Question 1

Which of the following transactions results in an increase in both net income and stockholders' equity?

Accepted Answer

A) Paying cash to acquire a six-month insurance policy. 
B) Collecting cash from a customer for services to be provided in the future. 
C) The accrual of interest expense year-end. 
D) Adjustment of the unearned revenue account for revenue earned during the period. 
A) Paying cash to acquire a six-month insurance policy. 
B) Collecting cash from a customer for services to be provided in the future. 
C) The accrual of interest expense year-end. 
D) Adjustment of the unearned revenue account for revenue earned during the period.

Question 2

Below are two related transactions for Golden Corporation.The annual accounting period ends December 31.The books are adjusted only at year-end.
A.October 1,2019: Golden Corporation borrowed $100,000 and signed a note providing for 8% interest.The principal and interest are due in one year on September 30,2020.
B.December 31,2019: End of the annual accounting period.
Prepare the required journal entry at October 31 and December 31,2019 for each of the above items.

Accepted Answer

A.October

Question 3

Which of the following correctly describes the effects of initially recording prepaid insurance expense when cash is paid to purchase an insurance policy?

Accepted Answer

A) Total assets do not change. 
B) Net income decreases. 
C) Liabilities are decreased. 
D) Stockholders' equity increases. 
A) Total assets do not change. 
B) Net income decreases. 
C) Liabilities are decreased. 
D) Stockholders' equity increases.

Question 4

Which of the following does not correctly describe the following adjusting journal entry?

Accepted Answer

A) Total assets do not change. 
B) The transaction is an example of an accrual. 
C) Stockholders' equity decreases. 
D) Net income is not affected. 
A) Total assets do not change. 
B) The transaction is an example of an accrual. 
C) Stockholders' equity decreases. 
D) Net income is not affected.

Question 5

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts:
   Prepare an income statement for September for the first month of Fast Track's operation.Ignore income taxes.

Accepted Answer

The answer of On September 1,2019,Fast Track,Inc.was started with $30,000...

Question 6

Which of the following accounts would not be included in the closing process at year-end?

Accepted Answer

A) Rent expense. 
B) Sales revenue. 
C) Additional paid-in capital. 
D) Cost of goods sold. 
A) Rent expense. 
B) Sales revenue. 
C) Additional paid-in capital. 
D) Cost of goods sold.

Question 7

An accrued expense is incurred and paid for in the current period.

Accepted Answer

A) True 
 B)False

Question 8

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts:
   Prepare a statement of stockholders' equity for September,the first month of operation.Ignore income taxes.

Accepted Answer

@#IMG-DLM& *$19,200 - ($2,400

Question 9

Depreciation expense is an estimated allocation of the cost of long-term assets and is recorded in a contra-asset called accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 10

Johnson Corporation is completing the accounting information processing cycle at the end of the fiscal year,June 30,2019.Johnson has provided the following trial balances as of June 30,2019:
   A.Reconstruct the adjusting entries and prepare a brief explanation of each.
B.What is the amount of net income?
C.Calculate earnings per share (EPS)assuming 1,000 shares of common stock are outstanding.

Accepted Answer

A.
 @#IMG-DLM& B.Net income =

Question 11

Accounts that start a new accounting period with zero balances are referred to as temporary accounts and include both balance sheet and income statement accounts.

Accepted Answer

A) True 
 B)False

Question 12

What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?

Accepted Answer

A) Net income is understated and assets are understated. 
B) Revenues are understated and liabilities are understated. 
C) Net income is understated and liabilities are overstated. 
D) Revenues are understated and stockholders' equity is overstated. 
A) Net income is understated and assets are understated. 
B) Revenues are understated and liabilities are understated. 
C) Net income is understated and liabilities are overstated. 
D) Revenues are understated and stockholders' equity is overstated.

Question 13

Which of the following journal entries is used to record a deferral?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

Which of the following transactions does not create a deferral?

Accepted Answer

A) Paying cash to purchase a three-month insurance policy. 
B) Receiving cash from a customer for services to be provided in the future. 
C) Paying cash to employees for wages they have earned. 
D) Paying cash to purchase a two-month supply of office supplies. 
A) Paying cash to purchase a three-month insurance policy. 
B) Receiving cash from a customer for services to be provided in the future. 
C) Paying cash to employees for wages they have earned. 
D) Paying cash to purchase a two-month supply of office supplies.

