Multiple Choice Answers

Accompanying the bank statement was a debit memorandum for bank service charges. On the bank reconciliation, the item is:

a. a deduction from the balance per depositor’s records

b. an addition to the balance per bank statement

c. a deduction from the balance per bank statement

d. an addition to the balance per depositor’s records

The “rules” of accounting are called __________.                                              a. Income tax regulations

b. SEC regulations

c. Internet rules

d. Generally Accepted Accounting Principles

Under the indirect method on preparing the statement of cash flows, increases in current assets are __________ net income in the cash flows from operating activities section.

a. Subtracted from

b. Added to

c. Not used

d. Cannot tell from the information given

The portion of a corporation’s net income retained in the business is called __________.

a. Income statement

b. Balance sheet

c. Statement of cash flows

d. Retained earnings

Which of the following would NOT affect the operating activities section of the statement of cash flows, using the indirect method?

a. Decrease in merchandise inventory

b. Payment on a note payable

c. Decrease in unearned rent

d. Depreciation expense