Question 1

An accumulated depreciation account:

Accepted Answer

A) is a contra liability account. 
B) is offset against depreciation expense. 
C) is offset against total assets on the balance sheet. 
D) is increased for depreciation expense. 
A) is a contra liability account. 
B) is offset against depreciation expense. 
C) is offset against total assets on the balance sheet. 
D) is increased for depreciation expense.

Question 2

Snelling Tables paid employee wages on and through Friday January 26 and the next payroll will be paid in February.There are three more working days in January (29-31).Employees work 5 days a week and the company pays $1200 a day in wages.What will be the adjustments to accrue wages expense at the end of January?

Accepted Answer

A) increase Salaries and Wages Expense $1200 increase Salaries and Wages Payable $ 1200 
B) increase Salaries and Wages Expense $6000 increase Salaries and Wages Payable $ 6000 
C) increase Salaries and Wages Expense $3600 increase Salaries and Wages Payable $ 3600 
D) No adjustment is required. 
A) increase Salaries and Wages Expense $1200 increase Salaries and Wages Payable $ 1200 
B) increase Salaries and Wages Expense $6000 increase Salaries and Wages Payable $ 6000 
C) increase Salaries and Wages Expense $3600 increase Salaries and Wages Payable $ 3600 
D) No adjustment is required.

Question 3

Given the data below for a firm in its first year of operation determine net income under the cash basis of accounting. $\begin{array} { l r } 
\text { Cash received from customers } & \$ 45,000 \
\text { Accounts receivable } & 12,000 \
\text { Cash paid for expenses } & 26,000 \
\text { Accounts payable (related to expenses) } & 3,000 \
\text { Prepaid rent for next period } & 7,000
\end{array}$

Accepted Answer

A) $19000 
B) $28000 
C) $21000 
D) $12000 
A) $19000 
B) $28000 
C) $21000 
D) $12000

Question 4

A company spends $20 million dollars for an office building.Over what period should the cost be written off?

Accepted Answer

A) When the $20 million is expended in cash. 
B) All in the first year. 
C) After $20 million in revenue is earned. 
D) None of these answer choices are correct. 
A) When the $20 million is expended in cash. 
B) All in the first year. 
C) After $20 million in revenue is earned. 
D) None of these answer choices are correct.

Question 5

Raxon Company borrowed $50000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

Accepted Answer

A) increase Interest Expense $3000; increase Interest Payable $3000. 
B) increase Interest Expense $250; increase Interest Payable $250. 
C) decrease Note Payable $3000; decrease Cash $3000. 
D) increase Cash $750; increase Interest Payable $750. 
A) increase Interest Expense $3000; increase Interest Payable $3000. 
B) increase Interest Expense $250; increase Interest Payable $250. 
C) decrease Note Payable $3000; decrease Cash $3000. 
D) increase Cash $750; increase Interest Payable $750.

Question 6

Green Realty Company received a check for $24000 on July 1 which represents a 6-month advance payment of rent on a building it rents to a client.Unearned Rent Revenue was increased for the full $24000.Financial statements will be prepared on July 31.Green Realty should make the following adjustment on July 31:

Accepted Answer

A) decrease Unearned Rent Revenue $4000; increase Rent Revenue $4000. 
B) decrease Rent Revenue $4000; increase Unearned Rent Revenue $4000. 
C) decrease Unearned Rent Revenue $24000; increase Rent Revenue $24000. 
D) increase Cash $24000; increase Rent Revenue $24000. 
A) decrease Unearned Rent Revenue $4000; increase Rent Revenue $4000. 
B) decrease Rent Revenue $4000; increase Unearned Rent Revenue $4000. 
C) decrease Unearned Rent Revenue $24000; increase Rent Revenue $24000. 
D) increase Cash $24000; increase Rent Revenue $24000.

Question 7

Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period.What adjustment must Mary make?

