Question 1

When a corporation pays a note payable and interest,

Accepted Answer

A)  the account Notes Payable will be increased. 
B)  the account Interest Expense will be decreased. 
C)  they will debit Notes Payable and Interest Expense. 
D)  they will debit Cash. 
A)  the account Notes Payable will be increased. 
B)  the account Interest Expense will be decreased. 
C)  they will debit Notes Payable and Interest Expense. 
D)  they will debit Cash.

Question 2

The trial balance

Accepted Answer

A)  Proves that debits are greater than credits when the company has net income. 
B)  Uncovers any errors in journalizing and posting prior to preparation of the statement of financial position. 
C)  Is useful in preparing the statement of financial position. 
D)  All of these choices are correct. 
A)  Proves that debits are greater than credits when the company has net income. 
B)  Uncovers any errors in journalizing and posting prior to preparation of the statement of financial position. 
C)  Is useful in preparing the statement of financial position. 
D)  All of these choices are correct.

Question 3

Which of the following statements best describes the purpose of closing entries?

Accepted Answer

A)  To faciliate posting and taking a trial balance. 
B)  To determine the amount of net income or net loss for the period. 
C)  To reduce the balances of temporary accounts to zero so that they may be used to accumulate the revenues, expenses and dividends of the next period. 
D)  To complete the record of various transactions that were started in a prior period. 
A)  To faciliate posting and taking a trial balance. 
B)  To determine the amount of net income or net loss for the period. 
C)  To reduce the balances of temporary accounts to zero so that they may be used to accumulate the revenues, expenses and dividends of the next period. 
D)  To complete the record of various transactions that were started in a prior period.

Question 4

A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts.

Accepted Answer

A) True 
 B)False

Question 5

The closing entries

Accepted Answer

A)  Must debit or credit one income statement account and one statement of financial position account. 
B)  Include closing the dividends account to income summary. 
C)  Are posted to the appropriate general ledger accounts. 
D)  All of these choices are correct. 
A)  Must debit or credit one income statement account and one statement of financial position account. 
B)  Include closing the dividends account to income summary. 
C)  Are posted to the appropriate general ledger accounts. 
D)  All of these choices are correct.

Question 6

desirable to exercise consistency and establish standardized procedures.

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  1 and 2 
A)  1 
B)  2 
C)  3 
D)  1 and 2

Question 7

Basic steps in the recording process include all of the following except

Accepted Answer

A)  Transfer the journal information to the appropriate account in the statement of financial postion. 
B)  Analyze each transaction for its effect on the accounts. 
C)  Enter the transaction information in a journal. 
D)  All of these choices are corrrect. 
A)  Transfer the journal information to the appropriate account in the statement of financial postion. 
B)  Analyze each transaction for its effect on the accounts. 
C)  Enter the transaction information in a journal. 
D)  All of these choices are corrrect.

Question 8

One purpose of a trial balance is to prove that debits and credits of an equal amount are in the general ledger.

Accepted Answer

A) True 
 B)False

Question 9

Under the cash basis of accounting, revenues are recorded

Accepted Answer

A)  when they are recognized and realized. 
B)  when the performance obligation is satisfied. 
C)  when they are recognized. 
D)  when the company receives cash. 
A)  when they are recognized and realized. 
B)  when the performance obligation is satisfied. 
C)  when they are recognized. 
D)  when the company receives cash.

Question 10

Reversing entries are made at the end of the accounting cycle to correct errors in the original recording of transactions.

Accepted Answer

A) True 
 B)False

Question 11

The trial balance is used to prepare statement of financial position while the general ledger is used to prepare the income statement.

Accepted Answer

A) True 
 B)False

Question 12

The closing process

Accepted Answer

A)  Is done each time a transaction takes place and is journalized. 
B)  Transfers all income statement items to their related statement of financial position account (for example, salaries/wages expense transfers to salaries/wages payable). 
C)  Posts all closing entries to the appropriate general ledger account. 
D)  All of these choices are correct. 
A)  Is done each time a transaction takes place and is journalized. 
B)  Transfers all income statement items to their related statement of financial position account (for example, salaries/wages expense transfers to salaries/wages payable). 
C)  Posts all closing entries to the appropriate general ledger account. 
D)  All of these choices are correct.

