Question 1

Which of the following concepts is important to accrual accounting?

Accepted Answer

A) Time period, because accrual accounting divides earnings into time periods 
B) Monetary unit, because inflation is a big factor in the environment 
C) Cash basis, because if cash is not received, revenue is not accrued 
D) Entity concept, because personal transactions must be separated from business transactions 
A) Time period, because accrual accounting divides earnings into time periods 
B) Monetary unit, because inflation is a big factor in the environment 
C) Cash basis, because if cash is not received, revenue is not accrued 
D) Entity concept, because personal transactions must be separated from business transactions

Question 2

Winston Corp.had $1,800 of supplies on hand at January 1.During the year, supplies with a cost of $4,000 were purchased.At December 31, the actual supplies on hand amount to $1,300.After the adjustments are recorded and posted at December 31, determine the balances in the Supplies and Supplies Expense accounts.

Accepted Answer

The answer of Winston Corp.had $1,800 of supplies on hand...

Question 3

On December 1, 2015, Twilight Corporation paid $8,000 rent in advance.The rent per month is $1,000.If Twilight's accounting period ends on December 31, 2015, what will be reported on the financial statements?

Accepted Answer

A) Prepaid Rent of $7,000 on its balance sheet at December 31, 2015 
B) Prepaid Rent of $8,000 on its balance sheet at December 31, 2015 
C) Rent Expense of $8,000 on its 2015 income statement 
D) Rent Revenue of $7,000 on its 2015 income statement 
A) Prepaid Rent of $7,000 on its balance sheet at December 31, 2015 
B) Prepaid Rent of $8,000 on its balance sheet at December 31, 2015 
C) Rent Expense of $8,000 on its 2015 income statement 
D) Rent Revenue of $7,000 on its 2015 income statement

Question 4

Which one of the following statements is true?

Accepted Answer

A) Recognition is concerned with the dollar amount of each economic effect that should be reported in the financial statements. 
B) Measurement is concerned with how economic effects should be quantified. 
C) The stability concept is concerned with identification of the specific entity for which economic effects are to be recognized and measured. 
D) The monetary unit assumption is concerned with the valuation of economic effects in terms of current purchasing power. 
A) Recognition is concerned with the dollar amount of each economic effect that should be reported in the financial statements. 
B) Measurement is concerned with how economic effects should be quantified. 
C) The stability concept is concerned with identification of the specific entity for which economic effects are to be recognized and measured. 
D) The monetary unit assumption is concerned with the valuation of economic effects in terms of current purchasing power.

Question 5

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Accepted Answer

A) Assets increase and liabilities increase. 
B) Assets increase and stockholders' equity increases. 
C) Assets decrease and liabilities decrease. 
D) Stockholders' equity increases and decreases by the same amount. 
A) Assets increase and liabilities increase. 
B) Assets increase and stockholders' equity increases. 
C) Assets decrease and liabilities decrease. 
D) Stockholders' equity increases and decreases by the same amount.

Question 6

Adjustments are recorded for all transactions involving outside entities.

Accepted Answer

A) True 
 B)False

Question 7

Tracy, Inc.
  
-Refer to the trial balance for Tracy, Inc.
According to contracts, $4,810 of Unearned Service Revenue has been earned in July.Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

Accepted Answer

A) $20,410 
B) $11,700 
C) $21,320 
D) $16,510 
A) $20,410 
B) $11,700 
C) $21,320 
D) $16,510

Question 8

Based on its income for the month, Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Accepted Answer

A) Increase retained earnings 
B) Increase income taxes expense 
C) Increase net income 
D) Decrease income taxes payable 
A) Increase retained earnings 
B) Increase income taxes expense 
C) Increase net income 
D) Decrease income taxes payable

Question 9

Wentworth Company received advance payments from customers during 2015 of $10,000.At December 31, 2015,
$1,000 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31, 2015, the balances in the Unearned Service Revenue and Service Revenue accounts will be:

Accepted Answer

The answer of Wentworth Company received advance payments from customers...

Question 10

Failure to record amounts earned for services provided to customers but not yet paid results in which of the following

Accepted Answer

A) Net income being overstated 
B) No effect on total assets 
C) Stockholders' equity being overstated 
D) Total assets being understated 
A) Net income being overstated 
B) No effect on total assets 
C) Stockholders' equity being overstated 
D) Total assets being understated

Question 11

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

Accepted Answer

A) U.S.dollar remains stable over a long period of time. 
B) U.S.dollar is universally recognized as a reliable financial measure. 
C) U.S.dollar is the medium of monetary exchange in the U.S. 
D) U.S.dollar is required for financial statement presentation by the FASB and SEC. 
A) U.S.dollar remains stable over a long period of time. 
B) U.S.dollar is universally recognized as a reliable financial measure. 
C) U.S.dollar is the medium of monetary exchange in the U.S. 
D) U.S.dollar is required for financial statement presentation by the FASB and SEC.

Question 12

The amount in the Dividends account should be carried over from the adjusted trial balance of the 10-column work sheet to which of the following columns?

Accepted Answer

A) Income statement as a debit 
B) Income statement as a credit 
C) Balance sheet as a debit 
D) Balance sheet as a credit 
A) Income statement as a debit 
B) Income statement as a credit 
C) Balance sheet as a debit 
D) Balance sheet as a credit

Question 13

The difference between accrual-based revenue and accrual-based expenses is called
_________________________.

Accepted Answer

The answer of The difference between accrual-based revenue and accrual-based...

Question 14

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

Accepted Answer

A) $5,140 net income 
B) $37,875 net loss 
C) $5,140 net loss 
D) $32,735 net income 
A) $5,140 net income 
B) $37,875 net loss 
C) $5,140 net loss 
D) $32,735 net income

Question 15

Failure to record the earned portion of unearned revenue would result in which of the following?

Accepted Answer

A) Net income being understated 
B) No effect on total liabilities 
C) Stockholders' equity being overstated 
D) Total assets being understated 
A) Net income being understated 
B) No effect on total liabilities 
C) Stockholders' equity being overstated 
D) Total assets being understated

Question 16

An) results when cash is received before the related amount is reported on the income statement.

Accepted Answer

The answer of An) results when cash is received before...

Question 17

Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity.How much interest will Longitude report on its income statement for the year ending December 31?

Accepted Answer

A) $ 10,000 
B) $ 15,000 
C) $ 30,000 
D) $ 5,000 
A) $ 10,000 
B) $ 15,000 
C) $ 30,000 
D) $ 5,000

Question 18

Expenses can be matched against revenue

Accepted Answer

A) if the earnings process is not complete. 
B) when cash is collected from the sale of products. 
C) through allocation to the accounting periods in which the benefits are recognized. 
D) when payment is made for costs related to revenue. 
A) if the earnings process is not complete. 
B) when cash is collected from the sale of products. 
C) through allocation to the accounting periods in which the benefits are recognized. 
D) when payment is made for costs related to revenue.

Question 19

Accountants often prepare work sheets at the end of an accounting period in place of financial statements.

Accepted Answer

A) True 
 B)False

Question 20

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue?
______________________________

Accepted Answer

As revenue is earned

Which of the following concepts is important to accrual accounting?

On December 1, 2015, Twilight Corporation paid $8,000 rent in advance.The rent per month is $1,000.If Twilight's accounting period ends on December 31, 2015, what will be reported on the financial statements?

Which one of the following statements is true?

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Adjustments are recorded for all transactions involving outside entities.

Tracy, Inc. -Refer to the trial balance for Tracy, Inc. According to contracts, $4,810 of Unearned Service Revenue has been earned in July.Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

Based on its income for the month, Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Failure to record amounts earned for services provided to customers but not yet paid results in which of the following

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

The amount in the Dividends account should be carried over from the adjusted trial balance of the 10-column work sheet to which of the following columns?

The difference between accrual-based revenue and accrual-based expenses is called _________________________.

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

Failure to record the earned portion of unearned revenue would result in which of the following?

An) results when cash is received before the related amount is reported on the income statement.

Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity.How much interest will Longitude report on its income statement for the year ending December 31?

Expenses can be matched against revenue

Accountants often prepare work sheets at the end of an accounting period in place of financial statements.

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue? ______________________________

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 4: Income Measurement and Accrual Accounting

Which of the following concepts is important to accrual accounting?

On December 1, 2015, Twilight Corporation paid $8,000 rent in advance.The rent per month is $1,000.If Twilight's accounting period ends on December 31, 2015, what will be reported on the financial statements?

Which one of the following statements is true?

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Adjustments are recorded for all transactions involving outside entities.

Tracy, Inc. -Refer to the trial balance for Tracy, Inc. According to contracts, $4,810 of Unearned Service Revenue has been earned in July.Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

Based on its income for the month, Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Failure to record amounts earned for services provided to customers but not yet paid results in which of the following

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

The amount in the Dividends account should be carried over from the adjusted trial balance of the 10-column work sheet to which of the following columns?

The difference between accrual-based revenue and accrual-based expenses is called _________________________.

After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $37,875 and $32,735, respectively.What is the amount of net income or net loss for the period?

Failure to record the earned portion of unearned revenue would result in which of the following?

An) results when cash is received before the related amount is reported on the income statement.

Longitude Company borrowed on a two-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity.How much interest will Longitude report on its income statement for the year ending December 31?

Expenses can be matched against revenue

Accountants often prepare work sheets at the end of an accounting period in place of financial statements.

Under the accrual basis of accounting, at what point in time should a publisher of magazines record revenue? ______________________________

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, Plant, and Equipment, and Intangibles

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters