ber in the Part I (15 points; 3 points each) Indicate the best answer by placing

Question

ber in the Part I (15 points; 3 points each) Indicate the best answer by placing the appropriate num space provided. 1. The three primary financial statements contain information which is useful to how many of the following groups? owners of the firm; creditors and customers of the firm; governmental bodies (1) None (2) One (3) Two (4) Three 2. In the accounting equation, Assets- (1) Liabilities (2) Capital (3) Liabilities Capital (4) Liabilities + Capital 3. The equality of the debit and credit totals on a trial balance indicates (1) total debits equal total credits (2) there are no errors in the account balances (3) there was a posting error (4) nothing, because they must balance the first time a trial balance is prepared 4. The general purpose of adjusting entries is (1) to make the debits and credits balance (2) to bring the accounts up to date (3) to provide information for a trial balance (4) to improve the net income for the period 5. Revenues are (1) the using up of assets of the firm (2) the liabilities of the firm (3) a special kind of growth in the assets of the firm (4) a special kind of decrease in the assets of the firm

Explanation / Answer

1 The financial information is useful to all the three users. Option 4 is correct 2 Assets = Liabilities+Capital Option 4 is correct 3 The equality of debit and credit totals indicate total debis equal total credits Option 1 is correct 4 The general purpose of adjusting entries is to bring the accounts up to date. Option 2 is correct 5 Revenues are a a special kind of growth in the assets of the firm Option 3 is correct

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