Question 1

Which of the following reflects the balances of prepayment accounts prior to adjustment?

Accepted Answer

A) Balance sheet accounts are understated and income statement accounts are understated. 
B) Balance sheet accounts are overstated and income statement accounts are overstated. 
C) Balance sheet accounts are overstated and income statement accounts are understated. 
D) Balance sheet accounts are understated and income statement accounts are overstated. 
A) Balance sheet accounts are understated and income statement accounts are understated. 
B) Balance sheet accounts are overstated and income statement accounts are overstated. 
C) Balance sheet accounts are overstated and income statement accounts are understated. 
D) Balance sheet accounts are understated and income statement accounts are overstated.

Question 2

The periodicity assumption states that the business will remain in operation for the foreseeable future.

Accepted Answer

A) True 
 B)False

Question 3

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Accepted Answer

A) True 
 B)False

Question 4

Adjusting entries are often made because some business events are not recorded as they occur.

Accepted Answer

A) True 
 B)False

Question 5

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 6

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Accepted Answer

A) True 
 B)False

Question 7

163. Relevant accounting information

Accepted Answer

A) is information that has been audited. 
B) must be reported within the operating cycle or one year, whichever is longer. 
C) has been objectively determined. 
D) is information that is capable of making a difference in a business decision. 
A) is information that has been audited. 
B) must be reported within the operating cycle or one year, whichever is longer. 
C) has been objectively determined. 
D) is information that is capable of making a difference in a business decision.

Question 8

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 9

169. Which of the following is a constraint in accounting?

Accepted Answer

A) Comparability. 
B) Cost. 
C) Consistency. 
D) Relevance. 
A) Comparability. 
B) Cost. 
C) Consistency. 
D) Relevance.

Question 10

The periodicity assumption states

Accepted Answer

A) the business will remain in operation for the foreseeable future. 
B) the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. 
C) every economic entity can be separately identified and accounted for. 
D) only those things that can be expressed in money are included in the accounting records. 
A) the business will remain in operation for the foreseeable future. 
B) the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. 
C) every economic entity can be separately identified and accounted for. 
D) only those things that can be expressed in money are included in the accounting records.

Question 11

Which of the statements below is not true?

Accepted Answer

A) An adjusted trial balance should show ledger account balances. 
B) An adjusted trial balance can be used to prepare financial statements. 
C) An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D) An adjusted trial balance is prepared before all transactions have been journalized. 
A) An adjusted trial balance should show ledger account balances. 
B) An adjusted trial balance can be used to prepare financial statements. 
C) An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D) An adjusted trial balance is prepared before all transactions have been journalized.

Question 12

The expense recognition principle matches

Accepted Answer

A) customers with businesses. 
B) expenses with revenues. 
C) assets with liabilities. 
D) creditors with businesses. 
A) customers with businesses. 
B) expenses with revenues. 
C) assets with liabilities. 
D) creditors with businesses.

Question 13

Accrued expenses are

Accepted Answer

A) paid and recorded in an asset account before they are used or consumed. 
B) paid and recorded in an asset account after they are used or consumed. 
C) incurred but not yet paid or recorded. 
D) incurred and already paid or recorded. 
A) paid and recorded in an asset account before they are used or consumed. 
B) paid and recorded in an asset account after they are used or consumed. 
C) incurred but not yet paid or recorded. 
D) incurred and already paid or recorded.

Question 14

On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31, 2015 is

Accepted Answer

A) $0. 
B) $2,520. 
C) $5,040. 
D) $7,560. 
A) $0. 
B) $2,520. 
C) $5,040. 
D) $7,560.

Question 15

Which of the following is not a common time period chosen by businesses as their accounting period?

Accepted Answer

A) Daily 
B) Monthly 
C) Quarterly 
D) Annually 
A) Daily 
B) Monthly 
C) Quarterly 
D) Annually

Question 16

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

Accepted Answer

A) accrual of expense. 
B) accrual of revenue. 
C) accrual of unearned revenue. 
D) prepayment for services. 
A) accrual of expense. 
B) accrual of revenue. 
C) accrual of unearned revenue. 
D) prepayment for services.

Question 17

Live Wire Hot Rod Shop follows the revenue recognition principle. Live Wire services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Live Wire on August 5. Live Wire receives the check in the mail on August 6. When should Live Wire show that the revenue was recognized?

Accepted Answer

A) July 31 
B) August 1 
C) August 5 
D) August 6 
A) July 31 
B) August 1 
C) August 5 
D) August 6

Question 18

In a service-type business, revenue is considered recognized

Accepted Answer

A) at the end of the month. 
B) at the end of the year. 
C) when the service is performed. 
D) when cash is received. 
A) at the end of the month. 
B) at the end of the year. 
C) when the service is performed. 
D) when cash is received.

Question 19

The time period assumption is used under

Accepted Answer

A) GAAP but not IFRS. 
B) IFRS but not GAAP. 
C) both IFRS and GAAP. 
D) neither IFRS nor GAAP. 
A) GAAP but not IFRS. 
B) IFRS but not GAAP. 
C) both IFRS and GAAP. 
D) neither IFRS nor GAAP.

Question 20

Adjusting entries are

Accepted Answer

A) not necessary if the accounting system is operating properly. 
B) usually required before financial statements are prepared. 
C) made whenever management desires to change an account balance. 
D) made to balance sheet accounts only. 
A) not necessary if the accounting system is operating properly. 
B) usually required before financial statements are prepared. 
C) made whenever management desires to change an account balance. 
D) made to balance sheet accounts only.

Which of the following reflects the balances of prepayment accounts prior to adjustment?

The periodicity assumption states that the business will remain in operation for the foreseeable future.

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Adjusting entries are often made because some business events are not recorded as they occur.

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

163. Relevant accounting information

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

169. Which of the following is a constraint in accounting?

The periodicity assumption states

Which of the statements below is not true?

The expense recognition principle matches

Accrued expenses are

On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31, 2015 is

Which of the following is not a common time period chosen by businesses as their accounting period?

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

In a service-type business, revenue is considered recognized

The time period assumption is used under

Adjusting entries are

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

Which of the following reflects the balances of prepayment accounts prior to adjustment?

The periodicity assumption states that the business will remain in operation for the foreseeable future.

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Adjusting entries are often made because some business events are not recorded as they occur.

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

163. Relevant accounting information

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

169. Which of the following is a constraint in accounting?

The periodicity assumption states

Which of the statements below is not true?

The expense recognition principle matches

Accrued expenses are

On January 1, 2014, Doolittle Company purchased furniture for $7,560. The company expects to use the furniture for 3 years. The asset has no salvage value. The book value of the furniture at December 31, 2015 is

Which of the following is not a common time period chosen by businesses as their accounting period?

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

In a service-type business, revenue is considered recognized

The time period assumption is used under

Adjusting entries are

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