Question 1

When a company uses cash-basis accounting, it frequently does not keep up with

Accepted Answer

A)  accounts receivable. 
B)  accounts payable. 
C)  prepaid expenses. 
D)  The company keeps up with all of the above. 
A)  accounts receivable. 
B)  accounts payable. 
C)  prepaid expenses. 
D)  The company keeps up with all of the above. D

Question 2

Rental receipts for the period July 1, 2015, through June 30, 2016, were collected on June 30, 2015. The effects of these economic events on the 2015 financial statements for unearned revenue and rent revenue are

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV A

Question 3

On August 1, 2015, Yellow Company paid $6,320 for a three-year insurance policy. On that date, an expense account was charged. In the adjusting entry on December 31, 2015, there would be a

Accepted Answer

A)  debit to Insurance Expense for $175. 
B)  credit to Prepaid Insurance for $2,107. 
C)  credit to Prepaid Insurance for $527. 
D)  credit to Insurance Expense for $5,442. 
A)  debit to Insurance Expense for $175. 
B)  credit to Prepaid Insurance for $2,107. 
C)  credit to Prepaid Insurance for $527. 
D)  credit to Insurance Expense for $5,442. D

Question 4

The Michael Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit. Which of the following statements about the general ledger account is not true?

Accepted Answer

A)  The general ledger account is also called a contra account. 
B)  The balance of the general ledger account should agree with the total of all of the accounts in the subsidiary ledger. 
C)  The general ledger account is called a permanent account. 
D)  The general ledger account is properly referred to as a control account. 
A)  The general ledger account is also called a contra account. 
B)  The balance of the general ledger account should agree with the total of all of the accounts in the subsidiary ledger. 
C)  The general ledger account is called a permanent account. 
D)  The general ledger account is properly referred to as a control account.

Question 5

Which of the following errors will be detected by a trial balance?

Accepted Answer

A)  posting a credit to Sales instead of to Accounts Payable 
B)  incorrectly computing the balance of the cash account 
C)  failure to journalize a sales transaction at all 
D)  forgetting to post a purchase transaction at all 
A)  posting a credit to Sales instead of to Accounts Payable 
B)  incorrectly computing the balance of the cash account 
C)  failure to journalize a sales transaction at all 
D)  forgetting to post a purchase transaction at all

Question 6

On May 1, 2015, Alang Corporation borrowed $3,600 on a two-year, 6% note payable. Interest is due and payable at the end of each six months. Alang makes all interest payments on schedule. The correct December 31, 2016, adjusting entry would be

Accepted Answer

The answer of On May 1, 2015, Alang Corporation borrowed...

Question 7

Which of the following is not a reason why a company first prepares a worksheet?

Accepted Answer

A)  simplify recording of adjusting and closing entries in the general journal 
B)  substitute for the trial balance 
C)  make it easier to prepare financial statements 
D)  minimize errors 
A)  simplify recording of adjusting and closing entries in the general journal 
B)  substitute for the trial balance 
C)  make it easier to prepare financial statements 
D)  minimize errors

Question 8

What is the primary purpose of a company's accounting system?

Accepted Answer

The primary purpose of a company's accou

Question 9

How many steps are there in completing a worksheet?

Accepted Answer

A)  three 
B)  four 
C)  five 
D)  six 
A)  three 
B)  four 
C)  five 
D)  six

Question 10

Information related to the Berkley Company for the calendar year 2015 follows:   Assuming no capital stock was issued during 2015, the net income earned by the Berkley Company during 2015 was

Accepted Answer

A)  $110 
B)  $200 
C)  $260 
D)  $290 
A)  $110 
B)  $200 
C)  $260 
D)  $290

Question 11

What are closing entries and why are they necessary?

Accepted Answer

Closing entries are entries made at the

Question 12

On April 1, 2015, Miller Company paid $6,280 for a two-year insurance policy. On that date, Miller recorded the purchase by debiting Prepaid Insurance and crediting Cash. The correct December 31, 2015, adjusting entry would be

Accepted Answer

A)  Prepaid Insurance 3,140 Insurance Expense 3,140 
B)  Insurance Expense 2,355 Prepaid Insurance 2,355 
C)  Prepaid Insurance 2,355 Insurance Expense 2,355 
D)  Insurance Expense 3,925 Prepaid Insurance 3,925 
A)  Prepaid Insurance 3,140 Insurance Expense 3,140 
B)  Insurance Expense 2,355 Prepaid Insurance 2,355 
C)  Prepaid Insurance 2,355 Insurance Expense 2,355 
D)  Insurance Expense 3,925 Prepaid Insurance 3,925

Question 13

A company usually makes a reversing entry

Accepted Answer

A)  on the first day of the next accounting period. 
B)  at the end of the prior accounting period. 
C)  on the second day of the next accounting period. 
D)  on the last day of the next accounting period. 
A)  on the first day of the next accounting period. 
B)  at the end of the prior accounting period. 
C)  on the second day of the next accounting period. 
D)  on the last day of the next accounting period.

