Question 1

Payments of expenses that will benefit more than one accounting period are identified as:

Accepted Answer

A) expenses. 
B) revenues. 
C) prepaid expenses. 
D) liabilities. 
A) expenses. 
B) revenues. 
C) prepaid expenses. 
D) liabilities.

Question 2

Which statement is incorrect concerning the adjusted tabular summary?

Accepted Answer

A) An adjusted tabular summary proves the equality of the basic accounting equation after all adjustments are made. 
B) The adjusted tabular summary provides the primary basis for the preparation of financial statements. 
C) The adjusted tabular summary lists the account balances in order of their magnitude. 
D) The adjusted tabular summary is prepared after the adjustments have been recorded. 
A) An adjusted tabular summary proves the equality of the basic accounting equation after all adjustments are made. 
B) The adjusted tabular summary provides the primary basis for the preparation of financial statements. 
C) The adjusted tabular summary lists the account balances in order of their magnitude. 
D) The adjusted tabular summary is prepared after the adjustments have been recorded.

Question 3

A flower shop makes a large sale for $1000 on November 30.The customer is sent a statement on December 5 and a check is received on December 10.The flower shop follows GAAP and applies the revenue recognition principle.When is the $1000 considered to be recognized?

Accepted Answer

A) December 5 
B) December 10 
C) November 30 
D) December 1 
A) December 5 
B) December 10 
C) November 30 
D) December 1

Question 4

Accrued expenses are:

Accepted Answer

A) paid and recorded in an asset account before they are used or consumed. 
B) paid and recorded in an asset account after they are used or consumed. 
C) incurred but not yet paid or recorded. 
D) incurred and already paid or recorded. 
A) paid and recorded in an asset account before they are used or consumed. 
B) paid and recorded in an asset account after they are used or consumed. 
C) incurred but not yet paid or recorded. 
D) incurred and already paid or recorded.

Question 5

Bluing Corporation issued a one-year 9% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Accepted Answer

A) $36000. 
B) $27000. 
C) $24000. 
D) $21000. 
A) $36000. 
B) $27000. 
C) $24000. 
D) $21000.

Question 6

Adjustments are not necessary if the basic accounting equation balances.

Accepted Answer

A) True 
 B)False

Question 7

An adjustment:

Accepted Answer

A) affects two balance sheet accounts. 
B) affects two income statement accounts. 
C) affects a balance sheet account and an income statement account. 
D) always involves three accounts. 
A) affects two balance sheet accounts. 
B) affects two income statement accounts. 
C) affects a balance sheet account and an income statement account. 
D) always involves three accounts.

Question 8

A liability-revenue relationship exists with:

Accepted Answer

A) asset accounts. 
B) revenue accounts. 
C) unearned revenue adjustments. 
D) accrued expense adjustments. 
A) asset accounts. 
B) revenue accounts. 
C) unearned revenue adjustments. 
D) accrued expense adjustments.

Question 9

If a company fails to adjust for accrued revenues:

Accepted Answer

A) liabilities will be understated and revenues will be understated. 
B) liabilities will be overstated and revenues will be understated. 
C) assets will be overstated and revenues will be understated. 
D) assets will be understated and revenues will be understated. 
A) liabilities will be understated and revenues will be understated. 
B) liabilities will be overstated and revenues will be understated. 
C) assets will be overstated and revenues will be understated. 
D) assets will be understated and revenues will be understated.

Question 10

Foley Marketing received $60000 from a customer on January 2 2022 to be on retainer for the next two years.The appropriate adjustment to recognize revenue at Foley's fiscal year-end on December 31 2022 would be:

Accepted Answer

A) Decrease Unearned Revenue $30000 Increase Service Revenue $30000 
B) Decrease Service Revenue $30000 Increase Unearned Revenue $30000 
C) Decrease Service Revenue $30000 Decrease Cash $30000 
D) Decrease Unearned Revenue $30000 Decrease Cash $30000 
A) Decrease Unearned Revenue $30000 Increase Service Revenue $30000 
B) Decrease Service Revenue $30000 Increase Unearned Revenue $30000 
C) Decrease Service Revenue $30000 Decrease Cash $30000 
D) Decrease Unearned Revenue $30000 Decrease Cash $30000

