Question 1

Adjusting journal entries are normally not necessary when cash-basis accounting is used.

Accepted Answer

A) True 
 B)False

Question 2

The first four steps in the accounting cycle, in proper sequence, are ________.

Accepted Answer

A)  journalize, analyze the transactions, post to the general ledger, prepare an unadjusted trial balance 
B)  analyze the transactions, journalize, post to the general ledger, prepare an unadjusted trial balance 
C)  analyze the transactions, prepare an unadjusted trial balance, post to the general ledger, prepare an adjusted trial balance 
D)  prepare an unadjusted trial balance, journalize, post to the general ledger, prepare an adjusted trial balance 
A)  journalize, analyze the transactions, post to the general ledger, prepare an unadjusted trial balance 
B)  analyze the transactions, journalize, post to the general ledger, prepare an unadjusted trial balance 
C)  analyze the transactions, prepare an unadjusted trial balance, post to the general ledger, prepare an adjusted trial balance 
D)  prepare an unadjusted trial balance, journalize, post to the general ledger, prepare an adjusted trial balance

Question 3

The posting reference in the general ledger is the general journal page number.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following accounts is a permanent account?

Accepted Answer

A)  Interest Expense 
B)  Gain on Sale of Equipment 
C)  Patents 
D)  Bad Debt Expense 
A)  Interest Expense 
B)  Gain on Sale of Equipment 
C)  Patents 
D)  Bad Debt Expense

Question 5

The adjusted trial balance is used to prepare the financial statements for an organization.

Accepted Answer

A) True 
 B)False

Question 6

Reversing entries are used in connection with accrued revenues and accrued expenses.

Accepted Answer

A) True 
 B)False

Question 7

An entry to record depreciation in the current period will be recorded after the unadjusted trial balance is prepared.

Accepted Answer

A) True 
 B)False

Question 8

The post-closing trial balance contains only permanent accounts.

Accepted Answer

A) True 
 B)False

Question 9

If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the expired portion.

Accepted Answer

A) True 
 B)False

Question 10

If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Interest Expense 
B)  Deferred Revenue 
C)  Investments 
D)  Loss on Sale of Equipment 
A)  Interest Expense 
B)  Deferred Revenue 
C)  Investments 
D)  Loss on Sale of Equipment

Question 12

Unearned revenues may be initially recorded as liabilities or revenues.

Accepted Answer

A) True 
 B)False

Question 13

The adjusted trial balance proves the accuracy of the financial statements.

Accepted Answer

A) True 
 B)False

Question 14

Each of the following accounts has a normal credit balance except ________.

Accepted Answer

A)  Sales Revenue 
B)  Accumulated Depreciation 
C)  Investments 
D)  Accounts Payable 
A)  Sales Revenue 
B)  Accumulated Depreciation 
C)  Investments 
D)  Accounts Payable

Question 15

The normal balance of an account is the side on which an increase in the account balance is recorded.

Accepted Answer

A) True 
 B)False

Question 16

The first step in preparing a worksheet is to ________.

Accepted Answer

A)  place adjusted trial balance amounts in appropriate income statement and balance sheet columns 
B)  compute the adjusted balance in the adjusted trial balance columns 
C)  enter the adjusting journal entries in the adjustments columns 
D)  prepare an unadjusted trial balance 
A)  place adjusted trial balance amounts in appropriate income statement and balance sheet columns 
B)  compute the adjusted balance in the adjusted trial balance columns 
C)  enter the adjusting journal entries in the adjustments columns 
D)  prepare an unadjusted trial balance

Question 17

Permanent accounts do not include ________.

Accepted Answer

A)  Rent Expense 
B)  Taxes Payable 
C)  Prepaid Insurance 
D)  Interest Receivable 
A)  Rent Expense 
B)  Taxes Payable 
C)  Prepaid Insurance 
D)  Interest Receivable

Question 18

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.

Accepted Answer

A)  debit to Equipment for $19,000 
B)  credit to Accounts Payable for $15,000 
C)  debit to Expense for $19,000 
D)  credit to Cash for $19,000 
A)  debit to Equipment for $19,000 
B)  credit to Accounts Payable for $15,000 
C)  debit to Expense for $19,000 
D)  credit to Cash for $19,000

Question 19

What are the common errors that a trial balance will not reveal?

Accepted Answer

1. A transaction that is not journalized

Question 20

Abacus Corporation purchased equipment costing $48,000. It paid $8,000 in cash and signed a note payable for $40,000. This transaction ________.

Accepted Answer

A)  increased assets by $48,000, liabilities by $40,000 and shareholders' equity by $8,000 
B)  increased assets by $48,000 and liabilities by $40,000 
C)  increased assets and liabilities each by $40,000 
D)  increased assets and shareholders' equity each by $48,000 
A)  increased assets by $48,000, liabilities by $40,000 and shareholders' equity by $8,000 
B)  increased assets by $48,000 and liabilities by $40,000 
C)  increased assets and liabilities each by $40,000 
D)  increased assets and shareholders' equity each by $48,000

Exam 4: Review of the Accounting Cycle

Adjusting journal entries are normally not necessary when cash-basis accounting is used.

The first four steps in the accounting cycle, in proper sequence, are ________.

The posting reference in the general ledger is the general journal page number.

Which of the following accounts is a permanent account?

The adjusted trial balance is used to prepare the financial statements for an organization.

Reversing entries are used in connection with accrued revenues and accrued expenses.

An entry to record depreciation in the current period will be recorded after the unadjusted trial balance is prepared.

The post-closing trial balance contains only permanent accounts.

If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the expired portion.

If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.

Which of the following accounts has a normal credit balance?

Unearned revenues may be initially recorded as liabilities or revenues.

The adjusted trial balance proves the accuracy of the financial statements.

Each of the following accounts has a normal credit balance except ________.

The normal balance of an account is the side on which an increase in the account balance is recorded.

The first step in preparing a worksheet is to ________.

Permanent accounts do not include ________.

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.

What are the common errors that a trial balance will not reveal?

Abacus Corporation purchased equipment costing $48,000. It paid $8,000 in cash and signed a note payable for $40,000. This transaction ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

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