Question 15

What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.

Accepted Answer

The total asset turnover ratio measures

Question 16

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Accepted Answer

A) The income statement only. 
B) The statement of stockholders' equity. 
C) The balance sheet only. 
D) The statement of cash flows. 
A) The income statement only. 
B) The statement of stockholders' equity. 
C) The balance sheet only. 
D) The statement of cash flows.

Question 17

Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?

Accepted Answer

A) Revenue is increased. 
B) Liabilities are not affected. 
C) Retained earnings increases. 
D) Net income is not affected. 
A) Revenue is increased. 
B) Liabilities are not affected. 
C) Retained earnings increases. 
D) Net income is not affected.

Question 18

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

Accepted Answer

A) The entry increases expenses and decreases retained earnings. 
B) The entry decreases net income and decreases stockholders' equity. 
C) The entry increases expenses and increases liabilities. 
D) The entry decreases assets and decreases stockholders' equity. 
A) The entry increases expenses and decreases retained earnings. 
B) The entry decreases net income and decreases stockholders' equity. 
C) The entry increases expenses and increases liabilities. 
D) The entry decreases assets and decreases stockholders' equity.

Question 19

The results or a balance on one financial statement may affect the results or a balance on another financial statement.
Prepare a response to the following items.
A.Describe how the income statement is related to the statement of stockholders' equity.
B.Describe how the statement of stockholders' equity is related to the balance sheet.
C.Describe how the statement of cash flows is related to the balance sheet.

Accepted Answer

A.Net income from the income statement a

Question 20

Which of the following does not correctly describe the following adjusting journal entry?

Accepted Answer

A) Total assets decrease. 
B) Retained earnings are not affected. 
C) Stockholders' equity decreases. 
D) Net income decreases. 
A) Total assets decrease. 
B) Retained earnings are not affected. 
C) Stockholders' equity decreases. 
D) Net income decreases.

Which of the following transactions results in an increase in both net income and stockholders' equity?

Which of the following correctly describes the effects of initially recording prepaid insurance expense when cash is paid to purchase an insurance policy?

Which of the following does not correctly describe the following adjusting journal entry?

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare an income statement for September for the first month of Fast Track's operation.Ignore income taxes.

Which of the following accounts would not be included in the closing process at year-end?

An accrued expense is incurred and paid for in the current period.

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare a statement of stockholders' equity for September,the first month of operation.Ignore income taxes.

Depreciation expense is an estimated allocation of the cost of long-term assets and is recorded in a contra-asset called accumulated depreciation.

Accounts that start a new accounting period with zero balances are referred to as temporary accounts and include both balance sheet and income statement accounts.

What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?

Which of the following journal entries is used to record a deferral?

Which of the following transactions does not create a deferral?

What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

Which of the following does not correctly describe the following adjusting journal entry?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 4: Adjustments,financial Statements,and the Quality of Earnings

Which of the following transactions results in an increase in both net income and stockholders' equity?

Which of the following correctly describes the effects of initially recording prepaid insurance expense when cash is paid to purchase an insurance policy?

Which of the following does not correctly describe the following adjusting journal entry?

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare an income statement for September for the first month of Fast Track's operation.Ignore income taxes.

Which of the following accounts would not be included in the closing process at year-end?

An accrued expense is incurred and paid for in the current period.

On September 1,2019,Fast Track,Inc.was started with $30,000 invested by the owners as contributed capital.On September 30,2019,the accounting records contained the following amounts: Prepare a statement of stockholders' equity for September,the first month of operation.Ignore income taxes.

Depreciation expense is an estimated allocation of the cost of long-term assets and is recorded in a contra-asset called accumulated depreciation.

Accounts that start a new accounting period with zero balances are referred to as temporary accounts and include both balance sheet and income statement accounts.

What is the effect on the financial statements when a company fails to adjust the unearned revenue account for revenues earned at year-end?

Which of the following journal entries is used to record a deferral?

Which of the following transactions does not create a deferral?

What does the total asset turnover ratio measure and how is it calculated? Give two examples of transactions that decrease the ratio.

The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?

Which of the following correctly describes the effects of initially recording deferred revenue when cash is received from a customer?

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

Which of the following does not correctly describe the following adjusting journal entry?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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