Accounting 301 Pretest preparation:
a. increase expenses and decrease assets.
b. increase equities and decrease liabilities.
c. decrease liabilities and increase expenses.
d. increase assets and increase revenues.
Answer to Question 1 : C
2. If a company borrows money in the form of an interest bearing note payable, then at the end of the accounting period the company is likely to make an adjusting entry:
a. debiting interest receivable and crediting interest payable.
b. debiting interest receivable and crediting cash.
c. debiting interest expense and crediting cash.
d. debiting interest expense and crediting interest payable.
Answer to Question 2: D
3. The matching principle states that
a. for every debit there is an equal credit.
b. total assets must match total liabilities and owners' equity.
c. expenses should be recognized in the same accounting period in which they generated revenue.
d. total debits equal total credits.
Answer to Question 3: C