2. Profit is determined by subtracting sales revenues from the total expenses of the firm. 3. Checks, invoices, and sales receipts are examples of source documents 4. An AIS( Accounting Inf ormation System) is part of the MIs(Management Information System) and collects and processes financial data for communication to users 5. Liabilities are probable future payments of assets or services that an entity is presently obligated to make as a result of past transactions or events 6. During the accounting period, the assets increased by $4,000 and the equity increased by $1,000. For the balance sheet equation to balance, the liabilities must increase by $5,000 7. The reversing entry for an adjusting entry that debited Accounts Receivable and credited fees earned would be a debit to fees earned and a credit to Accounts Receivable 8. A revenue expenditure benefits only the current period and should be charged to expenses of the current period. A capital expenditure has a benefit that extends beyond the end of the current period and should be charged to an asset 9. When a company records a credit sale, the acid-test ratio will increase 10. Data from one or more direct competitors of the company under analysis are usually preferred for developing standards for comparisons Part Il Multiple Choices(10*2.5=25 points) 1. The accounting specialty that deals with collecting and controlling the costs of producing a given product or service is called a)internal auditing b)bookkeeping c)cost accounting d)general accounting 2. Billy Gates, the owner of a Chinese restaurant, purchased a five-year insurance policy Recording the purchase of the policy requires a)an asset to be debited, a liability to be credited b)a liability to be debited, an asset to be credited c)one asset to be debited another asset to be credited d)withdrawals to be debited, an asset to be credited2. Profit is determined by subtracting sales revenues from the total expenses of the firm. 3. Checks, invoices, and sales receipts are examples of source documents. 4. An AIS (Accounting Information System) is part of the MIS (Management Information System) and collects and processes financial data for communication to users. 5. Liabilities are probable future payments of assets or services that an entity is presently obligated to make as a result of past transactions or events. 6. During the accounting period, the assets increased by $4,000 and the equity increased by $1,000. For the balance sheet equation to balance, the liabilities must increase by $5,000. 7. The reversing entry for an adjusting entry that debited Accounts Receivable and credited Fees Earned would be a debit to Fees Earned and a credit to Accounts Receivable. 8. A revenue expenditure benefits only the current period and should be charged to expenses of the current period. A capital expenditure has a benefit that extends beyond the end of the current period and should be charged to an asset. 9. When a company records a credit sale, the acid-test ratio will increase. 10. Data from one or more direct competitors of the company under analysis are usually preferred for developing standards for comparisons. Part III: Multiple Choices (10*2.5= 25 points) 1. The accounting specialty that deals with collecting and controlling the costs of producing a given product or service is called a) internal auditing b) bookkeeping c) cost accounting d) general accounting 2. Billy Gates, the owner of a Chinese restaurant, purchased a five-year insurance policy. Recording the purchase of the policy requires a) an asset to be debited, a liability to be credited b) a liability to be debited, an asset to be credited c) one asset to be debited, another asset to be credited d) withdrawals to be debited, an asset to be credited