Question 11

The Vintage Laundry Company purchased $8500 worth of laundry supplies on June 2 and recorded the purchase as an asset.On June 30 an inventory of the laundry supplies indicated only $1500 on hand.The adjustment that should be made by the company on June 30 is:

Accepted Answer

A) increase Supplies Expense $1500; decrease Supplies $1500. 
B) increase Supplies $7000; decrease Supplies Expense $7000. 
C) increase Supplies $1500; decrease Supplies Expense $1500. 
D) increase Supplies Expense $7000; decrease Supplies $7000. 
A) increase Supplies Expense $1500; decrease Supplies $1500. 
B) increase Supplies $7000; decrease Supplies Expense $7000. 
C) increase Supplies $1500; decrease Supplies Expense $1500. 
D) increase Supplies Expense $7000; decrease Supplies $7000.

Question 12

Amos Real Estate signed a four-month note payable in the amount of $20000 on September 1.The note requires interest at an annual rate of 9%.The amount of interest to be accrued at the end of September is:

Accepted Answer

A) $600. 
B) $150. 
C) $1800. 
D) $200. 
A) $600. 
B) $150. 
C) $1800. 
D) $200.

Question 13

Each of the following is a major type (or category) of adjustment except:

Accepted Answer

A) earned expenses. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues. 
A) earned expenses. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues.

Question 14

If a resource has been consumed but a bill has not been received at the end of the accounting period then:

Accepted Answer

A) an expense should be recorded when the bill is received. 
B) an expense should be recorded when the cash is paid out. 
C) an adjustment should be made recognizing the expense. 
D) it is optional whether to record the expense before the bill is received. 
A) an expense should be recorded when the bill is received. 
B) an expense should be recorded when the cash is paid out. 
C) an adjustment should be made recognizing the expense. 
D) it is optional whether to record the expense before the bill is received.

Question 15

La More Company had the following transactions during 2022: F1F1F1S1F1F1F10Sales of $9000 on account
F1F1F1S1F1F1F10Collected $4000 for services to be performed in 2023
F1F1F1S1F1F1F10Paid $3750 cash in salaries for 2017
F1F1F1S1F1F1F10Purchased airline tickets for $500 in December for a trip to take place in 2023
What is La More's 2022 net income using accrual accounting?

Accepted Answer

A) $5750 
B) $9750 
C) $9250 
D) $5250 
A) $5750 
B) $9750 
C) $9250 
D) $5250

Question 16

The periodicity assumption states that:

Accepted Answer

A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods. 
A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods.

Question 17

Otto's Tune-Up Shop follows the revenue recognition principle.Otto services a car on August 31.The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5.Otto receives the check in the mail on September 6.When should Otto show that the revenue was recognized?

Accepted Answer

A) August 31 
B) August 1 
C) September 5 
D) September 6 
A) August 31 
B) August 1 
C) September 5 
D) September 6

Question 18

A revenue-asset relationship exists with:

Accepted Answer

A) prepaid expense adjustments. 
B) accrued expense adjustments. 
C) unearned revenue adjustments. 
D) accrued revenue adjustments. 
A) prepaid expense adjustments. 
B) accrued expense adjustments. 
C) unearned revenue adjustments. 
D) accrued revenue adjustments.

Question 19

Given the following adjusted tabular summary amounts: $\begin{array} { l r } 
\text { Cash } & \$ 1,662 \
\text { Accounts receivable } & 2,098 \
\text { Inventory } & 3,124 \
\text { Prepaid rent } & 86 \
\text { Equipment } & 300 \
\text { Accumulated depreciation-equipment } & 52 \
\text { Accounts payable } & 82 \
\text { Unearned service revenue } & 122 \
\text { Common stock } & 206 \
\text { Retained earnings } & 6,610 \
\text { Service revenue } & 368 \
\text { Interest revenue } & 56 \
\text { Salaries and wages expense } & 160 \
\text { Travel expense } & 66
\end{array}$ The ending retained earnings amount on the retained earnings statement will be:

Accepted Answer

A) $6440. 
B) $6612. 
C) $6980. 
D) $6808. 
A) $6440. 
B) $6612. 
C) $6980. 
D) $6808.

