Question 1

The worksheet is an internal tool that assists with the preparation of the adjusting entries and the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

An accrued expense is an expense

Accepted Answer

A)  incurred but neither paid nor recorded. 
B)  incurred, paid, and recorded. 
C)  paid and recorded but not incurred. 
D)  whose amount is subject to estimation. 
A)  incurred but neither paid nor recorded. 
B)  incurred, paid, and recorded. 
C)  paid and recorded but not incurred. 
D)  whose amount is subject to estimation.

Question 3

Accrued revenues

Accepted Answer

A)  have been earned and collected, but not yet recorded. 
B)  have been collected, but not yet earned or recorded. 
C)  have been collected and recorded. 
D)  have been earned, but not yet collected or recorded. 
A)  have been earned and collected, but not yet recorded. 
B)  have been collected, but not yet earned or recorded. 
C)  have been collected and recorded. 
D)  have been earned, but not yet collected or recorded.

Question 4

Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred or revenues earned.

Accepted Answer

A) True 
 B)False

Question 5

The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue credited); Depreciation Expense debited); Unearned Rental Revenue debited); and Prepaid Insurance credited). Which account is likely to appear in Yellow Canoe's reversing entries?

Accepted Answer

A)  Prepaid Insurance 
B)  Interest Revenue 
C)  Depreciation Expense 
D)  None of these answer choices is correct. 
A)  Prepaid Insurance 
B)  Interest Revenue 
C)  Depreciation Expense 
D)  None of these answer choices is correct.

Question 6

The accountant failed to make the adjusting entry to record the amount of interest owed on a note to the bank at the end of the year. This error would cause an overstatement of

Accepted Answer

A)  assets. 
B)  expenses. 
C)  liabilities. 
D)  shareholders' equity. 
A)  assets. 
B)  expenses. 
C)  liabilities. 
D)  shareholders' equity.

Question 7

Which of the following is a temporary account?

Accepted Answer

A)  Retained Earnings 
B)  Accounts Receivable 
C)  Purchases Returns and Allowances 
D)  Accumulated Depreciation 
A)  Retained Earnings 
B)  Accounts Receivable 
C)  Purchases Returns and Allowances 
D)  Accumulated Depreciation

Question 8

In terms of debits and credits, which types of accounts have the same debit or credit) normal balances?

Accepted Answer

A)  dividends, expenses, assets 
B)  assets, capital stock, revenues 
C)  retained earnings, dividends, liabilities 
D)  expenses, liabilities, capital stock 
A)  dividends, expenses, assets 
B)  assets, capital stock, revenues 
C)  retained earnings, dividends, liabilities 
D)  expenses, liabilities, capital stock

Question 9

The purpose of closing entries is to reduce the balance in the temporary periodic) accounts to zero and to update the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 10

A trial balance does not identify all types of errors. Which of the following are errors that are not identified using the trial balance?

Accepted Answer

A)  incorrectly recording the transaction amount, but the debits still equal the credits 
B)  incorrectly posting part of a journal entry to the wrong account 
C)  not recording a transaction 
D)  All of these answer choices represent errors that are not identified using the trial balance. 
A)  incorrectly recording the transaction amount, but the debits still equal the credits 
B)  incorrectly posting part of a journal entry to the wrong account 
C)  not recording a transaction 
D)  All of these answer choices represent errors that are not identified using the trial balance.

Question 11

The worksheet has a debit and credit column for all of the following except the

Accepted Answer

A)  trial balance. 
B)  adjusted trial balance. 
C)  statement of cash flows. 
D)  income statement. 
A)  trial balance. 
B)  adjusted trial balance. 
C)  statement of cash flows. 
D)  income statement.

Question 12

The adjustment to convert cash-basis collections from customers to accrual-basis revenue earned requires adding the ending balance in accounts receivable and subtracting the beginning balance in accounts receivable.

Accepted Answer

A) True 
 B)False

Question 13

What are the advantages of using the general journal when recording journal entries?

Accepted Answer

1) It helps prevent errors. This is beca

Question 14

On March 31, 2015, the Turi Company purchased a two-year fire insurance policy. Turi recorded the purchase by debiting Prepaid Insurance and crediting Cash for $10,000. Which of the following adjusting entries should Turi prepare at the end of 2015?