Accepted Answer

A) increase Cash and increase Unearned Service Revenue 
B) decrease Accounts Receivable and increase Unearned Service Revenue 
C) increase Accounts Receivable and increase Service Revenue 
D) decrease Unearned Service Revenue and increase Service Revenue 
A) increase Cash and increase Unearned Service Revenue 
B) decrease Accounts Receivable and increase Unearned Service Revenue 
C) increase Accounts Receivable and increase Service Revenue 
D) decrease Unearned Service Revenue and increase Service Revenue

Question 8

Expenses are recognized when:

Accepted Answer

A) they contribute to the production of revenue. 
B) they are paid. 
C) they are billed by the supplier. 
D) the invoice is received. 
A) they contribute to the production of revenue. 
B) they are paid. 
C) they are billed by the supplier. 
D) the invoice is received.

Question 9

Unearned revenues are:

Accepted Answer

A) received and recorded as liabilities before they are recognized. 
B) recognized and recorded as liabilities before they are received. 
C) recognized but not yet received or recorded. 
D) recognized and already received and recorded. 
A) received and recorded as liabilities before they are recognized. 
B) recognized and recorded as liabilities before they are received. 
C) recognized but not yet received or recorded. 
D) recognized and already received and recorded.

Question 10

Adjustments are made to ensure that:

Accepted Answer

A) expenses are recognized in the period in which they are incurred. 
B) revenues are recorded in the period in which the performance obligation is satisfied. 
C) balance sheet and income statement accounts have correct balances at the end of an accounting period. 
D) All of these answer choices are correct. 
A) expenses are recognized in the period in which they are incurred. 
B) revenues are recorded in the period in which the performance obligation is satisfied. 
C) balance sheet and income statement accounts have correct balances at the end of an accounting period. 
D) All of these answer choices are correct.

Question 11

Darting Company purchased equipment for $9000 on January 1 2022.The company expects to use the equipment for 3 years.It has no salvage value.Monthly depreciation expense on the asset is:

Accepted Answer

A) $0. 
B) $250. 
C) $3000. 
D) $9000. 
A) $0. 
B) $250. 
C) $3000. 
D) $9000.

Question 12

Employees at Biquell Corporation are paid $15000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday December 31.How much salaries and wages expense should be recorded two days later on January 2?

Accepted Answer

A) $15000 
B) $9000 
C) None expense recognition requires the weekly salary to be accrued on December 31. 
D) $6000 
A) $15000 
B) $9000 
C) None expense recognition requires the weekly salary to be accrued on December 31. 
D) $6000

Question 13

Which one of the following is not a justification for adjustments?

Accepted Answer

A) Adjustments are necessary to ensure that the revenue recognition principle is followed. 
B) Adjustments are necessary to ensure that the expense recognition principle is followed. 
C) Adjustments are necessary to enable financial statements to be in conformity with GAAP. 
D) Adjustments are necessary to bring the accounts in line with the budget. 
A) Adjustments are necessary to ensure that the revenue recognition principle is followed. 
B) Adjustments are necessary to ensure that the expense recognition principle is followed. 
C) Adjustments are necessary to enable financial statements to be in conformity with GAAP. 
D) Adjustments are necessary to bring the accounts in line with the budget.

Question 14

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

Accepted Answer

A) when cash is received. 
B) when the performance obligation is satisfied. 
C) at the end of the month. 
D) in the period that income taxes are paid. 
A) when cash is received. 
B) when the performance obligation is satisfied. 
C) at the end of the month. 
D) in the period that income taxes are paid.

Question 15

An adjustment always involves two balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 16

Without an adjustment for accrued interest expense liabilities and interest expense are understated and net income and stockholders' equity are overstated.

