Question 1

Match the following choices to the listed situation.
-Income taxes are owed to the federal government at year end

Accepted Answer

A) a deferred expense 
B) a deferred revenue 
C) an accrued liability 
D) an accrued asset 
A) a deferred expense 
B) a deferred revenue 
C) an accrued liability 
D) an accrued asset C

Question 2

Frank Corporation purchased supplies at a cost of $15,000 during 2016.At January 1, 2016, supplies on hand were $2,000.At December 31, 2016, supplies on hand are $2,500.Calculate supplies expense for 2016.

Accepted Answer

A)  $ 15,500 
B)  $ 14,500 
C)  $ 15,000 
D)  $ 17,000 
A)  $ 15,500 
B)  $ 14,500 
C)  $ 15,000 
D)  $ 17,000 B

Question 3

Hsu Company purchased a truck on May 31, 2013 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, 2016?

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 C

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Three months before year-end, Billings Company signed a $100,000, 12%, 6-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Accepted Answer

A) True 
 B)False

Question 6

Select the correct revenue recognition principle for each of the following.
-Subscription to a magazine

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 7

Interim financial statements are prepared annually.

Accepted Answer

A) True 
 B)False

Question 8

Harvest Catering is a local catering service.Conceptually, when should Harvest recognize revenue from its catering service?

Accepted Answer

A)  At the date the customer places the order 
B)  At the date the meals are served 
C)  At the date the invoice is mailed to the customer 
D)  At the date the customer's payment is received 
A)  At the date the customer places the order 
B)  At the date the meals are served 
C)  At the date the invoice is mailed to the customer 
D)  At the date the customer's payment is received

Question 9

The ____________________ of accounting is a system in which revenues are recognized when payments are received and expenses are recognized when payments are made.

Accepted Answer

The answer of The ____________________ of accounting is a system...

Question 10

For each transaction select the letter of the type of adjustment that would be required.
-Magazine subscriptions are delivered during the current period, although customers had paid in a previous period

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 11

Davis Corp.has three employees.Each earns $600 per week for a five day work week ending on Friday.This month the last day of the month falls on a Wednesday.The company should make which of the following adjusting entries?

Accepted Answer

A)  Credit Wage Expense for $360 and debit Wages Payable for $360 
B)  Debit Wage Expense for $1,080 and credit Wages Payable for $1,080 
C)  Credit Wage Expense for $1,080 and debit Wages Payable for $1,080 
D)  Debit Wage Expense for $360 and credit Wages Payable for $360 
A)  Credit Wage Expense for $360 and debit Wages Payable for $360 
B)  Debit Wage Expense for $1,080 and credit Wages Payable for $1,080 
C)  Credit Wage Expense for $1,080 and debit Wages Payable for $1,080 
D)  Debit Wage Expense for $360 and credit Wages Payable for $360

Question 12

When cash is paid before an expense is incurred, an accrual is necessary.

Accepted Answer

A) True 
 B)False

Question 13

When an expense is incurred prior to the payment of cash for that expense, an adjustment that increases an expense account and decreases an asset is prepared.

Accepted Answer

A) True 
 B)False

Question 14

Closing entries serve two important purposes: (1) to return the balances in all temporary or nominal accounts to zero to start the next accounting period and (2) to transfer the net income (or net loss) and the dividends of the period to the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 15

Under the accrual method, expenses are recognized when revenue is earned.

Accepted Answer

A) True 
 B)False

Question 16

Lincoln Corp.received advance payments from customers during 2016 of $10,000.At December 31, 2016, $1,000 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31, 2016, the balances in the Unearned Service Revenue and Service Revenue accounts will be ​ $\begin{array}{lc}
\underline{\text { Unearned Service Revenue }}& \underline{\text { Service Revenue}} \
\text { a. } \$ 1,000 & \$ 9,000 \
\text { b. } \$ 1,000 & \$ 10,000 \
\text { c. } \$ 11,000 & \$ 1,000 \
\text { d. } \$ 9,000 & \$ 10,000
\end{array}$

Accepted Answer

The answer of Lincoln Corp.received advance payments from customers during...

Question 17

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

Accepted Answer

The answer of Under the ____________________ basis of accounting, revenues...