Question 20

Adjustments can be classified as:

Accepted Answer

A) postponements and advances. 
B) accruals and deferrals. 
C) deferrals and postponements. 
D) accruals and advances. 
A) postponements and advances. 
B) accruals and deferrals. 
C) deferrals and postponements. 
D) accruals and advances.

Payments of expenses that will benefit more than one accounting period are identified as:

Which statement is incorrect concerning the adjusted tabular summary?

A flower shop makes a large sale for $1000 on November 30.The customer is sent a statement on December 5 and a check is received on December 10.The flower shop follows GAAP and applies the revenue recognition principle.When is the $1000 considered to be recognized?

Accrued expenses are:

Bluing Corporation issued a one-year 9% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Adjustments are not necessary if the basic accounting equation balances.

An adjustment:

A liability-revenue relationship exists with:

If a company fails to adjust for accrued revenues:

Foley Marketing received $60000 from a customer on January 2 2022 to be on retainer for the next two years.The appropriate adjustment to recognize revenue at Foley's fiscal year-end on December 31 2022 would be:

The Vintage Laundry Company purchased $8500 worth of laundry supplies on June 2 and recorded the purchase as an asset.On June 30 an inventory of the laundry supplies indicated only $1500 on hand.The adjustment that should be made by the company on June 30 is:

Amos Real Estate signed a four-month note payable in the amount of $20000 on September 1.The note requires interest at an annual rate of 9%.The amount of interest to be accrued at the end of September is:

Each of the following is a major type (or category) of adjustment except:

If a resource has been consumed but a bill has not been received at the end of the accounting period then:

The periodicity assumption states that:

Otto's Tune-Up Shop follows the revenue recognition principle.Otto services a car on August 31.The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5.Otto receives the check in the mail on September 6.When should Otto show that the revenue was recognized?

A revenue-asset relationship exists with:

Adjustments can be classified as:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 4: Accrual Accounting Concepts

Payments of expenses that will benefit more than one accounting period are identified as:

Which statement is incorrect concerning the adjusted tabular summary?

A flower shop makes a large sale for $1000 on November 30.The customer is sent a statement on December 5 and a check is received on December 10.The flower shop follows GAAP and applies the revenue recognition principle.When is the $1000 considered to be recognized?

Accrued expenses are:

Bluing Corporation issued a one-year 9% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Adjustments are not necessary if the basic accounting equation balances.

An adjustment:

A liability-revenue relationship exists with:

If a company fails to adjust for accrued revenues:

Foley Marketing received $60000 from a customer on January 2 2022 to be on retainer for the next two years.The appropriate adjustment to recognize revenue at Foley's fiscal year-end on December 31 2022 would be:

The Vintage Laundry Company purchased $8500 worth of laundry supplies on June 2 and recorded the purchase as an asset.On June 30 an inventory of the laundry supplies indicated only $1500 on hand.The adjustment that should be made by the company on June 30 is:

Amos Real Estate signed a four-month note payable in the amount of $20000 on September 1.The note requires interest at an annual rate of 9%.The amount of interest to be accrued at the end of September is:

Each of the following is a major type (or category) of adjustment except:

If a resource has been consumed but a bill has not been received at the end of the accounting period then:

The periodicity assumption states that:

Otto's Tune-Up Shop follows the revenue recognition principle.Otto services a car on August 31.The customer picks up the vehicle on September 1 and mails the payment to Otto on September 5.Otto receives the check in the mail on September 6.When should Otto show that the revenue was recognized?

A revenue-asset relationship exists with:

Adjustments can be classified as:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters