An Income Statement is designed to show ______.

the profitability of the business during the current fiscal period

all the changes to owner’s equity that occurred during the fiscal period

the value of assets, liabilities, and owner’s equity in the business on a particular date

If a business pays cash for supplies, which of the following statements is true?

one asset increases and another asset decreases

one asset increases and one liability decreases

one asset decreases and owner’s equity decreases

one asset increases and owner’s equity increases

The Balance Sheet of Nally’s Nook includes the following items: Office Furniture Cash Supplies Accounts Payable R. Nally, Capital Accounts Receivable R. Nally, Drawing Truck The list includes ______.

five assets and two liabilities

four assets and three liabilities

five assets and three owner’s equity

A lost check with a blank endorsement on it can be cashed by ______.

only the person who endorsed the check

only the person whose name follows the words “Pay to the order of”

The point of the double-entry system of accounting is that every transaction ______.

affects two or more ledger accounts and is recorded by an equal dollar amount of debits and credits

affects accounts on both sides of the balance sheet

is recorded in both the journal and the ledger

increases one ledger account and decreases another

A journal consists of ______.

a chronological record of individual business transactions

a storage center of information within a computer-based accounting system from which data can be retrieved and arranged in any desired format

a listing of the balances of each ledger account to determine the equality of debit and credit entries

a separate page or “account” for each type of asset, liability, and element of owner’s equity

Net Income is best described as ______.

the increase in owner’s equity resulting from profitable business operations during an accounting period

revenue earned during an accounting period, less any cash payments made during the period

cash receipts less cash payments made during a given accounting period

the increase in total assets over a given accounting period

The financial affairs of a business and the financial affairs of the owner(s) should be ______.

combined only if the owner wants them to be

combined in the firm’s accounting records

reported in different parts of the firm’s accounting records

Debits are used to record ______.

increases in assets and expenses

increases in assets and liabilities

increases in expenses and capital

increases in expenses and revenues

The total of the figures on the left side of a cash account is $130,600. The total of the figures on the right side is $87,000. The balance of this account is ______.

$43,600 and would be recorded on the debit side of the account

$217,600 and would be recorded on the credit side of the account

$43,600 and would be recorded on the credit side of the account

$217,600 and would be recorded on the debit side of the account

The amount closed to Capital from Income Summary represents

the net income or net loss during the fiscal period

the ending capital account balance

the amount of withdrawals made during the fiscal period

the beginning capital account balance

Fundamental Accounting 2018

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