Question 1

Interim financial statements are prepared annually.

Accepted Answer

A) True 
 B)False

Question 2

Lowen Homes, Inc. pays its sales personnel 6% commission of the selling price of each home. During November of 2015, sales people sold $18,400,000 of homes. During December, 2015, sales people sold $20,050,000 of homes. Because its policy is to pay commissions only in the month after the sales, Lowen paid commissions during December for November, 2015. During January of 2016, Lowen paid its sales people commissions for December, 2015.
A If the cash basis of accounting is used, how much is reported commission expense on Lowen Homes' income statement for December of 2015?
B If the accrual basis of accounting is used, how much is reported as commission expense on Lowen Homes' December income statement for 2015?

Accepted Answer

A $18,400,000 × 6% = $1,104,00

Question 3

Doran Systems Corp. has grown significantly over the past year. One area that has plagued the Controller of Doran is the reconciliation of supplies expense. The end-of-year supplies on hand totaled $20, and purchases totaled $500, and supplies on hand at the beginning of the year amounted to $200. How much will Doran Systems report as supplies expense for the current year?

Accepted Answer

A)  $200 
B)  $680 
C)  $220 
D)  $700 
A)  $200 
B)  $680 
C)  $220 
D)  $700

Question 4

Camp Consulting Services started business on January 1, 2015. Camp performed services for customers totaling $100,000 of which 40% remain uncollected at the end of December. Under the accrual basis, what amounts would appear on Camp Consulting's financial statements for 2015?

Accepted Answer

The answer of Camp Consulting Services started business on January...

Question 5

During December, Filmore Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on December 31?

Accepted Answer

The answer of During December, Filmore Inc. purchased $800 of...

Question 6

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following adjustments decreases net income for the period?

Accepted Answer

A)  Recognition of depreciation on plant assets 
B)  Recognition of interest on a note receivable 
C)  Recognition of services that had been provided to customers but the cash has not yet been received 
D)  Recognition of rent as earned that had been received in advance from customers 
A)  Recognition of depreciation on plant assets 
B)  Recognition of interest on a note receivable 
C)  Recognition of services that had been provided to customers but the cash has not yet been received 
D)  Recognition of rent as earned that had been received in advance from customers

Question 8

Esquire Industrial plant operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the workweek just completed Monday through Friday. The last day of the month is Wednesday, March 31. What is the effect of the correct adjustment at March 31?

Accepted Answer

A)  Increases stockholders' equity and Wages Payable by $8,000 
B)  Increases Wages Payable and decreases Cash by $12,000 
C)  Decreases stockholders' equity and increases Wages Payable by $12,000 
D)  Increases Wages Payable and increases Wages Expense by $8,000 
A)  Increases stockholders' equity and Wages Payable by $8,000 
B)  Increases Wages Payable and decreases Cash by $12,000 
C)  Decreases stockholders' equity and increases Wages Payable by $12,000 
D)  Increases Wages Payable and increases Wages Expense by $8,000

Question 9

For each transaction select the letter of the type of adjustment that would be required
-The cost of supplies used during the current year is determined and 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 10

Accumulated depreciation is increased when depreciation is recognized.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period?

Accepted Answer

A)  Customers' account balances in accounts receivable are assigned to expense in the period in which each customer pays 
B)  Prepaid insurance is assigned to expense as the insurance expires 
C)  A building is depreciated and its cost is assigned to the current and future accounting periods in which the building is expected to be used 
D)  Merchandise inventory is assigned to cost of goods sold in the period the goods are sold 
A)  Customers' account balances in accounts receivable are assigned to expense in the period in which each customer pays 
B)  Prepaid insurance is assigned to expense as the insurance expires 
C)  A building is depreciated and its cost is assigned to the current and future accounting periods in which the building is expected to be used 
D)  Merchandise inventory is assigned to cost of goods sold in the period the goods are sold

Question 12

Adjustments are necessary only if

Accepted Answer

A)  The cash basis of accounting is used for all accounting periods 
B)  Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting 
C)  Management reports its adjustments on the statement of cash flows 
D)  The company reports revenue in the same period cash is collected 
A)  The cash basis of accounting is used for all accounting periods 
B)  Cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting 
C)  Management reports its adjustments on the statement of cash flows 
D)  The company reports revenue in the same period cash is collected

Question 13

The success of accounting as a form of communication depends on two concepts,---------and
____________________.

Accepted Answer

recognitio

Question 14

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

Accepted Answer

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

Question 15

Hensley Painting Company painted four houses in June at $500 each. At the end of June, three homeowners had paid Hensley cash for the jobs. Under the accrual basis, what amounts will be reported on the income statement and the statement of cash flows for June?

Accepted Answer

The answer of Hensley Painting Company painted four houses in...

Question 16

Select the correct revenue recognition principle for each of the following.
-Rent

Accepted Answer

A) Recognize revenue over the passage of time. 
B) Recognize revenue when the customer takes possession of the product. 
C) Recognize revenue when cash is collected. 
D) Recognize revenue when service is performed. 
A) Recognize revenue over the passage of time. 
B) Recognize revenue when the customer takes possession of the product. 
C) Recognize revenue when cash is collected. 
D) Recognize revenue when service is performed.

