Question 1

The post-closing trial balance will have fewer accounts than the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 2

A dress shop makes a dress that sells for $200 and delivers it to the customer on June 30.The customer is sent a statement on July 7 and a cheque is received by the dress shop on July 11.When should the $200 be recognized as revenue?

Accepted Answer

A) July 7 
B) July 11 
C) June 30 
D) July 1 
A) July 7 
B) July 11 
C) June 30 
D) July 1

Question 3

Accumulated Depreciation is a liability account and its normal account balance is a credit.

Accepted Answer

A) True 
 B)False

Question 4

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000 and represents three months rent starting on November 1.The adjusting entry required on December 31, assuming adjusting entries have not previously been made, is

Accepted Answer

A) debit Prepaid Rent, $4,000; credit Rent Expense $4,000. 
B) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. 
C) debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. 
D) debit Rent Expense, $8,000; credit Prepaid Rent, $8,000. 
A) debit Prepaid Rent, $4,000; credit Rent Expense $4,000. 
B) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. 
C) debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. 
D) debit Rent Expense, $8,000; credit Prepaid Rent, $8,000.

Question 5

The statement of changes in equity is prepared from the Common Shares, Retained Earnings and Dividends Declared accounts on the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 6

A liability-revenue relationship exists with

Accepted Answer

A) prepaid expense adjusting entries. 
B) accrued expense adjusting entries. 
C) deferred revenue adjusting entries. 
D) accrued revenue adjusting entries. 
A) prepaid expense adjusting entries. 
B) accrued expense adjusting entries. 
C) deferred revenue adjusting entries. 
D) accrued revenue adjusting entries.

Question 7

Accrued revenues are

Accepted Answer

A) received and recorded as liabilities before they are earned. 
B) earned and recorded as liabilities before they are received. 
C) revenues that have not yet been received but have been earned and have been recorded for the first time by an adjusting entry. 
D) earned and already received and recorded. 
A) received and recorded as liabilities before they are earned. 
B) earned and recorded as liabilities before they are received. 
C) revenues that have not yet been received but have been earned and have been recorded for the first time by an adjusting entry. 
D) earned and already received and recorded.

Question 8

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Accepted Answer

A) True 
 B)False

Question 9

The post-closing trial balance will contain only permanent accounts.

Accepted Answer

A) True 
 B)False

Question 10

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

Accepted Answer

A) contra asset. 
B) prepayment. 
C) asset. 
D) accrual. 
A) contra asset. 
B) prepayment. 
C) asset. 
D) accrual.

Question 11

Accrued revenues

Accepted Answer

A) represent money received from customers for work to be done later. 
B) are revenues that have not been earned before financial statements have been prepared. 
C) reflect an increase to an asset and an increase to a revenue account. 
D) reflect a decrease to an asset and an increase to a revenue account. 
A) represent money received from customers for work to be done later. 
B) are revenues that have not been earned before financial statements have been prepared. 
C) reflect an increase to an asset and an increase to a revenue account. 
D) reflect a decrease to an asset and an increase to a revenue account.

Question 12

On July 1, Kingston Store paid $15,000 to Location Realty for six months rent, starting July 1.Prepaid Rent was debited for the full amount.If financial statements are prepared on July 31, the adjusting entry to be made by Kingston Store is

Accepted Answer

A) debit Rent Expense, $15,000; credit Prepaid Rent, $15,000. 
B) debit Prepaid Rent, $2,500; credit Rent Expense, $2,500. 
C) debit Prepaid Rent, $7,500; credit Rent Expense, $7,500. 
D) debit Rent Expense, $2,500; credit Prepaid Rent, $2,500. 
A) debit Rent Expense, $15,000; credit Prepaid Rent, $15,000. 
B) debit Prepaid Rent, $2,500; credit Rent Expense, $2,500. 
C) debit Prepaid Rent, $7,500; credit Rent Expense, $7,500. 
D) debit Rent Expense, $2,500; credit Prepaid Rent, $2,500.

Question 13

Which of the following is true about closing the books of a corporation?

Accepted Answer

A) Expenses are closed to the Expense Summary account. 
B) Only revenues are closed to the Income Summary account. 
C) Revenues and expenses are closed to the Income Summary account. 
D) Revenues, expenses, and the dividends declared account are closed to the Income Summary account. 
A) Expenses are closed to the Expense Summary account. 
B) Only revenues are closed to the Income Summary account. 
C) Revenues and expenses are closed to the Income Summary account. 
D) Revenues, expenses, and the dividends declared account are closed to the Income Summary account.

Question 14

Recording transactions that affect a company's financial statements in the periods in which they occur rather than when cash is received or paid is called

Accepted Answer

A) time period accounting. 
B) the cash basis of accounting. 
C) monetary accounting. 
D) the accrual basis of accounting. 
A) time period accounting. 
B) the cash basis of accounting. 
C) monetary accounting. 
D) the accrual basis of accounting.

