Question 1

When the amount of revenue collected in advance decreases during an accounting period:

Accepted Answer

A)  Accrual-basis revenues exceed cash collections from customers. 
B)  Accrual-basis net income exceeds cash-basis net income. 
C)  Accrual-basis revenues are less than cash collections from customers. 
D)  Accrual-basis net income is less than cash-basis net income. 
A)  Accrual-basis revenues exceed cash collections from customers. 
B)  Accrual-basis net income exceeds cash-basis net income. 
C)  Accrual-basis revenues are less than cash collections from customers. 
D)  Accrual-basis net income is less than cash-basis net income. A

Question 2

When the amount of interest receivable decreases during an accounting period:

Accepted Answer

A)  Accrual-basis interest revenue exceeds cash collection from borrowers. 
B)  Accrual-basis net income exceeds cash-basis net income. 
C)  Accrual-basis interest revenue is less than cash collection from borrowers. 
D)  Accrual-basis net income is less than cash-basis net income. 
A)  Accrual-basis interest revenue exceeds cash collection from borrowers. 
B)  Accrual-basis net income exceeds cash-basis net income. 
C)  Accrual-basis interest revenue is less than cash collection from borrowers. 
D)  Accrual-basis net income is less than cash-basis net income. C

Question 3

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

Accepted Answer

A)  $300,000. 
B)  $280,000. 
C)  $260,000. 
D)  $240,000. 
A)  $300,000. 
B)  $280,000. 
C)  $260,000. 
D)  $240,000. C

Question 4

The sale of merchandise on account would be recorded in a sales journal.

Accepted Answer

A) True 
 B)False

Question 5

The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $32,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June?

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Salaries expense } & 22,400 & \
\hline \text { Prepaid salaries } & 9,600 & \
\hline \text { Salaries payable } & & 32,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|c|r|r|}
\hline \text { Salaries expense } & 6,400 \
\hline \text { Salaries payable } & &6,400\
\hline
\end{array}$ 
C)  $\begin{array}{|c|r|r|}
\hline \text { Prepaid salaries } & 9,600 \
\hline \text { Salaries payable } && 9,600 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Salaries expense } & 22,400 \
\hline \text { Salaries payable } && 22,400 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Salaries expense } & 22,400 & \
\hline \text { Prepaid salaries } & 9,600 & \
\hline \text { Salaries payable } & & 32,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|c|r|r|}
\hline \text { Salaries expense } & 6,400 \
\hline \text { Salaries payable } & &6,400\
\hline
\end{array}$ 
C)  $\begin{array}{|c|r|r|}
\hline \text { Prepaid salaries } & 9,600 \
\hline \text { Salaries payable } && 9,600 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Salaries expense } & 22,400 \
\hline \text { Salaries payable } && 22,400 \
\hline
\end{array}$

Question 6

What is an accrued liability?

Accepted Answer

An accrued liability results f

Question 7

Permanent accounts would not include:

Accepted Answer

A)  Interest expense. 
B)  Salaries and wages payable. 
C)  Prepaid rent. 
D)  Deferred revenues. 
A)  Interest expense. 
B)  Salaries and wages payable. 
C)  Prepaid rent. 
D)  Deferred revenues.

Question 8

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.

-Deferred revenue

Accepted Answer

Deferred revenue refers to cash received

Question 9

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.

-Short-term notes payable

Accepted Answer

\[\begin{array} { | l | c | c

Question 10

Silicon Chip Company's fiscal year-end is December 31. At the end of 2018, it owed employees $22,000 in salaries and wages that will be paid on January 7, 2019.
Required:
1. Prepare an adjusting entry to record accrued salaries and wages, a reversing entry on January 1, 2019, and an entry to record the payment of salaries and wages on January 7, 2019.
2. Prepare journal entries to record the accrued salaries and wages on December 31, 2018 and the payment of salaries and wages on January 7, 2019, assuming a reversing entry is not recorded.

Accepted Answer

The answer of Silicon Chip Company's fiscal year-end is December...

Question 11

Owners' equity can be expressed as assets minus liabilities.

Accepted Answer

A) True 
 B)False

Question 12

The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:

Accepted Answer

A)  Plus revenues, minus liabilities. 
B)  Plus accruals, minus deferrals. 
C)  Plus net income, minus dividends. 
D)  Plus assets, minus liabilities. 
A)  Plus revenues, minus liabilities. 
B)  Plus accruals, minus deferrals. 
C)  Plus net income, minus dividends. 
D)  Plus assets, minus liabilities.

Question 13

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.