Accepted Answer

A) True 
 B)False

Question 17

If a business has received cash in advance of services performed and increases a liability account the adjustment needed after the services are performed will be:

Accepted Answer

A) decrease Unearned Service Revenue and decrease Cash. 
B) decrease Unearned Service Revenue and increase Service Revenue. 
C) decrease Unearned Service Revenue and decrease Prepaid Expense. 
D) decrease Unearned Service Revenue and decrease Accounts Receivable. 
A) decrease Unearned Service Revenue and decrease Cash. 
B) decrease Unearned Service Revenue and increase Service Revenue. 
C) decrease Unearned Service Revenue and decrease Prepaid Expense. 
D) decrease Unearned Service Revenue and decrease Accounts Receivable.

Question 18

A contra asset account is subtracted from a related account in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

The expense recognition principle is frequently referred to as the matching principle.

Accepted Answer

A) True 
 B)False

Question 20

Leyland Realty Company received a check for $18000 on July 1 which represents a 6-month advance payment of rent on a building it rents to a client.Unearned Rent Revenue was increased for the full $18000.Financial statements will be prepared on July 31.Leyland Realty should make the following adjustment on July 31:

Accepted Answer

A) decrease Unearned Rent Revenue $3000; increase Rent Revenue $3000. 
B) decrease Rent Revenue $3000; increase Unearned Rent Revenue $3000. 
C) decrease Unearned Rent Revenue $18000; increase Rent Revenue $18000. 
D) increase Cash $18000; increase Rent Revenue $18000. 
A) decrease Unearned Rent Revenue $3000; increase Rent Revenue $3000. 
B) decrease Rent Revenue $3000; increase Unearned Rent Revenue $3000. 
C) decrease Unearned Rent Revenue $18000; increase Rent Revenue $18000. 
D) increase Cash $18000; increase Rent Revenue $18000.

An accumulated depreciation account:

Given the data below for a firm in its first year of operation determine net income under the cash basis of accounting. Cash received from customers \ 45,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000

A company spends $20 million dollars for an office building.Over what period should the cost be written off?

Raxon Company borrowed $50000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period.What adjustment must Mary make?

Expenses are recognized when:

Unearned revenues are:

Adjustments are made to ensure that:

Darting Company purchased equipment for $9000 on January 1 2022.The company expects to use the equipment for 3 years.It has no salvage value.Monthly depreciation expense on the asset is:

Employees at Biquell Corporation are paid $15000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday December 31.How much salaries and wages expense should be recorded two days later on January 2?

Which one of the following is not a justification for adjustments?

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

An adjustment always involves two balance sheet accounts.

Without an adjustment for accrued interest expense liabilities and interest expense are understated and net income and stockholders' equity are overstated.

If a business has received cash in advance of services performed and increases a liability account the adjustment needed after the services are performed will be:

A contra asset account is subtracted from a related account in the balance sheet.

The expense recognition principle is frequently referred to as the matching principle.

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

An accumulated depreciation account:

Given the data below for a firm in its first year of operation determine net income under the cash basis of accounting. Cash received from customers \ 45,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000

A company spends $20 million dollars for an office building.Over what period should the cost be written off?

Raxon Company borrowed $50000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

Mary Richardo has performed $500 of CPA services for a client but has not billed the client as of the end of the accounting period.What adjustment must Mary make?

Expenses are recognized when:

Unearned revenues are:

Adjustments are made to ensure that:

Darting Company purchased equipment for $9000 on January 1 2022.The company expects to use the equipment for 3 years.It has no salvage value.Monthly depreciation expense on the asset is:

Employees at Biquell Corporation are paid $15000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday December 31.How much salaries and wages expense should be recorded two days later on January 2?

Which one of the following is not a justification for adjustments?

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

An adjustment always involves two balance sheet accounts.

Without an adjustment for accrued interest expense liabilities and interest expense are understated and net income and stockholders' equity are overstated.

If a business has received cash in advance of services performed and increases a liability account the adjustment needed after the services are performed will be:

A contra asset account is subtracted from a related account in the balance sheet.

The expense recognition principle is frequently referred to as the matching principle.

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