Question 1

Which type of account is always debited during the closing process?

Accepted Answer

A)  Dividends. 
B)  Expense. 
C)  Revenue. 
D)  Retained earnings. 
A)  Dividends. 
B)  Expense. 
C)  Revenue. 
D)  Retained earnings.

Question 2

The failure to properly record an adjusting entry to accrue an expense will result in an:

Accepted Answer

A)  understatement of expenses and an understatement of liabilities. 
B)  understatement of expenses and an overstatement of liabilities. 
C)  understatement of expenses and an overstatement of assets. 
D)  overstatement of expenses and an understatement of assets. 
A)  understatement of expenses and an understatement of liabilities. 
B)  understatement of expenses and an overstatement of liabilities. 
C)  understatement of expenses and an overstatement of assets. 
D)  overstatement of expenses and an understatement of assets.

Question 3

The trial balance will not balance when a company

Accepted Answer

A)  Fails to journalize a transaction. 
B)  Omits posting a correct journal entry. 
C)  Posts a journal entry twice. 
D)  Debits two statement of financial position accounts and no income statement accounts. 
A)  Fails to journalize a transaction. 
B)  Omits posting a correct journal entry. 
C)  Posts a journal entry twice. 
D)  Debits two statement of financial position accounts and no income statement accounts.

Question 4

Under International Financial Reporting Standards (IFRS)

Accepted Answer

A)  The cash-basis method of accounting is accepted. 
B)  Events are recorded in the period in which the event occurs. 
C)  Net income will be lower under the cash-basis than accural-basis accounting. 
D)  All of the choices are correct. 
A)  The cash-basis method of accounting is accepted. 
B)  Events are recorded in the period in which the event occurs. 
C)  Net income will be lower under the cash-basis than accural-basis accounting. 
D)  All of the choices are correct.

Question 5

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Accepted Answer

A)  an unearned revenue. 
B)  a prepaid expense. 
C)  an accrued revenue. 
D)  an accrued expense. 
A)  an unearned revenue. 
B)  a prepaid expense. 
C)  an accrued revenue. 
D)  an accrued expense.

Question 6

Which of the following statements is false?

Accepted Answer

A)  Companies can prepare the income statement and the statement of financial position directly from the adjusted trial balance. 
B)  Companies can prepare the statement of cash flows directly from the adjusted trial balance. 
C)  The adjusted trial balance proves the equality of total debits and total credits after all adjustments. 
D)  Each adjusting entry affects one statement of financial position account and one income statement account. 
A)  Companies can prepare the income statement and the statement of financial position directly from the adjusted trial balance. 
B)  Companies can prepare the statement of cash flows directly from the adjusted trial balance. 
C)  The adjusted trial balance proves the equality of total debits and total credits after all adjustments. 
D)  Each adjusting entry affects one statement of financial position account and one income statement account.

Question 7

Posting is done for income statement activity; activity related to statement of financial position does not require posting.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following properly describes a deferral?

Accepted Answer

A)  Cash is received after revenue is earned. 
B)  Cash is received before revenue is earned. 
C)  Cash is paid after expense is incurred. 
D)  Cash is paid in the same time period that an expense is incurred. 
A)  Cash is received after revenue is earned. 
B)  Cash is received before revenue is earned. 
C)  Cash is paid after expense is incurred. 
D)  Cash is paid in the same time period that an expense is incurred.

Question 9

Debit always means

Accepted Answer

A)  right side of an account. 
B)  increase. 
C)  decrease. 
D)  None of these answers are correct. 
A)  right side of an account. 
B)  increase. 
C)  decrease. 
D)  None of these answers are correct.

