Question 1

Closing entries are prepared before adjusting entries.

Accepted Answer

A) True 
 B)False  False

Question 2

Prepaid 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. A

Question 3

A new accountant working for Astro Limited records $650 depreciation expense on store equipment at year end as follows:   The effect of this entry is to

Accepted Answer

A) adjust the accounts correctly at year end. 
B) understate expenses on the statement of income. 
C) overstate the carrying amount of the depreciable assets at year end. 
D) understate the carrying amount of the depreciable assets at year end. 
A) adjust the accounts correctly at year end. 
B) understate expenses on the statement of income. 
C) overstate the carrying amount of the depreciable assets at year end. 
D) understate the carrying amount of the depreciable assets at year end. C

Question 4

The process that begins with analyzing transactions and ends with the preparation of a post-closing trial balance is called

Accepted Answer

A) the fiscal period. 
B) the accounting cycle. 
C) the business cycle. 
D) the accounting year. 
A) the fiscal period. 
B) the accounting cycle. 
C) the business cycle. 
D) the accounting year.

Question 5

Closing entries result in the transfer of net income or loss into the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 6

A common method for calculating depreciation expense is to divide the asset's cost by

Accepted Answer

A) its fair value at date of purchase. 
B) its useful life. 
C) the accumulated depreciation recorded to date. 
D) the actual amount paid for the asset. 
A) its fair value at date of purchase. 
B) its useful life. 
C) the accumulated depreciation recorded to date. 
D) the actual amount paid for the asset.

Question 7

Failure to prepare an adjusting entry at the end of a period to record 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 8

The carrying amount of a depreciable asset is always equal to its actual value because depreciation is a valuation technique.

Accepted Answer

A) True 
 B)False

Question 9

The preparation of adjusting entries

Accepted Answer

A) is straight-forward because the accounts that need adjustment will be out of balance. 
B) requires an understanding of the company's operations and the inter-relationship of accounts. 
C) is only required for accounts that do not have a normal balance. 
D) is optional when financial statements are prepared. 
A) is straight-forward because the accounts that need adjustment will be out of balance. 
B) requires an understanding of the company's operations and the inter-relationship of accounts. 
C) is only required for accounts that do not have a normal balance. 
D) is optional when financial statements are prepared.

Question 10

The adjusting entry for deferred revenues result in

Accepted Answer

A) an increase to a liability account and a decrease to a revenue account. 
B) a decrease to a liability account and an increase to a revenue account. 
C) neither an increase or a decrease to a liability account. 
D) neither an increase or a decrease to a revenue account. 
A) an increase to a liability account and a decrease to a revenue account. 
B) a decrease to a liability account and an increase to a revenue account. 
C) neither an increase or a decrease to a liability account. 
D) neither an increase or a decrease to a revenue account.

Question 11

Depreciation is the process of

Accepted Answer

A) valuing an asset at its fair value. 
B) increasing the value of an asset over its useful life in a rational and systematic manner. 
C) allocating the cost of a non-current asset to expense over its useful life. 
D) writing down an asset to its fair value each accounting period. 
A) valuing an asset at its fair value. 
B) increasing the value of an asset over its useful life in a rational and systematic manner. 
C) allocating the cost of a non-current asset to expense over its useful life. 
D) writing down an asset to its fair value each accounting period.

Question 12

The shareholders' equity section of the statement of financial position uses the amount for Retained Earnings found on the

Accepted Answer

A) unadjusted trial balance. 
B) adjusted trial balance. 
C) statement of changes in equity. 
D) the previous year's statement of financial position. 
A) unadjusted trial balance. 
B) adjusted trial balance. 
C) statement of changes in equity. 
D) the previous year's statement of financial position.

Question 13

Expense recognition always coincides with revenue recognition.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not generally an accounting time period?

Accepted Answer

A) a week 
B) a month 
C) a quarter 
D) a year 
A) a week 
B) a month 
C) a quarter 
D) a year

Question 15

Which statement below is incorrect?

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 after the financial statements are completed. 
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 after the financial statements are completed.

Question 16

Which of the following statements is true regarding depreciation?

Accepted Answer

A) Depreciation is a valuation concept; that allocates cost to reflect the actual change in the value of the asset. 
B) Depreciation allocates the cost of a long-lived asset to the accounting periods over which it is used. 
C) Depreciation expense will typically will be shown on the statement of financial position. 
D) Accumulated depreciation has a normal debit balance. 
A) Depreciation is a valuation concept; that allocates cost to reflect the actual change in the value of the asset. 
B) Depreciation allocates the cost of a long-lived asset to the accounting periods over which it is used. 
C) Depreciation expense will typically will be shown on the statement of financial position. 
D) Accumulated depreciation has a normal debit balance.

Question 17

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would not result in a credit to Deferred Revenue?

Accepted Answer

A) rent collected in advance from tenants 
B) services performed on account 
C) sale of season tickets to hockey games 
D) sale of two-year magazine subscription 
A) rent collected in advance from tenants 
B) services performed on account 
C) sale of season tickets to hockey games 
D) sale of two-year magazine subscription

Question 19

Under IFRS, revenue recognition criteria include recognizing revenue when

Accepted Answer

A) cash is received. 
B) the company satisfies the performance obligation. 
C) related expenses are recognized. 
D) the revenue is recorded. 
A) cash is received. 
B) the company satisfies the performance obligation. 
C) related expenses are recognized. 
D) the revenue is recorded.

Question 20

The statement of financial position and statement of income can be prepared from the information provided by an adjusted trial balance.

Accepted Answer

A) True 
 B)False

Closing entries are prepared before adjusting entries.

Prepaid expenses are

A new accountant working for Astro Limited records $650 depreciation expense on store equipment at year end as follows: The effect of this entry is to

The process that begins with analyzing transactions and ends with the preparation of a post-closing trial balance is called

Closing entries result in the transfer of net income or loss into the Retained Earnings account.

A common method for calculating depreciation expense is to divide the asset's cost by

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

The carrying amount of a depreciable asset is always equal to its actual value because depreciation is a valuation technique.

The preparation of adjusting entries

The adjusting entry for deferred revenues result in

Depreciation is the process of

The shareholders' equity section of the statement of financial position uses the amount for Retained Earnings found on the

Expense recognition always coincides with revenue recognition.

Which of the following is not generally an accounting time period?

Which statement below is incorrect?

Which of the following statements is true regarding depreciation?

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

Which of the following would not result in a credit to Deferred Revenue?

Under IFRS, revenue recognition criteria include recognizing revenue when

The statement of financial position and statement of income can be prepared from the information provided by an adjusted trial balance.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 4: Accrual Accounting Concepts

Closing entries are prepared before adjusting entries.

Prepaid expenses are

A new accountant working for Astro Limited records $650 depreciation expense on store equipment at year end as follows: The effect of this entry is to

The process that begins with analyzing transactions and ends with the preparation of a post-closing trial balance is called

Closing entries result in the transfer of net income or loss into the Retained Earnings account.

A common method for calculating depreciation expense is to divide the asset's cost by

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

The carrying amount of a depreciable asset is always equal to its actual value because depreciation is a valuation technique.

The preparation of adjusting entries

The adjusting entry for deferred revenues result in

Depreciation is the process of

The shareholders' equity section of the statement of financial position uses the amount for Retained Earnings found on the

Expense recognition always coincides with revenue recognition.

Which of the following is not generally an accounting time period?

Which statement below is incorrect?

Which of the following statements is true regarding depreciation?

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

Which of the following would not result in a credit to Deferred Revenue?

Under IFRS, revenue recognition criteria include recognizing revenue when

The statement of financial position and statement of income can be prepared from the information provided by an adjusted trial balance.

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters