonprofit organizations and individuals. 2. Waterworld Shop purchased a truck for $12,000, making a down payment of $5,000 cash and signing a $7,000 note payable due in 60 days. As a result of this transaction --- ----- a. Total assets increased by $12,000. b. Total liabilities increased by $7,000. c. From the point of view of a short-term creditor, this transaction makes the business more liquid. d. This transaction had an immediate effect on the owner's equity in the business. 3. The following statements correctly describe net income except -------- a. Net income is equal to revenue minus the sum of expenses and dividends. b. Net income is equal to revenue minus expenses. c. Net income increases owner's equity. d. Net income is reported by a company for a specific period of time. 4. ----- is a type of account credited when customers pay in advance for services to be rendered in the future. a. Prepaid expenses b. Accrued expenses c. Unearned revenue d. Unrecorded revenue 5. ----- is the method used to record the cost of goods sold when each unit in the inventory is unique. a. Specific identification b. FIFO method c. LIFO method d. Average method 6. Which of the following account man

Answer 1

Part 1

Answer is option B

b. is an end rather than a means to an end

It is a means to an end

Part 2

Answer is option B

b. Total liabilities increased by $7000

Notes payable are current liabilities and signing notes payable, liabilities on the balance sheet increases

Part 3

Answer is option A

a. Net income is equal revenue minus the sum of expenses and dividends.

Dividends are not deducted to get net income.

Part 4

Part C

c. unearned revenue

Unearned revenue is revenue received in advance for the service or goods to be rendered on some future date.

Part 5

Part A

a. Specific Identification

It is method is used for tracking individual items of inventory.