Question 10

Under International Financial Reporting Standards (IFRS) real accounts include all of the following except

Accepted Answer

A)  Dividends 
B)  Assets 
C)  Liabilities 
D)  Equity 
A)  Dividends 
B)  Assets 
C)  Liabilities 
D)  Equity

Question 11

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

Accepted Answer

A)  Subtract ending accounts receivable. 
B)  Subtract beginning unearned service revenue. 
C)  Add ending accounts receivable. 
D)  Add cash sales. 
A)  Subtract ending accounts receivable. 
B)  Subtract beginning unearned service revenue. 
C)  Add ending accounts receivable. 
D)  Add cash sales.

Question 12

The trial balance is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 13

Adjusting entries are necessary to enable the financial statements to conform to International Financial Reporting Stanadard (IFRS).

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a nominal (temporary) account?

Accepted Answer

A)  Unearned Service Revenue 
B)  Salaries and Wages Expense 
C)  Inventory 
D)  Retained Earnings 
A)  Unearned Service Revenue 
B)  Salaries and Wages Expense 
C)  Inventory 
D)  Retained Earnings

Question 15

The accounting equation must remain in balance

Accepted Answer

A)  throughout each step in the accounting cycle. 
B)  only when journal entries are recorded. 
C)  only at the time the trial balance is prepared. 
D)  only when formal financial statements are prepared. 
A)  throughout each step in the accounting cycle. 
B)  only when journal entries are recorded. 
C)  only at the time the trial balance is prepared. 
D)  only when formal financial statements are prepared.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The book value of any depreciable asset is the difference between its cost and its salvage value.

Accepted Answer

A) True 
 B)False

Question 18

An accounting record where a company initially records transactions and selected other events is called the

Accepted Answer

A)  ledger. 
B)  account. 
C)  trial balance. 
D)  journal. 
A)  ledger. 
B)  account. 
C)  trial balance. 
D)  journal.

Question 19

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

Accepted Answer

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

Question 20

Which of the following is an example of an accrued expense?

Accepted Answer

A)  Office supplies purchased at the beginning of the year and debited to an expense account. 
B)  Property taxes incurred during the year, to be paid in the first quarter of the subsequent year. 
C)  Depreciation expense. 
D)  Rent earned during the period, to be received at the end of the year. 
A)  Office supplies purchased at the beginning of the year and debited to an expense account. 
B)  Property taxes incurred during the year, to be paid in the first quarter of the subsequent year. 
C)  Depreciation expense. 
D)  Rent earned during the period, to be received at the end of the year.

Which type of account is always debited during the closing process?

The failure to properly record an adjusting entry to accrue an expense will result in an:

The trial balance will not balance when a company

Under International Financial Reporting Standards (IFRS)

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Which of the following statements is false?

Posting is done for income statement activity; activity related to statement of financial position does not require posting.

Which of the following properly describes a deferral?

Debit always means

Under International Financial Reporting Standards (IFRS) real accounts include all of the following except

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

The trial balance is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position.

Adjusting entries are necessary to enable the financial statements to conform to International Financial Reporting Stanadard (IFRS).

Which of the following is a nominal (temporary) account?

The accounting equation must remain in balance

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

The book value of any depreciable asset is the difference between its cost and its salvage value.

An accounting record where a company initially records transactions and selected other events is called the

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

Which of the following is an example of an accrued expense?

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

Which type of account is always debited during the closing process?

The failure to properly record an adjusting entry to accrue an expense will result in an:

The trial balance will not balance when a company

Under International Financial Reporting Standards (IFRS)

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Which of the following statements is false?

Posting is done for income statement activity; activity related to statement of financial position does not require posting.

Which of the following properly describes a deferral?

Debit always means

Under International Financial Reporting Standards (IFRS) real accounts include all of the following except

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

The trial balance is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position.

Adjusting entries are necessary to enable the financial statements to conform to International Financial Reporting Stanadard (IFRS).

Which of the following is a nominal (temporary) account?

The accounting equation must remain in balance

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

The book value of any depreciable asset is the difference between its cost and its salvage value.

An accounting record where a company initially records transactions and selected other events is called the

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

Which of the following is an example of an accrued expense?

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