Question 1

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Accepted Answer

A)  Expenses increase 
B)  Revenues decrease 
C)  Liabilities increase 
D)  Net income increases 
A)  Expenses increase 
B)  Revenues decrease 
C)  Liabilities increase 
D)  Net income increases

Question 2

Financial statements should be prepared before any adjustments are made.

Accepted Answer

A) True 
 B)False

Question 3

Conceptually, anytime a cost is incurred, an asset is acquired.

Accepted Answer

A) True 
 B)False

Question 4

Super Clean operates an automatic car wash business, The Ultimate Shine. The following amounts were taken from the company's unadjusted trial balance at December 31, 2014:
Wages Expense 82,000
Rent Collected in Advance 8,000
Determine the effect on the accounting equation of any adjusting entries necessary at December 31, 2014, for each of the transactions that follow.
A The rent collected in advance represents rent for the period December 1, 2014 through January 31, 2015.
B In addition to the wages paid during the year, employees have not been paid for the last week of December which amounts to $900.

Accepted Answer

The answer of Super Clean operates an automatic car wash...

Question 5

Cumberland City Consultants started business on January 1, 2015, and immediately purchased $1,000 of supplies to use in the business. At the end of the month, 25 percent of the supplies remains unpaid and 20% are still on hand. What amounts should appear on the financial statements for January, 2015?

Accepted Answer

The answer of Cumberland City Consultants started business on January...

Question 6

Failure to record accrued interest expense would result in which of the following?

Accepted Answer

A)  Assets being overstated 
B)  Assets being understated 
C)  Liabilities being overstated 
D)  Liabilities being understated 
A)  Assets being overstated 
B)  Assets being understated 
C)  Liabilities being overstated 
D)  Liabilities being understated

Question 7

Which one of the following is the last step in the accounting cycle?

Accepted Answer

A)  Journalizing business transactions 
B)  Recording and posting adjustments 
C)  Closing the accounts 
D)  Preparing financial statements 
A)  Journalizing business transactions 
B)  Recording and posting adjustments 
C)  Closing the accounts 
D)  Preparing financial statements

Question 8

For each transaction select the letter of the type of adjustment that would be required
-Depreciation on a delivery truck is recorded

Accepted Answer

A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset 
A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset

Question 9

--------- is the allocation of the cost of a tangible, long-term asset over its useful life.

Accepted Answer

The answer of --------- is the allocation of the cost...

Question 10

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 11

For each transaction select the letter of the type of adjustment that would be required
-The cost of salaries earned by employees, but not paid at the end of the accounting period is recorded

Accepted Answer

A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset 
A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset

Question 12

Cuisine Company received a 6-month, 6% note for $10,000 from its president on October 1, 2014. The note is due on March 31, 2015. If Cuisine's accounting period ends on December 31, how much interest revenue should Cuisine recognize during 2014 and 2015?

Accepted Answer

The answer of Cuisine Company received a 6-month, 6% note...

Question 13

From the list of accounts below, determine whether the account would be a nominal account or a real account.
-Prepaid Rent

Accepted Answer

A) nominal account 
B) real account 
A) nominal account 
B) real account

Question 14

Brooke Accounting Services collected $15,000 from a customer on June 1 and agreed to provide accounting services during the next six months. Brooke expects to provide an equal amount of services each month.
REQUIRED:
1. Identify and analyze the transaction for the receipt of the customer deposit on June 1.
2. Identify and analyze the adjustment needed on June 30.
3. What will be the effect on net income for June if the adjustment in 2 is not made?

Accepted Answer

1.
June 1 To record receipt of customer

Question 15

Tracy, Inc.
Tracy, Inc. adjusts its books each month but closes its books at the end of the year. The trial balance at July 31 before adjustments is as follows:
  
-Refer to the trial balance for Tracy, Inc. On July 31, the amount of supplies on hand is $520. What amount is reported in the July income statement for supplies expense?

Accepted Answer

A)  $520 
B)  $1,400 
C)  $1,920 
D)  $880 
A)  $520 
B)  $1,400 
C)  $1,920 
D)  $880

Question 16

Clarke Shop purchased supplies at a cost of $18,000 during 2015. At January 1, 2015, the beginning balance in the supplies account was $1,000. For 2015, supplies expense was $16,000. How much "Supplies" are on hand as of December 31, 2015?

Accepted Answer

A)  $1,000 
B)  $3,000 
C)  $16,000 
D)  $17,000 
A)  $1,000 
B)  $3,000 
C)  $16,000 
D)  $17,000

Question 17

Using matching under the accrual method, expenses are recognized when revenue is earned.

Accepted Answer

A) True 
 B)False

Question 18

On July 1, 2015, Crouch Corporation takes out a 12%, two-month, $50,000 loan at Cocoa National Bank. Principal and interest are to be repaid on August 31.
Required
1. Identify and analyze the transaction for July 1 to record the borrowing, for July 31 to record the accrual of interest, and for August 31 to record repayment of the principal and interest.
2. Evaluate the following statement: It would be much easier not to bother with an adjusting entry on July 31 and simply record interest expense on August 31 when the loan is repaid.

Accepted Answer

ANSWE1R.: @#IMG-DLM& 
2. It would save the time an

Question 19

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 20

For each transaction select the letter of the type of adjustment that would be required.
-Interest is incurred on money borrowed from the bank, but not yet paid

Accepted Answer

A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset 
A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Financial statements should be prepared before any adjustments are made.

Conceptually, anytime a cost is incurred, an asset is acquired.

Failure to record accrued interest expense would result in which of the following?

Which one of the following is the last step in the accounting cycle?

For each transaction select the letter of the type of adjustment that would be required -Depreciation on a delivery truck is recorded

--------- is the allocation of the cost of a tangible, long-term asset over its useful life.

Which of the following concepts is important to accrual accounting?

For each transaction select the letter of the type of adjustment that would be required -The cost of salaries earned by employees, but not paid at the end of the accounting period is recorded

Cuisine Company received a 6-month, 6% note for $10,000 from its president on October 1, 2014. The note is due on March 31, 2015. If Cuisine's accounting period ends on December 31, how much interest revenue should Cuisine recognize during 2014 and 2015?

From the list of accounts below, determine whether the account would be a nominal account or a real account. -Prepaid Rent

Clarke Shop purchased supplies at a cost of $18,000 during 2015. At January 1, 2015, the beginning balance in the supplies account was $1,000. For 2015, supplies expense was $16,000. How much "Supplies" are on hand as of December 31, 2015?

Using matching under the accrual method, expenses are recognized when revenue is earned.

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?

For each transaction select the letter of the type of adjustment that would be required. -Interest is incurred on money borrowed from the bank, but not yet paid

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

Exam 4: Income Measurement and Accrual Accounting

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Financial statements should be prepared before any adjustments are made.

Conceptually, anytime a cost is incurred, an asset is acquired.

Failure to record accrued interest expense would result in which of the following?

Which one of the following is the last step in the accounting cycle?

For each transaction select the letter of the type of adjustment that would be required -Depreciation on a delivery truck is recorded

--------- is the allocation of the cost of a tangible, long-term asset over its useful life.

Which of the following concepts is important to accrual accounting?

For each transaction select the letter of the type of adjustment that would be required -The cost of salaries earned by employees, but not paid at the end of the accounting period is recorded

Cuisine Company received a 6-month, 6% note for $10,000 from its president on October 1, 2014. The note is due on March 31, 2015. If Cuisine's accounting period ends on December 31, how much interest revenue should Cuisine recognize during 2014 and 2015?

From the list of accounts below, determine whether the account would be a nominal account or a real account. -Prepaid Rent

Clarke Shop purchased supplies at a cost of $18,000 during 2015. At January 1, 2015, the beginning balance in the supplies account was $1,000. For 2015, supplies expense was $16,000. How much "Supplies" are on hand as of December 31, 2015?

Using matching under the accrual method, expenses are recognized when revenue is earned.

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?

For each transaction select the letter of the type of adjustment that would be required. -Interest is incurred on money borrowed from the bank, but not yet paid

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