Question 15

The difference between the balance of a building account and its related accumulated depreciation account is its

Accepted Answer

A) fair value. 
B) contra asset. 
C) carrying amount. 
D) liability. 
A) fair value. 
B) contra asset. 
C) carrying amount. 
D) liability.

Question 16

Financial statements are generally prepared before the closing entries are posted.

Accepted Answer

A) True 
 B)False

Question 17

The purpose of an adjusted trial balance is to ensure all adjusting entries have been recorded.

Accepted Answer

A) True 
 B)False

Question 18

From an accounting standpoint, the acquisition of long-lived assets is essentially a(n)

Accepted Answer

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

Question 19

If Bee Corp.fails to adjust the Deferred Rent account for rent that has been earned, what effect will this have on that month's financial statements?

Accepted Answer

A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated. 
A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated.

Question 20

D.Debit Inc.has performed $700 of accounting services for a client but has not yet billed the client at the end of the accounting period.What adjusting entry must D.Debit prepare?

Accepted Answer

A) debit Cash and credit Deferred Revenue 
B) debit Accounts Receivable and credit Deferred Revenue 
C) debit Accounts Receivable and credit Service Revenue 
D) debit Deferred Revenue and credit Service Revenue 
A) debit Cash and credit Deferred Revenue 
B) debit Accounts Receivable and credit Deferred Revenue 
C) debit Accounts Receivable and credit Service Revenue 
D) debit Deferred Revenue and credit Service Revenue

The post-closing trial balance will have fewer accounts than the adjusted trial balance.

A dress shop makes a dress that sells for $200 and delivers it to the customer on June 30.The customer is sent a statement on July 7 and a cheque is received by the dress shop on July 11.When should the $200 be recognized as revenue?

Accumulated Depreciation is a liability account and its normal account balance is a credit.

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000 and represents three months rent starting on November 1.The adjusting entry required on December 31, assuming adjusting entries have not previously been made, is

The statement of changes in equity is prepared from the Common Shares, Retained Earnings and Dividends Declared accounts on the adjusted trial balance.

A liability-revenue relationship exists with

Accrued revenues are

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

The post-closing trial balance will contain only permanent accounts.

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

Accrued revenues

On July 1, Kingston Store paid $15,000 to Location Realty for six months rent, starting July 1.Prepaid Rent was debited for the full amount.If financial statements are prepared on July 31, the adjusting entry to be made by Kingston Store is

Which of the following is true about closing the books of a corporation?

Recording transactions that affect a company's financial statements in the periods in which they occur rather than when cash is received or paid is called

The difference between the balance of a building account and its related accumulated depreciation account is its

Financial statements are generally prepared before the closing entries are posted.

The purpose of an adjusted trial balance is to ensure all adjusting entries have been recorded.

From an accounting standpoint, the acquisition of long-lived assets is essentially a(n)

If Bee Corp.fails to adjust the Deferred Rent account for rent that has been earned, what effect will this have on that month's financial statements?

D.Debit Inc.has performed $700 of accounting services for a client but has not yet billed the client at the end of the accounting period.What adjusting entry must D.Debit prepare?

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

The post-closing trial balance will have fewer accounts than the adjusted trial balance.

A dress shop makes a dress that sells for $200 and delivers it to the customer on June 30.The customer is sent a statement on July 7 and a cheque is received by the dress shop on July 11.When should the $200 be recognized as revenue?

Accumulated Depreciation is a liability account and its normal account balance is a credit.

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000 and represents three months rent starting on November 1.The adjusting entry required on December 31, assuming adjusting entries have not previously been made, is

The statement of changes in equity is prepared from the Common Shares, Retained Earnings and Dividends Declared accounts on the adjusted trial balance.

A liability-revenue relationship exists with

Accrued revenues are

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

The post-closing trial balance will contain only permanent accounts.

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

Accrued revenues

On July 1, Kingston Store paid $15,000 to Location Realty for six months rent, starting July 1.Prepaid Rent was debited for the full amount.If financial statements are prepared on July 31, the adjusting entry to be made by Kingston Store is

Which of the following is true about closing the books of a corporation?

Recording transactions that affect a company's financial statements in the periods in which they occur rather than when cash is received or paid is called

The difference between the balance of a building account and its related accumulated depreciation account is its

Financial statements are generally prepared before the closing entries are posted.

The purpose of an adjusted trial balance is to ensure all adjusting entries have been recorded.

From an accounting standpoint, the acquisition of long-lived assets is essentially a(n)

If Bee Corp.fails to adjust the Deferred Rent account for rent that has been earned, what effect will this have on that month's financial statements?

D.Debit Inc.has performed $700 of accounting services for a client but has not yet billed the client at the end of the accounting period.What adjusting entry must D.Debit prepare?

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