Reference no: EM131163

Question 1

Which of the following events would be recorded as an accounting event?

a. A guest purchases a meal in a food outlet.
b. A guest enters the dining room and is seated by a host.
c. A valet parks a guest's vehicle.
d. A guest complains to front office representatives about a dirty guestroom.

Question 2

What happens to the fundamental accounting equation when the sole proprietor of a business invests more cash in it?

a. Assets increase, liabilities increase, and owner's equity decreases.
b. Assets increase, liabilities increase, and owner's equity remains the same.
c. Assets increase, liabilities remain the same, and owner's equity increases.
d. Assets remain the same, liabilities increase, and owner's equity increases.

Question 3

The branch of accounting that involves reviewing and evaluating documents, records, and control systems is called:

a. financial accounting.
b. cost accounting.
c. auditing.
d. Managerial accounting.

Question 4

Which of the following groups has the most influence over the development of accounting principles in the private sector?

a. Financial Accounting Standards Board (FASB)
b. Securities and Exchange Commission (SEC)
c. Hospitality Financial and Technology Professionals (HFTP)
d. Internal Revenue Service (IRS)

Question 5

The organization that administers the certification programs for Certified Hotel Account Executives and Certified Hotel Technology Professionals is:

a. the Internal Revenue Service (IRS).
b. the Securities and Exchange Commission (SEC).
c. Hospitality Financial and Technology Professionals (HFTP).
d. the Financial Accounting Standards Board (FASB).

Question 6

The major disadvantage of the corporate form of business organization is:

a. limited liability.
b. double taxation.
c. all of the above.
d. difficulty in raising capital.

Question 7

Regardless of the size of an operation's accounting department, the diversity of its responsibilities, or the number and types of reports produced, the accounting staff is responsible for providing:

a. clean rooms that are ready for sale.
b. service.
c. guest comment cards.
d. inventory counts.

Question 8

The generally accepted accounting principle of matching requires that:

a. hospitality businesses use the cash basis of accounting.
b. expenses be matched with the revenues they generate.
c. accounting adjustments be made at least quarterly.
d. balance sheet accounts and income statement accounts match.

Question 9

The Tech Hotel purchased a computer for $3,000. The retail value of the computer per the salesperson is $3,500; however, it is projected that the computer will have a market value of only $2,500 one year from now. The cost principle dictates that the computer purchase be recorded at the date of purchase for:

a. $3,000.
b. $2,500.
c. $3,500.
d. cannot be determined

Question 10

Which of the following statements best describes the accounting principle of objective evidence?

a. It involves recording, classifying, and summarizing transactions in order to prepare reports.
b. It requires supporting documents for accounting transactions whenever possible.
c. It requires that all events that would make a difference to the user of a financial report be accounted for.
d. It assumes that the business will survive for the foreseeable future.

Question 11

T-accounts are so named because of:

a. their appearance.
b. the kinds of information they provide.
c. their inventor, whose first initial was T.
d. their relevance to trade analysis.

Question 12

Hospitality accounting staff members prepare a trial balance in order to:

a. test the equality of debits and credits.
b. keep track of how the bookkeeper handles transactions.
c. make sure that all transactions have been entered only once.
d. determine the firm's profitability.

Question 13

Jerry accepts a formal, written promise from an employee of his hotel to pay a certain sum. The employee plans to repay the hotel within the current fiscal year, and states this intention in the note. Notes Receivable are classified as:

a. owners' equity.
b. liabilities.
c. assets.
d. expenses.

Question 14

The basic element used in an accounting system to classify and summarize business transactions is the:

a. marketable security.
b. T-account.
c. account.
d. Liability

Question 15

Sara totals the credits and debits for a certain account and finds that the account carries a debit balance. All of the following types of accounts typically carry a debit balance except:

a. drawing accounts.
b. expense accounts.
c. asset accounts.
d. liability accounts.

Question 16

Revenue from cash sales ultimately affects which two balance sheet accounts?

a. assets and expenses
b. assets and owner's equity
c. assets and liabilities
d. liabilities and owner's equity

Question 17

All of the following are balance sheet accounts except:

a. asset accounts.
b. liability accounts.
c. owners' equity accounts.
d. revenue accounts.

Question 18

Which of the following kinds of accounts would appear in a general ledger?

a. owners' equity accounts
b. drawing accounts
c. all of the above
d. asset accounts

Question 19

Collette is the owner of a small motel who keeps her own financial records. She needs to record the income from room sales for the day. All of today's income was from a single group, and the group's representative paid the bill on account. The accounts that this income affects are:

a. Room Expense and Accounts Payable.
b. Room Revenues and Accounts Receivable.
c. Rooms Expense and Cash.
d. Cash and Accounts Payable.

Question 20

Which of the following procedures involves transferring amounts recorded in the general journal to ledger accounts?

a. preparing a trial balance
b. journalizing
c. posting
d. cross-indexing

Question 21

Which of the following statements about accrual basis accounting is true?

a. Accrual basis accounting is used only by small hospitality businesses.
b. Accrual basis accounting is reflected on the statement of cash flows.
c. Accrual basis accounting generally requires that several adjusting entries be recorded at the end of the accounting period.
d. Accrual basis accounting allows a business to show greater profits than cash basis accounting.