Accepted Answer

A)  Prepaid Insurance 3,750 Insurance Expense 3,750 
B)  Insurance Expense 3,750 Prepaid Insurance 3,750 
C)  Prepaid Insurance 5,500 Insurance Expense 5,500 
D)  Insurance Expense 5,000 Prepaid Insurance 5,000 
A)  Prepaid Insurance 3,750 Insurance Expense 3,750 
B)  Insurance Expense 3,750 Prepaid Insurance 3,750 
C)  Prepaid Insurance 5,500 Insurance Expense 5,500 
D)  Insurance Expense 5,000 Prepaid Insurance 5,000

Question 15

On October 1, 2015, Jacob's Beach Umbrellas borrowed $5,000 on a 12%, one-year note payable. Interest was payable semiannually. A correct adjusting entry was made on December 31, 2015, and a correct reversing entry was made on January 1, 2016. The entry that should be made on March 31, 2016, is

Accepted Answer

A)  Interest Payable 300 Cash 300 
B)  Interest Expense 150 Interest Payable 150 Cash 300 
C)  Interest Expense 150 Cash 150 
D)  Interest Expense 300 Cash 300 
A)  Interest Payable 300 Cash 300 
B)  Interest Expense 150 Interest Payable 150 Cash 300 
C)  Interest Expense 150 Cash 150 
D)  Interest Expense 300 Cash 300

Question 16

If the trial balance does not balance, the preparer should check to see if the difference is evenly divisible by 9. If so there may be a transposition.

Accepted Answer

A) True 
 B)False

Question 17

An organization will typically utilize a subsidiary ledger to

Accepted Answer

A)  make sure all debits equal credits. 
B)  make it easier to handle cash received from customers. 
C)  keep customer accounts up to date. 
D)  record customer credit sales outside of the normal double entry system. 
A)  make sure all debits equal credits. 
B)  make it easier to handle cash received from customers. 
C)  keep customer accounts up to date. 
D)  record customer credit sales outside of the normal double entry system.

Question 18

Reversing entries should not be made for which of the following?

Accepted Answer

A)  Adjusting entries that defer costs by recording them as prepaid expenses. 
B)  Adjusting entries to expenses that are to be paid in the next period. 
C)  Adjusting entries to accrue revenue to be collected in the next period. 
D)  Adjusting entries related to estimates. 
A)  Adjusting entries that defer costs by recording them as prepaid expenses. 
B)  Adjusting entries to expenses that are to be paid in the next period. 
C)  Adjusting entries to accrue revenue to be collected in the next period. 
D)  Adjusting entries related to estimates.

Question 19

Which of the following rules is incorrect?

Accepted Answer

A)  The accounting equation must always remain in balance. 
B)  Asset accounts are increased by debit entries and decreased by credit entries. 
C)  Expense accounts normally have debit balances. 
D)  Common stock accounts are increased by debit entries and decreased by credit entries. 
A)  The accounting equation must always remain in balance. 
B)  Asset accounts are increased by debit entries and decreased by credit entries. 
C)  Expense accounts normally have debit balances. 
D)  Common stock accounts are increased by debit entries and decreased by credit entries.

Question 20

Which of the following accounts would not be closed to Income Summary during the year-end closing process?

Accepted Answer

A)  Loss on Sale of Land 
B)  Prepaid Rent 
C)  Freight-In 
D)  Sales Discounts 
A)  Loss on Sale of Land 
B)  Prepaid Rent 
C)  Freight-In 
D)  Sales Discounts

Exam 3: Review of a Company S Accounting System

The worksheet is an internal tool that assists with the preparation of the adjusting entries and the financial statements.

An accrued expense is an expense

Accrued revenues

Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred or revenues earned.

The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue credited); Depreciation Expense debited); Unearned Rental Revenue debited); and Prepaid Insurance credited). Which account is likely to appear in Yellow Canoe's reversing entries?

The accountant failed to make the adjusting entry to record the amount of interest owed on a note to the bank at the end of the year. This error would cause an overstatement of

Which of the following is a temporary account?

In terms of debits and credits, which types of accounts have the same debit or credit) normal balances?

The purpose of closing entries is to reduce the balance in the temporary periodic) accounts to zero and to update the Retained Earnings account.

A trial balance does not identify all types of errors. Which of the following are errors that are not identified using the trial balance?

The worksheet has a debit and credit column for all of the following except the

The adjustment to convert cash-basis collections from customers to accrual-basis revenue earned requires adding the ending balance in accounts receivable and subtracting the beginning balance in accounts receivable.

What are the advantages of using the general journal when recording journal entries?

On March 31, 2015, the Turi Company purchased a two-year fire insurance policy. Turi recorded the purchase by debiting Prepaid Insurance and crediting Cash for $10,000. Which of the following adjusting entries should Turi prepare at the end of 2015?

On October 1, 2015, Jacob's Beach Umbrellas borrowed $5,000 on a 12%, one-year note payable. Interest was payable semiannually. A correct adjusting entry was made on December 31, 2015, and a correct reversing entry was made on January 1, 2016. The entry that should be made on March 31, 2016, is

If the trial balance does not balance, the preparer should check to see if the difference is evenly divisible by 9. If so there may be a transposition.

An organization will typically utilize a subsidiary ledger to

Reversing entries should not be made for which of the following?

Which of the following rules is incorrect?

Which of the following accounts would not be closed to Income Summary during the year-end closing process?

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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