Question 1

The closing entry for the Salaries Expense account includes a debit to:

Accepted Answer

A)  Salaries Expense and a credit to Retained Earnings.
B)  Salaries Expense and a credit to Net Income.
C)  Retained Earnings and a credit to Salaries Expense.
D)  Net Income and a credit to Salaries Expense.E) All of the above
F) B) and D)

Question 2

The accumulated depreciation account decreases over the life of the asset.

Accepted Answer

A) True 
 B)False

Question 3

The Accumulated Depreciation account:

Accepted Answer

A)  is another term for depreciation expense.
B)  represents the original cost of a plant asset.
C)  is a contra asset account.
D)  has a normal balance which is the same as its companion account.E) B) and D)
F) B) and C)

Question 4

Which account is credited in the adjusting entry to allocate the cost of equipment?

Accepted Answer

A)  Equipment Expense
B)  Depreciation Expense-Equipment
C)  Accumulated Equipment
D)  Accumulated Depreciation-EquipmentE) None of the above
F) B) and D)

Question 5

When preparing the financial statements for a company:

Accepted Answer

A)  the report format of the income statement lists liabilities before assets.
B)  the account format for the balance sheet lists the assets on the left and liabilities and stockholders' equity on the right.
C)  the multistep balance sheet lists assets in order of their liquidity.
D)  the single-step income statement reports more subtotals than a multistep income statement.E) A) and D)
F) B) and D)

Question 6

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Accepted Answer

A) True 
 B)False

Question 7

A low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

Accepted Answer

A) True 
 B)False

Question 8

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Accepted Answer

A)  $0.
B)  $60.
C)  $740.
D)  $800E) A) and D)
F) A) and B)

Question 9

Complete the chart below by putting an "X" in the appropriate box:

Accepted Answer

The answer of Complete the chart below by putting an...

Question 10

Which of the following is NOT a correct statement about adjusting entries?

Accepted Answer

A)  Every adjusting entry affects cash.
B)  Every adjusting entry affects the balance sheet.
C)  Every adjusting entry affects net income.
D)  Adjusting entries are posted before the adjusted trial balance is prepared.E) A) and B)
F) A) and C)

Question 11

The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Accepted Answer

A)  credit to Unearned Revenue of $3,900.
B)  debit to Unearned Revenue of $3,900.
C)  debit to Ticket Revenue of $3,900.
D)  credit to Prepaid Revenue of $2,600.E) All of the above
F) B) and D)

Question 12

The revenue principle states that revenue should be recorded in the same period as the cash is received.

Accepted Answer

A) True 
 B)False

Question 13

The dividends account is a permanent account.

Accepted Answer

A) True 
 B)False

Question 14

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

Accepted Answer

A) True 
 B)False

Question 15

The following accounts and balances are taken from Evan Company's adjusted trial balance:  In the closing process,which accounts are credited?

Accepted Answer

A)  Accounts Receivable,Prepaid Insurance,Salary Expense
B)  Depreciation Expense,Dividends,Insurance Expense,Salary Expense
C)  Depreciation Expense,Insurance Expense,Salary Expense,Prepaid Insurance
D)  Interest Revenue,Service RevenueE) None of the above
F) A) and B)

Question 16

Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

Accepted Answer

A)  collecting cash from customers
B)  borrowing money from the bank
C)  purchasing of inventory on account
D)  issuing stock for cashE) A) and C)
F) C) and D)

Question 17

On July 25,Henry Company's accountant prepared a check to prepay for the August through December monthly rent payments.Henry Company mailed the check on July 27 to the landlord.The landlord received the check on July 31 and cashed it on August 2.When should Henry Company record the rent expense for August associated with this transaction? Henry Company uses accrual accounting.

Accepted Answer

A)  July 25
B)  July 27
C)  August 31
D)  August 2E) A) and B)
F) A) and C)

Question 18

Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

Accepted Answer

A)  that the company had net income of $5,000.
B)  an increase in cash of $5,000.
C)  the company had a net loss of $5,000.
D)  a decrease in cash of $5,000.E) None of the above
F) A) and B)

Question 19

Accrual accounting records all of the following transactions EXCEPT:

Accepted Answer

A)  earning of unearned revenue received in advance.
B)  expiration of prepaid insurance.
C)  accrual of expenses incurred but not paid.
D)  receipt of Award for Service to the Community of Naperville,Illinois.E) B) and C)
F) All of the above

Question 20

The balance sheet reports:

Accepted Answer

A)  assets,liabilities and stockholders' equity.
B)  the changes in retained earnings.
C)  assets,liabilities,revenues and expenses.
D)  revenues and expenses.E) A) and B)
F) All of the above

Exam 3: Accrual Accounting Income

Which of the following is NOT a correct statement about adjusting entries?

Correct Answer
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When preparing the financial statements for a company:

Correct Answer
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The balance sheet reports:

Correct Answer
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Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

Correct Answer
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Which account is credited in the adjusting entry to allocate the cost of equipment?

Correct Answer
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The Accumulated Depreciation account:

Correct Answer
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The following accounts and balances are taken from Evan Company's adjusted trial balance: In the closing process,which accounts are credited?

Correct Answer
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A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Correct Answer
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The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Correct Answer
verified

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

Correct Answer
verified

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Correct Answer
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The closing entry for the Salaries Expense account includes a debit to:

Correct Answer
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Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

Correct Answer
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Complete the chart below by putting an "X" in the appropriate box:

Correct Answer
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Correct Answer
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The accumulated depreciation account decreases over the life of the asset.

Correct Answer
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The dividends account is a permanent account.

Correct Answer
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The revenue principle states that revenue should be recorded in the same period as the cash is received.

Correct Answer
verified

A low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

Correct Answer
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Accrual accounting records all of the following transactions EXCEPT:

Correct Answer
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Exam 3: Accrual Accounting Income

Which of the following is NOT a correct statement about adjusting entries?

Correct AnswerverifiedShow Answer

When preparing the financial statements for a company:

Correct AnswerverifiedShow Answer

The balance sheet reports:

Correct AnswerverifiedShow Answer

Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

Correct AnswerverifiedShow Answer

Which account is credited in the adjusting entry to allocate the cost of equipment?

Correct AnswerverifiedShow Answer

The Accumulated Depreciation account:

Correct AnswerverifiedShow Answer

The following accounts and balances are taken from Evan Company's adjusted trial balance: In the closing process,which accounts are credited?

Correct AnswerverifiedShow Answer

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Correct AnswerverifiedShow Answer

The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Correct AnswerverifiedShow Answer

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

Correct AnswerverifiedShow Answer

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Correct AnswerverifiedShow Answer

The closing entry for the Salaries Expense account includes a debit to:

Correct AnswerverifiedShow Answer

Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

Correct AnswerverifiedShow Answer

Complete the chart below by putting an "X" in the appropriate box:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The accumulated depreciation account decreases over the life of the asset.

Correct AnswerverifiedShow Answer

The dividends account is a permanent account.

Correct AnswerverifiedShow Answer

The revenue principle states that revenue should be recorded in the same period as the cash is received.

Correct AnswerverifiedShow Answer

A low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

Correct AnswerverifiedShow Answer

Accrual accounting records all of the following transactions EXCEPT:

Correct AnswerverifiedShow Answer

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