Question 22

A meeting planner made a deposit with a hotel to reserve exhibit space and the hotel has hosted the meeting. Now that the meeting has taken place, accountants should make an adjustment:

a. to record liabilities and expenses not previously recorded.
b. to record assets and revenues not previously provided.
c. in which previously recorded liabilities become revenue.
d. in which previously recorded assets become expenses.

Question 23

Which of the following is an example of an accounting adjustment in which previously recorded assets become expenses?

a. Prepaid Insurance decreases and Insurance Expense decreases.
b. Prepaid Rent decreases and Rent Expense increases.
c. Utilities Payable increases and Utilities Expense increases.
d. Depreciation Expense increases and Accumulated Depreciation, Building increases.

Question 24

Which of the following adjustments is an example of an accrual adjustment?

a. a liability/expense adjustment involving utility expenses
b. an asset/expense adjustment involving depreciation
c. a liability/revenue adjustment involving unearned revenues
d. an asset/expense adjustment involving insurance

Question 25

Accounts that record accumulated depreciation are shown on the:

a. balance sheet as deductions from assets.
b. income statement as deductions from liabilities.
c. statement of cash flows as revenue.
d. income statement as increases to expenses.

Question 26

James Bell plans to stay at the Michaels Motel for one month, and he prepays his room charges. Bell arrives and begins his stay on January 21. To account for Bell's prepayment, at the end of January (the end of the accounting period) the motel accountant should:

a. debit Unearned Room Revenue and credit Room Revenue.
b. credit Room Revenue and debit Cash.
c. credit Accounts Receivable and debit Cash.
d. debit Unearned Room Revenue and credit Cash.

Question 27

Accounting adjustments to account for unpaid wages would:

a. debit Wage Expense and credit Accrued Wages Payable.
b. credit both Wage Expense and Cash.
c. credit Wage Expense and debit Accrued Wages Payable.
d. debit both Wage Expense and Accrued Wages Payable.

Question 28

Telephone service costs the Eggleston Motor Hotel $250 per week. The business pays its phone service bill on the fifteenth day of each month, but it prepares its financial statements at the end of each month. Which of the following types of adjustments is required to ensure the accuracy of the Eggleston Motor Hotel's financial statements?

a. a liability/expense adjustment
b. an asset/expense adjustment
c. a liability/revenue adjustment
d. an asset/revenue adjustment

Question 29

Jaime failed to make adjusting entries to account for the use of prepaid insurance for his hotel. This mistake affects which of the following financial statements?

a. the balance sheet
b. a and b
c. the income statement
d. the statement of cash flows

Question 30

If an accountant fails to make adjusting entries for utility service payments that have not yet been made:

a. assets will be understated.
b. gross revenue will be overstated.
c. expenses will be understated.
d. liabilities will be overstated.

Question 31

Which of the following steps in the accounting cycle is performed immediately before preparing adjusting entries?

a. analyzing transactions
b. preparing a trial balance
c. preparing the financial statements
d. recording and posting closing entries

Question 32

The accounting cycle step that involves summarizing the ledger accounts to prove the equality of debits and credits is called:

a. preparing a trial balance.
b. posting adjusting entries.
c. preparing the financial statements.
d. analyzing transactions.

Question 33

Which of the following serves as the link between the income statement and the balance sheet?

a. the statement of owners' equity
b. the post-closing trial balance
c. the adjusted trial balance
d. the statement of cash flows

Question 34

Trish is preparing a financial statement for which she needs the balances of the owners' capital and drawing accounts. Which statement is Trish most likely preparing?

a. an income statement
b. an adjusted trial balance
c. a statement of owners' equity
d. a statement of cash flows

Question 35

Ivan is making several entries into the general journal at the restaurant where he serves as an accountant. The main difference between entries for routine business transactions and adjusting entries is that:

a. . entries for business transactions usually affect fewer kinds of accounts than adjusting entries.
b. . entries for business transactions are made more often than adjusting entries.
c. . adjusting entries are usually higher than entries for routine business transactions.
d. . adjusting entries are usually lower than entries for routine business transactions.

Question 36

Why do accountants close accounts?

a. to consolidate revenues and expenses into one net figure
b. to test the balance of debits and credits
c.  to ensure that the general ledger is the only remaining ledger account
d. to obtain more detailed information on revenues and expenses

Question 37

Closing the Interest Income account usually involves:

a. crediting an expense account.
b. crediting an asset account.
c. debiting a liabilities account.
d. crediting the Owners' Equity account.

Question 38

All of the following are examples of accounts that would be listed on a worksheet except:

a. Depreciation Expense.
b. Interest Expense.
c. Income Summary.
d. Rooms Revenue.

Question 39

Which of the following items do accountants neither publish nor give to managers?

a. the income statement
b. the worksheet
c. the statement of owner's equity
d. the balance of the owner's capital account

Question 40

Accountants should not reverse the adjustment of prepaid insurance to recognize insurance expense at the end of the accounting period because:

a. . doing so results in a change from accrual basis accounting to cash basis accounting.
b. . Prepaid Insurance is a liability account.
c. . Prepaid Insurance should never be adjusted.
d. . there is no transaction in the following accounting period to offset a reversing entry as there is for the accrual of assets and liabilities.