Question 14

Long, Inc. uses the accrual basis of accounting. Long's rent expense account had a balance of $18,000 at the end of the year. The prepaid rent account had a balance of $5,000 at the beginning of the year and a balance of $9,000 at the end of the year. How much cash was paid for rent during the year?

Accepted Answer

A)  $ 5,000 
B)  $9,000 
C)  $18,000 
D)  $22,000 
A)  $ 5,000 
B)  $9,000 
C)  $18,000 
D)  $22,000

Question 15

The following are selected data for the Young Company:

Accepted Answer

@#IMG-DLM& a. $11,230 Net sales $10,050 + Sales re

Question 16

Which of the following adjusting entries involves the recognition of an accrued expense?

Accepted Answer

A)  recording depreciation on a long-lived asset 
B)  writing off the portion of an insurance policy that has expired 
C)  recognition of salaries owed to employees for work done during the current period that will be paid during the next accounting period 
D)  recognition of bad debt losses that are expected to result from making sales on credit terms 
A)  recording depreciation on a long-lived asset 
B)  writing off the portion of an insurance policy that has expired 
C)  recognition of salaries owed to employees for work done during the current period that will be paid during the next accounting period 
D)  recognition of bad debt losses that are expected to result from making sales on credit terms

Question 17

With closing entries, you would expect to find all of the following except

Accepted Answer

A)  debit Unearned Rent; credit Income Summary. 
B)  debit Sales Revenue; credit Income Summary. 
C)  debit Retained Earnings; credit Dividends. 
D)  debit Income Summary; credit Loss on Sale of Land. 
A)  debit Unearned Rent; credit Income Summary. 
B)  debit Sales Revenue; credit Income Summary. 
C)  debit Retained Earnings; credit Dividends. 
D)  debit Income Summary; credit Loss on Sale of Land.

Question 18

December 31 balances for selected accounts of the Chaney Company are presented below.

Accepted Answer

The answer of December 31 balances for selected accounts of...

Question 19

On February 1, 2015, Apollo Company received $24,000 in advance for a three-year rental of land, and credited Rent Revenue for the entire amount. The correct December 31, 2015 adjusting entry would be

Accepted Answer

A)  Unearned Rent 16,667 Rent Revenue 16,667 
B)  Rent Revenue 16,667 Unearned Rent 16,667 
C)  Unearned Rent 7,333 Rent Revenue 7,333 
D)  Rent Revenue 7,333 Unearned Rent 7,333 
A)  Unearned Rent 16,667 Rent Revenue 16,667 
B)  Rent Revenue 16,667 Unearned Rent 16,667 
C)  Unearned Rent 7,333 Rent Revenue 7,333 
D)  Rent Revenue 7,333 Unearned Rent 7,333

Question 20

In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

Accepted Answer

A) True 
 B)False

Exam 3: Review of a Company S Accounting System

When a company uses cash-basis accounting, it frequently does not keep up with

Rental receipts for the period July 1, 2015, through June 30, 2016, were collected on June 30, 2015. The effects of these economic events on the 2015 financial statements for unearned revenue and rent revenue are

On August 1, 2015, Yellow Company paid $6,320 for a three-year insurance policy. On that date, an expense account was charged. In the adjusting entry on December 31, 2015, there would be a

The Michael Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit. Which of the following statements about the general ledger account is not true?

Which of the following errors will be detected by a trial balance?

On May 1, 2015, Alang Corporation borrowed $3,600 on a two-year, 6% note payable. Interest is due and payable at the end of each six months. Alang makes all interest payments on schedule. The correct December 31, 2016, adjusting entry would be

Which of the following is not a reason why a company first prepares a worksheet?

What is the primary purpose of a company's accounting system?

How many steps are there in completing a worksheet?

Information related to the Berkley Company for the calendar year 2015 follows: Assuming no capital stock was issued during 2015, the net income earned by the Berkley Company during 2015 was

What are closing entries and why are they necessary?

On April 1, 2015, Miller Company paid $6,280 for a two-year insurance policy. On that date, Miller recorded the purchase by debiting Prepaid Insurance and crediting Cash. The correct December 31, 2015, adjusting entry would be

A company usually makes a reversing entry

The following are selected data for the Young Company:

Which of the following adjusting entries involves the recognition of an accrued expense?

With closing entries, you would expect to find all of the following except

December 31 balances for selected accounts of the Chaney Company are presented below.

On February 1, 2015, Apollo Company received $24,000 in advance for a three-year rental of land, and credited Rent Revenue for the entire amount. The correct December 31, 2015 adjusting entry would be

In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Post-Retirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

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