Question 1

Which of the following is a real (permanent) account?

Accepted Answer

A) Goodwill 
B) Sales 
C) Accounts Receivable 
D) Both Goodwill and Accounts Receivable 
A) Goodwill 
B) Sales 
C) Accounts Receivable 
D) Both Goodwill and Accounts Receivable

Question 2

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

Accepted Answer

A) Increase of $40,000. 
B) Increase of $27,000. 
C) Increase of $19,000. 
D) Increase of $6,000. 
A) Increase of $40,000. 
B) Increase of $27,000. 
C) Increase of $19,000. 
D) Increase of $6,000.

Question 3

Allen Corp.'s liability account balances at June 30, 2007 included a 10% note payable in the amount of $2,400,000.The note is dated October 1, 2005 and is payable in three equal annual payments of $800,000 plus interest.The first interest and principal payment was made on October 1, 2006.In Allen's June 30, 2007 balance sheet, what amount should be reported as accrued interest payable for this note?

Accepted Answer

A) $180,000. 
B) $120,000. 
C) $60,000. 
D) $40,000. 
A) $180,000. 
B) $120,000. 
C) $60,000. 
D) $40,000.

Question 4

External events do not include

Accepted Answer

A) interaction between an entity and its environment. 
B) a change in the price of a good or service that an entity buys or sells, a flood or earthquake. 
C) improvement in technology by a competitor. 
D) using buildings and machinery in operations. 
A) interaction between an entity and its environment. 
B) a change in the price of a good or service that an entity buys or sells, a flood or earthquake. 
C) improvement in technology by a competitor. 
D) using buildings and machinery in operations.

Question 5

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

An accrued expense can best be described as an amount

Accepted Answer

A) paid and currently matched with earnings. 
B) paid and not currently matched with earnings. 
C) not paid and not currently matched with earnings. 
D) not paid and currently matched with earnings. 
A) paid and currently matched with earnings. 
B) paid and not currently matched with earnings. 
C) not paid and not currently matched with earnings. 
D) not paid and currently matched with earnings.

Question 7

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

Accepted Answer

A) The original cost of the asset 
B) Its useful life 
C) The decline of its fair market value 
D) Both the original cost of the asset and its useful life. 
A) The original cost of the asset 
B) Its useful life 
C) The decline of its fair market value 
D) Both the original cost of the asset and its useful life.

Question 8

The first step in the accounting cycle is the journalizing of transactions and selected other events.

Accepted Answer

A) True 
 B)False

Question 9

In November and December 2007, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2008 issue.Lane included the entire $90,000 in its 2007 income tax return.What amount should Lane report in its 2007 income statement for subscriptions revenue?

Accepted Answer

A) $0. 
B) $5,000. 
C) $30,000. 
D) $90,000. 
A) $0. 
B) $5,000. 
C) $30,000. 
D) $90,000.

Question 10

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Accepted Answer

A) Expiration of prepaid insurance 
B) Depreciation of fixed assets 
C) Accrued wages payable 
D) All of these 
A) Expiration of prepaid insurance 
B) Depreciation of fixed assets 
C) Accrued wages payable 
D) All of these

Question 11

Adjustments are often prepared

Accepted Answer

A) after the balance sheet date, but dated as of the balance sheet date. 
B) after the balance sheet date, and dated after the balance sheet date. 
C) before the balance sheet date, but dated as of the balance sheet date. 
D) before the balance sheet date, and dated after the balance sheet date. 
A) after the balance sheet date, but dated as of the balance sheet date. 
B) after the balance sheet date, and dated after the balance sheet date. 
C) before the balance sheet date, but dated as of the balance sheet date. 
D) before the balance sheet date, and dated after the balance sheet date.

Question 12

An unearned revenue can best be described as an amount

Accepted Answer

A) collected and currently matched with expenses. 
B) collected and not currently matched with expenses. 
C) not collected and currently matched with expenses. 
D) not collected and not currently matched with expenses. 
A) collected and currently matched with expenses. 
B) collected and not currently matched with expenses. 
C) not collected and currently matched with expenses. 
D) not collected and not currently matched with expenses.

Question 13

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Accepted Answer

A) Decrease of $71,000. 
B) Decrease of $39,000. 
C) Decrease of $18,000. 
D) Increase of $11,000. 
A) Decrease of $71,000. 
B) Decrease of $39,000. 
C) Decrease of $18,000. 
D) Increase of $11,000.

Question 14

Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Accepted Answer

A) debit Rent Revenue and credit Unearned Rent, $4,500. 
B) debit Rent Revenue and credit Unearned Rent, $9,000. 
C) debit Unearned Rent and credit Rent Revenue, $4,500. 
D) debit Cash and credit Unearned Rent, $9,000. 
A) debit Rent Revenue and credit Unearned Rent, $4,500. 
B) debit Rent Revenue and credit Unearned Rent, $9,000. 
C) debit Unearned Rent and credit Rent Revenue, $4,500. 
D) debit Cash and credit Unearned Rent, $9,000.

Question 15

Which of the following would not be a correct form for an adjusting entry?

Accepted Answer

A) A debit to a revenue and a credit to a liability 
B) A debit to an expense and a credit to a liability 
C) A debit to a liability and a credit to a revenue 
D) A debit to an asset and a credit to a liability 
A) A debit to a revenue and a credit to a liability 
B) A debit to an expense and a credit to a liability 
C) A debit to a liability and a credit to a revenue 
D) A debit to an asset and a credit to a liability

Question 16

A prepaid expense can best be described as an amount

Accepted Answer

A) paid and currently matched with revenues. 
B) paid and not currently matched with revenues. 
C) not paid and currently matched with revenues. 
D) not paid and not currently matched with revenues. 
A) paid and currently matched with revenues. 
B) paid and not currently matched with revenues. 
C) not paid and currently matched with revenues. 
D) not paid and not currently matched with revenues.

Which of the following is a real (permanent) account?

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

External events do not include

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

An accrued expense can best be described as an amount

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

The first step in the accounting cycle is the journalizing of transactions and selected other events.

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Adjustments are often prepared

An unearned revenue can best be described as an amount

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Which of the following would not be a correct form for an adjusting entry?

A prepaid expense can best be described as an amount

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters

Exam 3: The Accounting Information System

Which of the following is a real (permanent) account?

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

External events do not include

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

An accrued expense can best be described as an amount

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

The first step in the accounting cycle is the journalizing of transactions and selected other events.

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Adjustments are often prepared

An unearned revenue can best be described as an amount

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Which of the following would not be a correct form for an adjusting entry?

A prepaid expense can best be described as an amount

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters