Reference no: EM132602424

Question 1) The business entity principle

a. requires that corporations have shareholders

b. requires that partnership income be taxed at the partnership level

c. requires that sole proprietors have unlimited liability

d. means that business records should be kept separate from the owner's personal records

e. requires that partnerships have written agreements

Question 2) An unconditional written promise to pay a definite sum of money on demand or on a defined future date (or dates) is a(n)

a. account receivable

b. unearned revenue

c. notes receivable

d. account payable

e. prepaid expense

Question 3) The following is a correct journal entry:

Cash14,400

Consulting revenue 14,400

What is this journal entry recording?

a. An increase in an asset and an increase in owners' equity.

b. An increase in an asset and an increase in a liability.

c. An increase in owners' equity and a decrease in assets.

d. An increase in an asset and a decrease in owners' equity.

e. A decrease in an asset and a decrease in owners' equity.

Question 4) What are prepaid expenses?

a. Assets created by payments for economic benefits that are not used up until later

b. Classified as liabilities on the balance sheet

c. Always debited to an expense account

d. Payments made for economic benefits that never expire

e. Generally, all combined into one account called "Miscellaneous Expenses"

Question 5) An account balance is

a. the same as the balance sheet equation

b. not used in the real world

c. the difference between the increases (including the beginning balance) and decreases recorded in the account

d. the total of the debit side of the account

e. the total of the credit side of the account