1. Which of the four basic financial statements has three main sections: one dealing with operating expenses, another dealing with financial activities, and another dealing with investment activities?
a. 0 Income statement
b. 0 Retained earnings statement
c. 0 Balance sheet
d. 0 Statement of cash flows

2. Which of the following lists the main sections of the statement of cash flows?
a. 0 Operations, investment, and credit activities
b. 0 Investments, credit, and cash operations
c. 0 Operations, investment, and financial activities
d. 0 Financing, investment, and credit activities

Objective: Classify transactions using the rules of debit and credit.

3. Which accounts have a normal credit balance?
a. 0 Assets and expenses
b. 0 Liabilities and expenses
c. 0 Assets and revenue
d. 0 Liabilities and revenue

4. A debit entry may indicate which of the following:
a. 0 An increase in an asset account
b. 0 A decrease in an asset account
c. 0 An increase in a liability account
d. 0 An increase in a capital account

Objective: Journalize basic transactions.

5. ABC Corporation records sales for the day totaling $50,000 in cash sales and $35,000 in sales on account. Which of the following is the correct journal entry?
a. 0 Cash $50,000 Accounts Receivable $35,000 Sales $85,000
b. 0 Cash $50,000 Accounts Receivable $35,000 Sales on Account $35,000 Cash Sales $50,000
c. 0 Sales $85,000 Cash $50,000 Accounts Receivable $35,000
d. 0 Sales