Question 1

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows:   The effect of this entry is to

Accepted Answer

A) adjust the accounts to their proper amounts on December 31. 
B) understate total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31. 
A) adjust the accounts to their proper amounts on December 31. 
B) understate total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31.

Question 2

Ultramega Company collected $19,600 in May of 2015 for 4 months of service which would take place from October of 2015 through January of 2016. The revenue reported from this transaction during 2015 would be

Accepted Answer

A) 0. 
B) $4,900. 
C) $14,700. 
D) $19,600. 
A) 0. 
B) $4,900. 
C) $14,700. 
D) $19,600.

Question 3

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Accepted Answer

A) Comparability 
B) Relevance 
C) Faithful representation 
D) Consistency 
A) Comparability 
B) Relevance 
C) Faithful representation 
D) Consistency

Question 4

Accrued revenues are

Accepted Answer

A) cash received and a liability recorded before services are performed. 
B) revenue for services performed and recorded as liabilities before they are received. 
C) revenue for services performed but not yet received in cash or recorded. 
D) revenue for services performed and already received in cash and recorded. 
A) cash received and a liability recorded before services are performed. 
B) revenue for services performed and recorded as liabilities before they are received. 
C) revenue for services performed but not yet received in cash or recorded. 
D) revenue for services performed and already received in cash and recorded.

Question 5

The time period assumption states that

Accepted Answer

A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the company's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods. 
A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the company's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods.

Question 6

Accumulated Depreciation is

Accepted Answer

A) an expense account. 
B) a stockholders' equity account. 
C) a liability account. 
D) a contra asset account. 
A) an expense account. 
B) a stockholders' equity account. 
C) a liability account. 
D) a contra asset account.

Question 7

The fiscal year of a business is usually determined by

Accepted Answer

A) the IRS. 
B) a lottery. 
C) the business. 
D) the SEC. 
A) the IRS. 
B) a lottery. 
C) the business. 
D) the SEC.

Question 8

A company using the same accounting principles from year to year is an application of

Accepted Answer

A) timeliness. 
B) consistency. 
C) full disclosure. 
D) materiality. 
A) timeliness. 
B) consistency. 
C) full disclosure. 
D) materiality.

Question 9

If the adjusting entry for depreciation is not made,

Accepted Answer

A) assets will be understated. 
B) stockholders' equity will be understated. 
C) net income will be understated. 
D) expenses will be understated. 
A) assets will be understated. 
B) stockholders' equity will be understated. 
C) net income will be understated. 
D) expenses will be understated.

Question 10

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Accepted Answer

A) annual, annual 
B) monthly, annual 
C) quarterly, monthly 
D) monthly, monthly 
A) annual, annual 
B) monthly, annual 
C) quarterly, monthly 
D) monthly, monthly

Question 11

The adjusted trial balance is prepared

Accepted Answer

A) after financial statements are prepared. 
B) before the trial balance. 
C) to prove the equality of total assets and total liabilities. 
D) after adjusting entries have been journalized and posted. 
A) after financial statements are prepared. 
B) before the trial balance. 
C) to prove the equality of total assets and total liabilities. 
D) after adjusting entries have been journalized and posted.

Question 12

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

Accepted Answer

A) net income to be overstated. 
B) an understatement of assets and an understatement of revenues. 
C) an understatement of revenues and an understatement of liabilities. 
D) an understatement of revenues and an overstatement of liabilities. 
A) net income to be overstated. 
B) an understatement of assets and an understatement of revenues. 
C) an understatement of revenues and an understatement of liabilities. 
D) an understatement of revenues and an overstatement of liabilities.

Question 13

Crue Company had the following transactions during 2015:
-Sales of $4,800 on account
-Collected $2,000 for services to be performed in 2016
-Paid $1,625 cash in salaries
-Purchased airline tickets for $250 in December for a trip to take place in 2016
What is Crue's 2015 net income using accrual accounting?

Accepted Answer

A) $2,925. 
B) $3,175. 
C) $4,925. 
D) $5,175. 
A) $2,925. 
B) $3,175. 
C) $4,925. 
D) $5,175.

Question 14

An item is considered material if

Accepted Answer

A) it doesn't cost a lot of money. 
B) it is of a tangible good. 
C) it is likely to influence the decision of an investor or creditor. 
D) the cost of reporting the item is greater than its benefits. 
A) it doesn't cost a lot of money. 
B) it is of a tangible good. 
C) it is likely to influence the decision of an investor or creditor. 
D) the cost of reporting the item is greater than its benefits.

Question 15

The preparation of adjusting entries is

Accepted Answer

A) straight forward because the accounts that need adjustment will be out of balance. 
B) often an involved process requiring the skills of a professional. 
C) only required for accounts that do not have a normal balance. 
D) optional when financial statements are prepared. 
A) straight forward because the accounts that need adjustment will be out of balance. 
B) often an involved process requiring the skills of a professional. 
C) only required for accounts that do not have a normal balance. 
D) optional when financial statements are prepared.

Question 16

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Accepted Answer

A) net income to be understated. 
B) an overstatement of assets and an overstatement of liabilities. 
C) an understatement of expenses and an understatement of liabilities. 
D) an overstatement of expenses and an overstatement of liabilities. 
A) net income to be understated. 
B) an overstatement of assets and an overstatement of liabilities. 
C) an understatement of expenses and an understatement of liabilities. 
D) an overstatement of expenses and an overstatement of liabilities.

Question 17

Which of the following time periods would not be referred to as an interim period?

Accepted Answer

A) Monthly 
B) Quarterly 
C) Semi-annually 
D) Annually 
A) Monthly 
B) Quarterly 
C) Semi-annually 
D) Annually

Question 18

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

Accepted Answer

A) expenses to be overstated. 
B) net income to be overstated. 
C) liabilities to be understated. 
D) revenues to be understated. 
A) expenses to be overstated. 
B) net income to be overstated. 
C) liabilities to be understated. 
D) revenues to be understated.

Question 19

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Accepted Answer

A) True 
 B)False

Question 20

Expense recognition is tied to revenue recognition.

Accepted Answer

A) True 
 B)False

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows: The effect of this entry is to

Ultramega Company collected $19,600 in May of 2015 for 4 months of service which would take place from October of 2015 through January of 2016. The revenue reported from this transaction during 2015 would be

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Accrued revenues are

The time period assumption states that

Accumulated Depreciation is

The fiscal year of a business is usually determined by

A company using the same accounting principles from year to year is an application of

If the adjusting entry for depreciation is not made,

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.

The adjusted trial balance is prepared

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

An item is considered material if

The preparation of adjusting entries is

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Which of the following time periods would not be referred to as an interim period?

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Expense recognition is tied to revenue recognition.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 3: Adjusting the Accounts

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows: The effect of this entry is to

Ultramega Company collected $19,600 in May of 2015 for 4 months of service which would take place from October of 2015 through January of 2016. The revenue reported from this transaction during 2015 would be

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Accrued revenues are

The time period assumption states that

Accumulated Depreciation is

The fiscal year of a business is usually determined by

A company using the same accounting principles from year to year is an application of

If the adjusting entry for depreciation is not made,

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

The adjusted trial balance is prepared

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

An item is considered material if

The preparation of adjusting entries is

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Which of the following time periods would not be referred to as an interim period?

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Expense recognition is tied to revenue recognition.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.