Question 13

A reversing entry should never be made for an adjusting entry that

Accepted Answer

A)  accrues unrecorded revenue. 
B)  adjusts expired costs from an asset account to an expense account. 
C)  accrues unrecorded expenses. 
D)  adjusts unexpired costs from an expense account to an asset account. 
A)  accrues unrecorded revenue. 
B)  adjusts expired costs from an asset account to an expense account. 
C)  accrues unrecorded expenses. 
D)  adjusts unexpired costs from an expense account to an asset account.

Question 14

Each adjusting entry affects one statement of financial position account and one income statement account.

Accepted Answer

A) True 
 B)False

Question 15

Real (permanent) accounts are revenue, expense, and dividend accounts and are periodically closed.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true regarding debits and credits?

Accepted Answer

A)  On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances. 
B)  Before adjustments, debits will not equal credits in the trial balance. 
C)  The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities. 
D)  On the income statement, revenues are increased by debit whereas on the statement of financial position retained earnings is increased by a credit. 
A)  On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances. 
B)  Before adjustments, debits will not equal credits in the trial balance. 
C)  The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities. 
D)  On the income statement, revenues are increased by debit whereas on the statement of financial position retained earnings is increased by a credit.

Question 17

In general, debits refer to increases in account balances, and credits refer to decreases.

Accepted Answer

A) True 
 B)False

Question 18

Reversing entries do not apply to which of the following items?

Accepted Answer

A)  Unearned revenue. 
B)  Accrued wages. 
C)  Prepaid insurance. 
D)  Depreciation. 
A)  Unearned revenue. 
B)  Accrued wages. 
C)  Prepaid insurance. 
D)  Depreciation.

Question 19

A ledger is where the company initially records transactions and selected other events.

Accepted Answer

A) True 
 B)False

Question 20

Nominal accounts are also called

Accepted Answer

A)  temporary accounts. 
B)  permanent accounts. 
C)  real accounts. 
D)  None of these answers are correct. 
A)  temporary accounts. 
B)  permanent accounts. 
C)  real accounts. 
D)  None of these answers are correct.

When a corporation pays a note payable and interest,

The trial balance

Which of the following statements best describes the purpose of closing entries?

A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts.

The closing entries

desirable to exercise consistency and establish standardized procedures.

Basic steps in the recording process include all of the following except

One purpose of a trial balance is to prove that debits and credits of an equal amount are in the general ledger.

Under the cash basis of accounting, revenues are recorded

Reversing entries are made at the end of the accounting cycle to correct errors in the original recording of transactions.

The trial balance is used to prepare statement of financial position while the general ledger is used to prepare the income statement.

The closing process

A reversing entry should never be made for an adjusting entry that

Each adjusting entry affects one statement of financial position account and one income statement account.

Real (permanent) accounts are revenue, expense, and dividend accounts and are periodically closed.

Which of the following statements is true regarding debits and credits?

In general, debits refer to increases in account balances, and credits refer to decreases.

Reversing entries do not apply to which of the following items?

A ledger is where the company initially records transactions and selected other events.

Nominal accounts are also called

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

Income Statement and Related Information

Statement of Financial Position 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

Filters

Exam 3: The Accounting Information System

When a corporation pays a note payable and interest,

The trial balance

Which of the following statements best describes the purpose of closing entries?

A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts.

The closing entries

desirable to exercise consistency and establish standardized procedures.

Basic steps in the recording process include all of the following except

One purpose of a trial balance is to prove that debits and credits of an equal amount are in the general ledger.

Under the cash basis of accounting, revenues are recorded

Reversing entries are made at the end of the accounting cycle to correct errors in the original recording of transactions.

The trial balance is used to prepare statement of financial position while the general ledger is used to prepare the income statement.

The closing process

A reversing entry should never be made for an adjusting entry that

Each adjusting entry affects one statement of financial position account and one income statement account.

Real (permanent) accounts are revenue, expense, and dividend accounts and are periodically closed.

Which of the following statements is true regarding debits and credits?

In general, debits refer to increases in account balances, and credits refer to decreases.

Reversing entries do not apply to which of the following items?

A ledger is where the company initially records transactions and selected other events.

Nominal accounts are also called

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

Income Statement and Related Information

Statement of Financial Position 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

Filters