-Accounts receivable

Accepted Answer

Accounts receivable refers to

Question 14

The adjusting entry required to record accrued expenses includes:

Accepted Answer

A)  A credit to cash. 
B)  A debit to an asset. 
C)  A credit to an asset. 
D)  A credit to liability. 
A)  A credit to cash. 
B)  A debit to an asset. 
C)  A credit to an asset. 
D)  A credit to liability.

Question 15

On September 15, 2018, Oliver's Mortuary received a $6,000, nine-month note bearing interest at an annual rate of 10% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2018?

Accepted Answer

A)  $\begin{array}{|c|r|r|}
\hline \text { Interest receivable } & 175 \
\hline \text { Interest revenue } & & 175 \
\hline
\end{array}$ 
B)  $\begin{array}{|c|r|r|}
\hline \text { Interest receivable } & 230 & \
\hline \text { Interest revenue } & & 230 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Interest receivable } & 175 & \
\hline \text { Notes receivable } & & 175\
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Interest receivable } & 600 & \
\hline \text { Interest revenue } & & 175 \
\hline \text { Cash } & & 425 \
\hline
\end{array}$ 
A)  $\begin{array}{|c|r|r|}
\hline \text { Interest receivable } & 175 \
\hline \text { Interest revenue } & & 175 \
\hline
\end{array}$ 
B)  $\begin{array}{|c|r|r|}
\hline \text { Interest receivable } & 230 & \
\hline \text { Interest revenue } & & 230 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|l|}
\hline \text { Interest receivable } & 175 & \
\hline \text { Notes receivable } & & 175\
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Interest receivable } & 600 & \
\hline \text { Interest revenue } & & 175 \
\hline \text { Cash } & & 425 \
\hline
\end{array}$

Question 16

On June 1, Royal Corp. began operating a service company with an initial cash investment by shareholders of $2,000,000. The company provided $6,400,000 of services in June and received full payment in July. Royal also incurred expenses of $3,000,000 in June that were paid in August. During June, Royal paid its shareholders cash dividends of $1,000,000. What was the company's income before income taxes for the two months ended July 31 under the following methods of accounting?

Accepted Answer

A)  Option a 
B)  Option b 
C)  Option c 
D)  Option d 
A)  Option a 
B)  Option b 
C)  Option c 
D)  Option d

Question 17

When a business makes an end-of-period adjusting entry with a debit to supplies expense, the usual credit entry is made to:

Accepted Answer

A)  Accounts payable. 
B)  Supplies. 
C)  Cash. 
D)  Retained earnings. 
A)  Accounts payable. 
B)  Supplies. 
C)  Cash. 
D)  Retained earnings.

Question 18

The account titles to be responded to are provided in no particular order. Assume that all accounts have normal balances according to whether the account is increased by a debit or increased by a credit.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.

-Inventory

Accepted Answer

\[\begin{array} { | l | c | c

Question 19

The income statement summarizes the operating activity of a firm at a particular point in time.

Accepted Answer

A) True 
 B)False

Question 20

Cost of goods sold is:

Accepted Answer

A)  An asset account. 
B)  A revenue account. 
C)  An expense account. 
D)  A permanent equity account. 
A)  An asset account. 
B)  A revenue account. 
C)  An expense account. 
D)  A permanent equity account.

When the amount of revenue collected in advance decreases during an accounting period:

When the amount of interest receivable decreases during an accounting period:

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

The sale of merchandise on account would be recorded in a sales journal.

What is an accrued liability?

Permanent accounts would not include:

Owners' equity can be expressed as assets minus liabilities.

The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:

The adjusting entry required to record accrued expenses includes:

On September 15, 2018, Oliver's Mortuary received a $6,000, nine-month note bearing interest at an annual rate of 10% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2018?

When a business makes an end-of-period adjusting entry with a debit to supplies expense, the usual credit entry is made to:

The income statement summarizes the operating activity of a firm at a particular point in time.

Cost of goods sold is:

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 2: Review of the Accounting Process

When the amount of revenue collected in advance decreases during an accounting period:

When the amount of interest receivable decreases during an accounting period:

Carolina Mills purchased $270,000 in supplies this year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. What was supplies expense for Carolina Mills during the year?

The sale of merchandise on account would be recorded in a sales journal.

What is an accrued liability?

Permanent accounts would not include:

Owners' equity can be expressed as assets minus liabilities.

The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:

The adjusting entry required to record accrued expenses includes:

On September 15, 2018, Oliver's Mortuary received a $6,000, nine-month note bearing interest at an annual rate of 10% from the estate of Jay Hendrix for services rendered. Oliver's has a December 31 year-end. What adjusting entry will the company record on December 31, 2018?

When a business makes an end-of-period adjusting entry with a debit to supplies expense, the usual credit entry is made to:

The income statement summarizes the operating activity of a firm at a particular point in time.

Cost of goods sold is:

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters