Question 1

The double-entry accounting system means

Accepted Answer

A)  Each transaction is recorded with two journal entries. 
B)  Each item is recorded in a journal entry, then in a general ledger account. 
C)  The dual effect of each transaction is recorded with a debit and a credit. 
D)  None of these answer choices are correct. 
A)  Each transaction is recorded with two journal entries. 
B)  Each item is recorded in a journal entry, then in a general ledger account. 
C)  The dual effect of each transaction is recorded with a debit and a credit. 
D)  None of these answer choices are correct.

Question 2

Stockholders' equity is not affected by all

Accepted Answer

A)  cash receipts. 
B)  dividends. 
C)  revenues. 
D)  expenses. 
A)  cash receipts. 
B)  dividends. 
C)  revenues. 
D)  expenses.

Question 3

The difference between the accounting process and the accounting cycle is

Accepted Answer

A)  the accounting process results in the preparation of financial statements, whereas the accounting cycle is concerned with recording business transactions. 
B)  the accounting cycle represents the steps taken to accomplish the accounting process. 
C)  the accounting process represents the steps taken to accomplish the accounting cycle. 
D)  merely semantic, because both concepts refer to the same thing. 
A)  the accounting process results in the preparation of financial statements, whereas the accounting cycle is concerned with recording business transactions. 
B)  the accounting cycle represents the steps taken to accomplish the accounting process. 
C)  the accounting process represents the steps taken to accomplish the accounting cycle. 
D)  merely semantic, because both concepts refer to the same thing.

Question 4

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, and dated before 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, and dated before the balance sheet date. 
D)  before the balance sheet date, and dated after the balance sheet date.

Question 5

When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash paid for operating expenses to determine accrual-basis operating expenses?

Accepted Answer

A)  Add beginning accrued liabilities. 
B)  Subtract beginning prepaid expense. 
C)  Subtract ending prepaid expense. 
D)  Subtract interest expense. 
A)  Add beginning accrued liabilities. 
B)  Subtract beginning prepaid expense. 
C)  Subtract ending prepaid expense. 
D)  Subtract interest expense.

Question 6

As rules for accounting for specific events sometimes differ across countries, the double-entry accounting system is difficult to implement as the basis of worldwide accounting system.

Accepted Answer

A) True 
 B)False

Question 7

The debit and credit analysis of a transaction normally takes place

Accepted Answer

A)  before an entry is recorded in a journal. 
B)  when the entry is posted to the ledger. 
C)  when the trial balance is prepared. 
D)  at the end of the accounting cycle. 
A)  before an entry is recorded in a journal. 
B)  when the entry is posted to the ledger. 
C)  when the trial balance is prepared. 
D)  at the end of the accounting cycle.

Question 8

The post-closing trial balance consists of asset, liability, owners' equity, revenue and expense accounts.

Accepted Answer

A) True 
 B)False

Question 9

When revenue or expense has been recognized or incurred but not yet collected or paid, it is normally called a(n) ____________ revenue or expense.

Accepted Answer

A)  deferred 
B)  adjusted 
C)  estimated 
D)  None of these answer choices are correct. 
A)  deferred 
B)  adjusted 
C)  estimated 
D)  None of these answer choices are correct.

Question 10

A trial balance may prove that debits and credits are equal, but

Accepted Answer

A)  an amount could be entered in the wrong account. 
B)  a transaction could have been entered twice. 
C)  a transaction could have been omitted. 
D)  All of these answer choices are correct. 
A)  an amount could be entered in the wrong account. 
B)  a transaction could have been entered twice. 
C)  a transaction could have been omitted. 
D)  All of these answer choices are correct.

Question 11

Total stockholders' equity consists of common stock and the earnings retained in the business.

Accepted Answer

A) True 
 B)False

Question 12

Tate Company purchased equipment on November 1, 2014 and gave a 3-month, 9% note with a face value of $60,000. The December 31, 2014 adjusting entry is

Accepted Answer

A)  debit Interest Expense and credit Interest Payable, $5,400. 
B)  debit Interest Expense and credit Interest Payable, $1,350. 
C)  debit Interest Expense and credit Cash, $900. 
D)  debit Interest Expense and credit Interest Payable, $900. 
A)  debit Interest Expense and credit Interest Payable, $5,400. 
B)  debit Interest Expense and credit Interest Payable, $1,350. 
C)  debit Interest Expense and credit Cash, $900. 
D)  debit Interest Expense and credit Interest Payable, $900.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Garcia Corporation received cash of $36,000 on August 1, 2014 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2014 adjusting entry is

Accepted Answer

A)  debit Rent Revenue and credit Unearned Rent Revenue, $15,000. 
B)  debit Rent Revenue and credit Unearned Rent Revenue, $21,000. 
C)  debit Unearned Rent Revenue and credit Rent Revenue, $15,000. 
D)  debit Cash and credit Unearned Rent Revenue, $21,000. 
A)  debit Rent Revenue and credit Unearned Rent Revenue, $15,000. 
B)  debit Rent Revenue and credit Unearned Rent Revenue, $21,000. 
C)  debit Unearned Rent Revenue and credit Rent Revenue, $15,000. 
D)  debit Cash and credit Unearned Rent Revenue, $21,000.

Question 15

During an accounting period, if an expense has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

Accepted Answer

A)  a liability account and an asset account. 
B)  an asset or contra asset account and an expense account. 
C)  a liability account and an expense account. 
D)  a receivable account and a revenue account. 
A)  a liability account and an asset account. 
B)  an asset or contra asset account and an expense account. 
C)  a liability account and an expense account. 
D)  a receivable account and a revenue account.

Question 16

Cash to accrual accounting.The following information is available for Renn Corporation's first year of operations:   The balance in accounts payable relates only to merchandise purchases. All merchandise items were marked to sell at 35% above cost. What should be the ending balance in accounts receivable, assuming all accounts are deemed collectible?

Accepted Answer

Since this is the first year of operatio

Question 17

Maso Company recorded journal entries for the issuance of common stock for $160,000, the payment of $52,000 on accounts payable, and the payment of salaries expense of $84,000. What net effect do these entries have on owners' equity?

Accepted Answer

A)  Increase of $160,000. 
B)  Increase of $108,000. 
C)  Increase of $76,000. 
D)  Increase of $24,000. 
A)  Increase of $160,000. 
B)  Increase of $108,000. 
C)  Increase of $76,000. 
D)  Increase of $24,000.

Question 18

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 recognized 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 recognized during the period, to be received at the end of the year

Question 19

Debit always means

Accepted Answer

A)  the right side of an account. 
B)  an increase. 
C)  a decrease. 
D)  None of these answer choices are correct. 
A)  the right side of an account. 
B)  an increase. 
C)  a decrease. 
D)  None of these answer choices are correct.

Question 20

Icon International, a software company, incorporated on January 1, 2013 is planning to convert to IFRS. The company decided to present its first IFRS statements for the year ended December 31, 2015. What is the reporting date of Icon International?

Accepted Answer

A)  January 1, 2013 
B)  January 1, 2015 
C)  December 31, 2015 
D)  December 31, 2013 
A)  January 1, 2013 
B)  January 1, 2015 
C)  December 31, 2015 
D)  December 31, 2013

Exam 3: The Accounting Information System

The double-entry accounting system means

Stockholders' equity is not affected by all

The difference between the accounting process and the accounting cycle is

Adjustments are often prepared

When converting from cash-basis to accrual-basis accounting, which of the following adjustments should be made to cash paid for operating expenses to determine accrual-basis operating expenses?

As rules for accounting for specific events sometimes differ across countries, the double-entry accounting system is difficult to implement as the basis of worldwide accounting system.

The debit and credit analysis of a transaction normally takes place

The post-closing trial balance consists of asset, liability, owners' equity, revenue and expense accounts.

When revenue or expense has been recognized or incurred but not yet collected or paid, it is normally called a(n) ____________ revenue or expense.

A trial balance may prove that debits and credits are equal, but

Total stockholders' equity consists of common stock and the earnings retained in the business.

Tate Company purchased equipment on November 1, 2014 and gave a 3-month, 9% note with a face value of $60,000. The December 31, 2014 adjusting entry is

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

Garcia Corporation received cash of $36,000 on August 1, 2014 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2014 adjusting entry is

During an accounting period, if an expense has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

Maso Company recorded journal entries for the issuance of common stock for $160,000, the payment of $52,000 on accounts payable, and the payment of salaries expense of $84,000. What net effect do these entries have on owners' equity?

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

Debit always means

Icon International, a software company, incorporated on January 1, 2013 is planning to convert to IFRS. The company decided to present its first IFRS statements for the year ended December 31, 2015. What is the reporting date of Icon International?

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

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

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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