Question 18

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

Accepted Answer

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

Question 19

Holten Farm sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold.During the month of August, a salesperson, Fred, sold 3 new tractors.Jacob pays Jason on the 10th day of the month following the sale.Fred operates on the cash basis; the tractor dealer operates on the accrual basis.Which of the following statements is true?

Accepted Answer

A)  Fred will recognize commission revenue earned in the amount of $3,000 in August. 
B)  Jacob will recognize commission expense in the amount of $3,000 in August. 
C)  Fred will recognize commission expense in the amount of $3,000 in September. 
D)  Fred will recognize revenue in the same month that the tractor dealer recognizes expense. 
A)  Fred will recognize commission revenue earned in the amount of $3,000 in August. 
B)  Jacob will recognize commission expense in the amount of $3,000 in August. 
C)  Fred will recognize commission expense in the amount of $3,000 in September. 
D)  Fred will recognize revenue in the same month that the tractor dealer recognizes expense.

Question 20

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

Match the following choices to the listed situation. -Income taxes are owed to the federal government at year end

Frank Corporation purchased supplies at a cost of $15,000 during 2016.At January 1, 2016, supplies on hand were $2,000.At December 31, 2016, supplies on hand are $2,500.Calculate supplies expense for 2016.

Hsu Company purchased a truck on May 31, 2013 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, 2016?

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

Three months before year-end, Billings Company signed a $100,000, 12%, 6-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Select the correct revenue recognition principle for each of the following. -Subscription to a magazine

Interim financial statements are prepared annually.

Harvest Catering is a local catering service.Conceptually, when should Harvest recognize revenue from its catering service?

The ____________________ of accounting is a system in which revenues are recognized when payments are received and expenses are recognized when payments are made.

For each transaction select the letter of the type of adjustment that would be required. -Magazine subscriptions are delivered during the current period, although customers had paid in a previous period

Davis Corp.has three employees.Each earns $600 per week for a five day work week ending on Friday.This month the last day of the month falls on a Wednesday.The company should make which of the following adjusting entries?

When cash is paid before an expense is incurred, an accrual is necessary.

When an expense is incurred prior to the payment of cash for that expense, an adjustment that increases an expense account and decreases an asset is prepared.

Closing entries serve two important purposes: (1) to return the balances in all temporary or nominal accounts to zero to start the next accounting period and (2) to transfer the net income (or net loss) and the dividends of the period to the Retained Earnings account.

Under the accrual method, expenses are recognized when revenue is earned.

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

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

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

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters

Exam 4: Income Measurement and Accrual Accounting

Match the following choices to the listed situation. -Income taxes are owed to the federal government at year end

Frank Corporation purchased supplies at a cost of $15,000 during 2016.At January 1, 2016, supplies on hand were $2,000.At December 31, 2016, supplies on hand are $2,500.Calculate supplies expense for 2016.

Hsu Company purchased a truck on May 31, 2013 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, 2016?

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

Three months before year-end, Billings Company signed a $100,000, 12%, 6-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Select the correct revenue recognition principle for each of the following. -Subscription to a magazine

Interim financial statements are prepared annually.

Harvest Catering is a local catering service.Conceptually, when should Harvest recognize revenue from its catering service?

The ____________________ of accounting is a system in which revenues are recognized when payments are received and expenses are recognized when payments are made.

For each transaction select the letter of the type of adjustment that would be required. -Magazine subscriptions are delivered during the current period, although customers had paid in a previous period

Davis Corp.has three employees.Each earns $600 per week for a five day work week ending on Friday.This month the last day of the month falls on a Wednesday.The company should make which of the following adjusting entries?

When cash is paid before an expense is incurred, an accrual is necessary.

When an expense is incurred prior to the payment of cash for that expense, an adjustment that increases an expense account and decreases an asset is prepared.

Closing entries serve two important purposes: (1) to return the balances in all temporary or nominal accounts to zero to start the next accounting period and (2) to transfer the net income (or net loss) and the dividends of the period to the Retained Earnings account.

Under the accrual method, expenses are recognized when revenue is earned.

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

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

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

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 True Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Exploring Accounting Standards and Differences around the World

Filters