Question 1

XYZ Co.paid $1,000 in dividends to stockholders.How does this transaction affect the accounts of XYZ?

Accepted Answer

A) Cash will decrease by $1,000 and retained earnings will decrease by $1,000. 
B) Cash will decrease by $1,000 and expenses will increase $1,000. 
C) Cash will decrease by $1,000 and revenues will decrease $1,000. 
D) Net income will decrease by $1,000. 
A) Cash will decrease by $1,000 and retained earnings will decrease by $1,000. 
B) Cash will decrease by $1,000 and expenses will increase $1,000. 
C) Cash will decrease by $1,000 and revenues will decrease $1,000. 
D) Net income will decrease by $1,000.

Question 2

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

Accepted Answer

A) the cash flows from financing activities section. 
B) the cash flows from investing activities section. 
C) a separate schedule. 
D) the cash flows from operating activities section. 
A) the cash flows from financing activities section. 
B) the cash flows from investing activities section. 
C) a separate schedule. 
D) the cash flows from operating activities section.

Question 3

Which of the following is an example of an intangible asset?

Accepted Answer

A) Goodwill 
B) Patents 
C) Copyrights 
D) All of these 
A) Goodwill 
B) Patents 
C) Copyrights 
D) All of these

Question 4

Expenses not related to the primary operations of the business are sometimes reported as:

Accepted Answer

A) administrative expense. 
B) operating expense. 
C) other expense. 
D) all of these. 
A) administrative expense. 
B) operating expense. 
C) other expense. 
D) all of these.

Question 5

X&Y Co.received $4,000 in payments from clients for services billed in a previous month.What effect does this transaction have on the accounts under the accrual basis of accounting?

Accepted Answer

A) Total assets increase by $4,000. 
B) Assets will increase by $4,000 and revenues will increase $4,000. 
C) Total assets will be decrease by $4,000. 
D) The net effect on assets is zero. 
A) Total assets increase by $4,000. 
B) Assets will increase by $4,000 and revenues will increase $4,000. 
C) Total assets will be decrease by $4,000. 
D) The net effect on assets is zero.

Question 6

The is prepared with various sections,subsections,and captions that aid in its interpretation and analysis.

Accepted Answer

A) accounting equation 
B) retained earnings statement 
C) intangible asset section 
D) classified balance sheet 
A) accounting equation 
B) retained earnings statement 
C) intangible asset section 
D) classified balance sheet

Question 7

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account,which section of the statement of cash flows is affected?

Accepted Answer

A) Cash Flow from Operating Activities 
B) Cash Flow from Investing Activities 
C) Cash Flow from Financing Activities 
D) There is no effect on the statement of cash flows. 
A) Cash Flow from Operating Activities 
B) Cash Flow from Investing Activities 
C) Cash Flow from Financing Activities 
D) There is no effect on the statement of cash flows.

Question 8

Refer to Perill Co.How much cash will be paid on Friday?

Accepted Answer

A) $650 
B) $1,950 
C) $1,300 
D) $3,250 
A) $650 
B) $1,950 
C) $1,300 
D) $3,250

Question 9

Eagle Eye,Inc.,a corporation,received an additional investment of $6,000 cash in exchange for shares of capital stock.How does this transaction affect Eagle Eye's accounts?

Accepted Answer

A) Increase in stock expense and decrease cash by $6,000 each 
B) Increase capital stock and increase cash by $6,000 each 
C) Increase capital stock and increase revenue by $6,000 each 
D) Increase capital stock and decrease retained earnings by $6,000 each 
A) Increase in stock expense and decrease cash by $6,000 each 
B) Increase capital stock and increase cash by $6,000 each 
C) Increase capital stock and increase revenue by $6,000 each 
D) Increase capital stock and decrease retained earnings by $6,000 each

Question 10

Every company must use the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 11

For a corporation,stockholders' equity consists of:

Accepted Answer

A) assets plus liabilities. 
B) current assets plus long-term assets. 
C) intangible assets. 
D) capital stock and retained earnings. 
A) assets plus liabilities. 
B) current assets plus long-term assets. 
C) intangible assets. 
D) capital stock and retained earnings.

Question 12

Using accrual accounting,expenses are recorded and reported only:

Accepted Answer

A) when they are incurred,whether or not cash is paid. 
B) when they are incurred and paid at the same time. 
C) if they are paid before they are incurred. 
D) if they are paid after they are incurred. 
A) when they are incurred,whether or not cash is paid. 
B) when they are incurred and paid at the same time. 
C) if they are paid before they are incurred. 
D) if they are paid after they are incurred.

Question 13

XYZ Co.received $3,000 in payments from clients for services billed in a previous month.Which accounts will be affected and by what amounts under the accrual basis of accounting?

Accepted Answer

A) Cash will increase by $3,000 and accounts receivable decrease by $3,000. 
B) Cash will increase by $3,000 and revenues will increase $3,000. 
C) Accounts receivable will increase by $3,000 and revenue will increase by $3,000. 
D) Accounts receivable will increase by $3,000 and cash will increase by $3,000. 
A) Cash will increase by $3,000 and accounts receivable decrease by $3,000. 
B) Cash will increase by $3,000 and revenues will increase $3,000. 
C) Accounts receivable will increase by $3,000 and revenue will increase by $3,000. 
D) Accounts receivable will increase by $3,000 and cash will increase by $3,000.

Question 14

Refer to Coke's Statement of Cash Flows.What amount of depreciation and amortization did Coke record in 2008?

