Accounting and Auditing Page-2

11) Combination can be best described as
(A) Restructuring of capital of a company
(B) Reduction of capital of a company
(C) Amount Receivable
(D) Amalgamation of two different types of businesses

12) Books of original entry are called
(A) Ledger
(B) Work sheets
(C) Journal
(D) All of the above

13) For preparing balance sheets prepaid expenses are shown as part of
(A) Liability
(B) Equities
(C) Assets
(D) None of these

14) Unpaid and unrecorded expenses are called
(A) Accrued expenses
(B) Prepaid expenses
(C) Additional expenses
(D) None of these

15) Under the diminishing balance method, depreciation amount is
(A) Payment
(B) Receipt
(C) Expenditure
(D) None of these

16) Users of accounting information include
(A) The tax authorities
(B) Investors
(C) Creditors
(D) All of these

17) The business form(s) in which the owner(s) is (are) personally liable is (are) the:
(A) Partnership
(B) Proprietorship
(C) Corporation
(D) Partnership and proprietorship

18) The investment of personal assets by the owner
(A) Increases total assets and increases owner’s equity
(B) Increases total assets only
(C) Has no effect on assets but increases owner’s equity
(D) Increase assets and liabilities

19) Economic resources of a business that are expected to be of benefit in the future are referred to as
(A) Liabilities
(B) Owner’s equity
(C) Assets
(D) Withdrawals

20) An owner investment of land into the business would
(A) Decrease withdrawals
(B) Increase owner’s equity
(C) Increase liabilities
(D) Decrease assets

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