Question 17

Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the amount due on March 31. Under the accrual basis of accounting, which of the following statements is true?

Accepted Answer

A)  Fox Auto will recognize the revenue on March 31. 
B)  The March 10th transaction increases revenue, but has no effect on assets because cash has not been received. 
C)  Revenue is recognized after the cost of the merchandise sold has been paid by Fox Auto. 
D)  The March 31st transaction has no effect on total assets under the accrual basis. 
A)  Fox Auto will recognize the revenue on March 31. 
B)  The March 10th transaction increases revenue, but has no effect on assets because cash has not been received. 
C)  Revenue is recognized after the cost of the merchandise sold has been paid by Fox Auto. 
D)  The March 31st transaction has no effect on total assets under the accrual basis.

Question 18

Hsu Company purchased a truck on May 31, 2012 for $70,000. The equipment has an estimated useful life of five years. What amount will appear on Hsu Company's balance sheet for total accumulated depreciation at May 31, 2015?

Accepted Answer

A)  $14,000 
B)  $35,000 
C)  $42,000 
D)  $28,000 
A)  $14,000 
B)  $35,000 
C)  $42,000 
D)  $28,000

Question 19

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. According to contracts, $4,810 of Unearned Service Revenue has been earned in July. Which of the following is the correct amount of Service Revenue to be reported in the July income statement?

Accepted Answer

A)  $20,410 
B)  $11,700 
C)  $21,320 
D)  $16,510 
A)  $20,410 
B)  $11,700 
C)  $21,320 
D)  $16,510

Question 20

A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on:

Accepted Answer

A)  December 31 
B)  July 1 
C)  June 1 
D)  May 1 
A)  December 31 
B)  July 1 
C)  June 1 
D)  May 1

Interim financial statements are prepared annually.

Camp Consulting Services started business on January 1, 2015. Camp performed services for customers totaling $100,000 of which 40% remain uncollected at the end of December. Under the accrual basis, what amounts would appear on Camp Consulting's financial statements for 2015?

During December, Filmore Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on December 31?

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

Which one of the following adjustments decreases net income for the period?

Esquire Industrial plant operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the workweek just completed Monday through Friday. The last day of the month is Wednesday, March 31. What is the effect of the correct adjustment at March 31?

For each transaction select the letter of the type of adjustment that would be required -The cost of supplies used during the current year is determined and recorded

Accumulated depreciation is increased when depreciation is recognized.

Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period?

Adjustments are necessary only if

The success of accounting as a form of communication depends on two concepts,---------and ____________________.

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

Hensley Painting Company painted four houses in June at $500 each. At the end of June, three homeowners had paid Hensley cash for the jobs. Under the accrual basis, what amounts will be reported on the income statement and the statement of cash flows for June?

Select the correct revenue recognition principle for each of the following. -Rent

Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the amount due on March 31. Under the accrual basis of accounting, which of the following statements is true?

Hsu Company purchased a truck on May 31, 2012 for $70,000. The equipment has an estimated useful life of five years. What amount will appear on Hsu Company's balance sheet for total accumulated depreciation at May 31, 2015?

A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on:

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

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Exam 4: Income Measurement and Accrual Accounting

Interim financial statements are prepared annually.

Camp Consulting Services started business on January 1, 2015. Camp performed services for customers totaling $100,000 of which 40% remain uncollected at the end of December. Under the accrual basis, what amounts would appear on Camp Consulting's financial statements for 2015?

During December, Filmore Inc. purchased $800 of supplies for use in its business. At the end of December, 20% of the supplies were still on hand, but only 75% had been paid. What amounts will appear on the company's balance sheet on December 31?

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

Which one of the following adjustments decreases net income for the period?

Esquire Industrial plant operates five days per week with a daily payroll of $4,000. Employees are paid every Saturday for the workweek just completed Monday through Friday. The last day of the month is Wednesday, March 31. What is the effect of the correct adjustment at March 31?

For each transaction select the letter of the type of adjustment that would be required -The cost of supplies used during the current year is determined and recorded

Accumulated depreciation is increased when depreciation is recognized.

Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period?

Adjustments are necessary only if

The success of accounting as a form of communication depends on two concepts,---------and ____________________.

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

Hensley Painting Company painted four houses in June at $500 each. At the end of June, three homeowners had paid Hensley cash for the jobs. Under the accrual basis, what amounts will be reported on the income statement and the statement of cash flows for June?

Select the correct revenue recognition principle for each of the following. -Rent

Fox Auto sold merchandise to a customer for $3,000 on credit on March 10. The customer paid Fox Auto the amount due on March 31. Under the accrual basis of accounting, which of the following statements is true?

Hsu Company purchased a truck on May 31, 2012 for $70,000. The equipment has an estimated useful life of five years. What amount will appear on Hsu Company's balance sheet for total accumulated depreciation at May 31, 2015?

A pool cleaning service signs a contract with a new customer on May 1. The pool is vacuumed and "shocked" for the customer on June 1, and the bill for the services is paid on July 1. Under the accrual basis, the business should recognize revenue on:

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

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