Accepted Answer

Coke recorded depreciation and

Question 15

On April 1,Smart,Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

Accepted Answer

A) Increase insurance expense and decrease cash by $7,200 each 
B) Increase prepaid insurance and decrease cash by $7,200 each 
C) Increase unearned insurance and decrease cash by $7,200 each 
D) Increase prepaid insurance and decrease retained earnings by $7,200 each 
A) Increase insurance expense and decrease cash by $7,200 each 
B) Increase prepaid insurance and decrease cash by $7,200 each 
C) Increase unearned insurance and decrease cash by $7,200 each 
D) Increase prepaid insurance and decrease retained earnings by $7,200 each

Question 16

Under the accrual basis of accounting,the accounting records are normally updated after the preparation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 17

Accounts receivable arising from trade transactions amounted to $62,000 and $78,000 at the beginning and end of the year,respectively.Net income reported on the income statement for the year was $125,000.Exclusive of the effect of other adjustments,the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method are:

Accepted Answer

A) $109,000. 
B) $141,000. 
C) $125,000. 
D) $140,000. 
A) $109,000. 
B) $141,000. 
C) $125,000. 
D) $140,000.

Question 18

Accrued expenses are ordinarily reported on the balance sheet as:

Accepted Answer

A) assets. 
B) liabilities. 
C) fixed assets. 
D) prepaid expenses. 
A) assets. 
B) liabilities. 
C) fixed assets. 
D) prepaid expenses.

Question 19

Which of the following best describes an accrual adjustment?

Accepted Answer

A) It records a transaction in a way that delays or defers the recognition of an expense or revenue. 
B) It is initially recorded as an asset but become expense over time or through normal operations of the business. 
C) It is initially recorded as liabilities but become revenues over time or through normal operations of the business. 
D) It is created when a revenue or expense has been earned or incurred but has not been recorded. 
A) It records a transaction in a way that delays or defers the recognition of an expense or revenue. 
B) It is initially recorded as an asset but become expense over time or through normal operations of the business. 
C) It is initially recorded as liabilities but become revenues over time or through normal operations of the business. 
D) It is created when a revenue or expense has been earned or incurred but has not been recorded.

Question 20

Which transaction would be recorded in a cash basis system of accounting?

Accepted Answer

A) Purchase of equipment by signing a note 
B) Purchase of supplies on credit 
C) Sale of goods against a note 
D) Sale of goods for cash 
A) Purchase of equipment by signing a note 
B) Purchase of supplies on credit 
C) Sale of goods against a note 
D) Sale of goods for cash

XYZ Co.paid $1,000 in dividends to stockholders.How does this transaction affect the accounts of XYZ?

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

Which of the following is an example of an intangible asset?

Expenses not related to the primary operations of the business are sometimes reported as:

X&Y Co.received $4,000 in payments from clients for services billed in a previous month.What effect does this transaction have on the accounts under the accrual basis of accounting?

The is prepared with various sections,subsections,and captions that aid in its interpretation and analysis.

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account,which section of the statement of cash flows is affected?

Refer to Perill Co.How much cash will be paid on Friday?

Eagle Eye,Inc.,a corporation,received an additional investment of $6,000 cash in exchange for shares of capital stock.How does this transaction affect Eagle Eye's accounts?

Every company must use the cash basis of accounting.

For a corporation,stockholders' equity consists of:

Using accrual accounting,expenses are recorded and reported only:

XYZ Co.received $3,000 in payments from clients for services billed in a previous month.Which accounts will be affected and by what amounts under the accrual basis of accounting?

Refer to Coke's Statement of Cash Flows.What amount of depreciation and amortization did Coke record in 2008?

On April 1,Smart,Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

Under the accrual basis of accounting,the accounting records are normally updated after the preparation of the financial statements.

Accrued expenses are ordinarily reported on the balance sheet as:

Which of the following best describes an accrual adjustment?

Which transaction would be recorded in a cash basis system of accounting?

The Role of Accounting in Business

Basic Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 3: Accrual Accounting Concepts

XYZ Co.paid $1,000 in dividends to stockholders.How does this transaction affect the accounts of XYZ?

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in:

Which of the following is an example of an intangible asset?

Expenses not related to the primary operations of the business are sometimes reported as:

X&Y Co.received $4,000 in payments from clients for services billed in a previous month.What effect does this transaction have on the accounts under the accrual basis of accounting?

The is prepared with various sections,subsections,and captions that aid in its interpretation and analysis.

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account,which section of the statement of cash flows is affected?

Refer to Perill Co.How much cash will be paid on Friday?

Eagle Eye,Inc.,a corporation,received an additional investment of $6,000 cash in exchange for shares of capital stock.How does this transaction affect Eagle Eye's accounts?

Every company must use the cash basis of accounting.

For a corporation,stockholders' equity consists of:

Using accrual accounting,expenses are recorded and reported only:

XYZ Co.received $3,000 in payments from clients for services billed in a previous month.Which accounts will be affected and by what amounts under the accrual basis of accounting?

Refer to Coke's Statement of Cash Flows.What amount of depreciation and amortization did Coke record in 2008?

On April 1,Smart,Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

Under the accrual basis of accounting,the accounting records are normally updated after the preparation of the financial statements.

Accrued expenses are ordinarily reported on the balance sheet as:

Which of the following best describes an accrual adjustment?

Which transaction would be recorded in a cash basis system of accounting?

The Role of Accounting in Business

Basic Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters