Question 1

Which of the following assets is not subject to depreciation?

Accepted Answer

A)  Vehicles 
B)  Art equipment 
C)  Land 
D)  Machinery 
A)  Vehicles 
B)  Art equipment 
C)  Land 
D)  Machinery

Question 2

Which of the following is an example of an accrual?

Accepted Answer

A)  Bookkeeping fees collected but not yet earned 
B)  Six months' rent paid in advance 
C)  Interest earned but not yet received 
D)  Equipment purchased for use in the business 
A)  Bookkeeping fees collected but not yet earned 
B)  Six months' rent paid in advance 
C)  Interest earned but not yet received 
D)  Equipment purchased for use in the business

Question 3

Wages Payable were $700 at the end of October and $560 at the end of November.Wages Expense for November was $3,600.How much cash was paid for wages during November?

Accepted Answer

A)  $3,460 
B)  $4,860 
C)  $3,740 
D)  $2,340 
A)  $3,460 
B)  $4,860 
C)  $3,740 
D)  $2,340

Question 4

Formal closing entries ultimately will affect

Accepted Answer

A)  the Common Stock account. 
B)  total Liabilities. 
C)  the Retained Earnings account. 
D)  total Assets. 
A)  the Common Stock account. 
B)  total Liabilities. 
C)  the Retained Earnings account. 
D)  total Assets.

Question 5

Accumulated depreciation is classified as a(n)

Accepted Answer

A)  contra-expense account. 
B)  expense account. 
C)  contra-asset account. 
D)  liability account. 
A)  contra-expense account. 
B)  expense account. 
C)  contra-asset account. 
D)  liability account.

Question 6

Accounts Receivable was $750 at the end of November and $525 at the end of December.Revenue totaled $4,775 for December.How much cash was received from revenues during December?

Accepted Answer

A)  $6,050 
B)  $5,000 
C)  $4,550 
D)  $3,550 
A)  $6,050 
B)  $5,000 
C)  $4,550 
D)  $3,550

Question 7

Office Supplies were $1,800 at the end of January and $2,280 at the end of February.During February,Office Supplies Expense equaled $840.How much cash was paid for office supplies during February?

Accepted Answer

A)  720 
B)  $3,120 
C)  $3,720 
D)  $1,320 
A)  720 
B)  $3,120 
C)  $3,720 
D)  $1,320

Question 8

The four conditions that must exist,according to the SEC,before revenue should be recognized include all of the following except

Accepted Answer

A)  there is a reasonable assurance the amount is collectible. 
B)  a selling price has been determined. 
C)  delivery will occur or services will be rendered within 30 days. 
D)  persuasive evidence of an arrangement exists. 
A)  there is a reasonable assurance the amount is collectible. 
B)  a selling price has been determined. 
C)  delivery will occur or services will be rendered within 30 days. 
D)  persuasive evidence of an arrangement exists.

Question 9

Match each definition with the correct term below.
-Expenses

Accepted Answer

A) Used to determine that all temporary accounts have zero balances. 
B) The postponement of the recognition of an expense already paid. 
C) Accounts that begin each accounting period with a zero balance. 
D) Increases in stockholders' equity resulting from selling goods. 
E) Revenue that is received in advance of goods delivery or service performance.
F)Accounts that carry their end-of-period balances into the next accounting period.
G)The recognition of a revenue or an expense that has arisen but not been recorded during the accounting period.
H)Decreases in stockholders' equity resulting from the cost of selling goods.
I)Used after making adjusting journal entries to ensure that debits equal credits.
J)Revenues that a company has earned by performing a service or delivering goods but for which no entry 
A) Used to determine that all temporary accounts have zero balances. 
B) The postponement of the recognition of an expense already paid. 
C) Accounts that begin each accounting period with a zero balance. 
D) Increases in stockholders' equity resulting from selling goods. 
E) Revenue that is received in advance of goods delivery or service performance.
F)Accounts that carry their end-of-period balances into the next accounting period.
G)The recognition of a revenue or an expense that has arisen but not been recorded during the accounting period.
H)Decreases in stockholders' equity resulting from the cost of selling goods.
I)Used after making adjusting journal entries to ensure that debits equal credits.
J)Revenues that a company has earned by performing a service or delivering goods but for which no entry

Question 10

In order to make comparison easier,financial statement time periods should

Accepted Answer

A)  end during the peak season. 
B)  be of equal length. 
C)  correspond to the calendar year. 
D)  comply with income tax regulations. 
A)  end during the peak season. 
B)  be of equal length. 
C)  correspond to the calendar year. 
D)  comply with income tax regulations.

Question 11

Which of the following is not a permanent account?

Accepted Answer

A)  Cash 
B)  Common Stock 
C)  Insurance Expense 
D)  Accounts Payable 
A)  Cash 
B)  Common Stock 
C)  Insurance Expense 
D)  Accounts Payable

Question 12

Which of the following accounts would most likely be found on both a trial balance and an adjusted trial balance?

Accepted Answer

A)  Utilities Expense 
B)  Insurance Expense 
C)  Supplies Expense 
D)  Depreciation Expense-Equipment 
A)  Utilities Expense 
B)  Insurance Expense 
C)  Supplies Expense 
D)  Depreciation Expense-Equipment

Question 13

When a credit sale takes place,

Accepted Answer

A)  a revenue account will decrease. 
B)  an asset account will increase. 
C)  one asset account will increase and another will decrease. 
D)  assets will be unaffected. 
A)  a revenue account will decrease. 
B)  an asset account will increase. 
C)  one asset account will increase and another will decrease. 
D)  assets will be unaffected.

Question 14

Closing entries will

Accepted Answer

A)  decrease the Retained Earnings balance. 
B)  most likely either increase or decrease the Retained Earnings balance. 
C)  not affect the Retained Earnings balance. 
D)  increase the Retained Earnings balance. 
A)  decrease the Retained Earnings balance. 
B)  most likely either increase or decrease the Retained Earnings balance. 
C)  not affect the Retained Earnings balance. 
D)  increase the Retained Earnings balance.

Question 15

Which of the following is an example of an accrual?

Accepted Answer

A)  The purchase of office supplies 
B)  Wages expense incurred but not yet paid 
C)  Tuition revenue collected in advance 
D)  Payment of two years' insurance in advance 
A)  The purchase of office supplies 
B)  Wages expense incurred but not yet paid 
C)  Tuition revenue collected in advance 
D)  Payment of two years' insurance in advance

Question 16

After all closing entries have been posted,which of the following accounts is most likely to have a nonzero balance?

Accepted Answer

A)  Income Summary 
B)  Utilities Payable 
C)  Rent Expense 
D)  Service Revenue 
A)  Income Summary 
B)  Utilities Payable 
C)  Rent Expense 
D)  Service Revenue

Question 17

Which of the following is not an application of accrual accounting?

Accepted Answer

A)  Recognizing revenues when earned and expenses when incurred 
B)  Applying the matching rule 
C)  Adjusting the accounts 
D)  Recording on the basis of actual receipt and payment of cash 
A)  Recognizing revenues when earned and expenses when incurred 
B)  Applying the matching rule 
C)  Adjusting the accounts 
D)  Recording on the basis of actual receipt and payment of cash

Question 18

Which of the following transactions results in an increase in expenses?

Accepted Answer

A)  Cash payment on accounts payable 
B)  Receive a bill for the usage of utilities 
C)  Repayment of principal of bank loan 
D)  Purchase of machinery on credit 
A)  Cash payment on accounts payable 
B)  Receive a bill for the usage of utilities 
C)  Repayment of principal of bank loan 
D)  Purchase of machinery on credit

Question 19

Susan Kane won the mayoral election in the City of Ashley partly on the basis of her charge that Allen Ross,the former mayor,was responsible for the budget deficit.After taking office,she hired a major international accounting firm to straighten things out.This excerpt appeared in an article from a leading business publication,West End Business Review:
[A riddle]
Q: When is a budget deficit not a deficit?
A: When it is a surplus,of course.

Ashley Mayor Susan Kane was once again caught with egg on her face last week as she and her financial advisers tried to defend that riddle.On one hand,Comptroller Jim Guan [a Kane appointee],explaining $75 million in assets the mayor [Kane] hopes to hold in reserve in the 2013 Ashley city budget,testified in hearings that the city had actually ended 2011 with a $6 million surplus,not the much-reported deficit.He said further that the modest surplus grew to $54 million as a result of tax-enrichment supplements to the 2011 balance sheet.

On the other hand,the mayor stuck by the same guns she used last year on her predecessor.The city had ended 2011,under the Allen Ross administration,not merely without a surplus,but with a deficit.The apparent discrepancy can be explained.

Like most U.S.cities,Ashley operates under a modified accrual accounting basis.This is a combination of the cash basis and the accrual basis.The modified accrual basis differs from the accrual basis in that revenue is recorded when it is collected.The collection of Ashley's parking tax,which is assessed on all city parking lots and garages,is an example.

The tax is assessed and collected on a quarterly basis but the city doesn't collect the amount due for the last quarter of 2012 until the first quarter of 2013.Under ideal accrual methods,the parking revenues should be recorded in the 2012 financial statements.Under a cash approach,the revenues would be recorded in the 2013 budget.What the city did before was to record the money whenever it was advantageous politically.That,combined with the infamous revolving funds,allowed the city to hide the fact that it was running large deficits under [former] Mayor Ross.That also means that no one really knew where the city stood.
The auditors are now reallocating the parking revenues to the 2013 budget but are accruing other revenues by shifting the period of collection from a year in the past.Overall,more revenues were moved into earlier fiscal years than into later years,inflating those budgets.Thus,the 2013 deficit is a surplus.
The article concluded:
The upshot is that both Mayor Kane and Mr.Guan [the comptroller] were correct.There was a deficit in the 2011 corporate or checkbook fund,but because of corrections taking place now,a surplus exists.
a.Do you agree with the way the auditors handled parking revenues? Support your answer by explaining which method of accounting you think a city should use.
b.Comment on the statement,"Systematically applied accounting principles will allow all to know exactly where the city stands."

Accepted Answer

a.The question to be resolved is whether

Question 20

Use this adjusted trial balance to answer the following question.   The entry to close the expense accounts includes a

Accepted Answer

A)  debit to Retained Earnings for $4,000. 
B)  debit to Income Summary for $20,000. 
C)  debit to Insurance Expense for $4,000. 
D)  credit to Retained Earnings for $40,000. 
A)  debit to Retained Earnings for $4,000. 
B)  debit to Income Summary for $20,000. 
C)  debit to Insurance Expense for $4,000. 
D)  credit to Retained Earnings for $40,000.

Which of the following assets is not subject to depreciation?

Which of the following is an example of an accrual?

Wages Payable were $700 at the end of October and $560 at the end of November.Wages Expense for November was $3,600.How much cash was paid for wages during November?

Formal closing entries ultimately will affect

Accumulated depreciation is classified as a(n)

Accounts Receivable was $750 at the end of November and $525 at the end of December.Revenue totaled $4,775 for December.How much cash was received from revenues during December?

Office Supplies were $1,800 at the end of January and $2,280 at the end of February.During February,Office Supplies Expense equaled $840.How much cash was paid for office supplies during February?

The four conditions that must exist,according to the SEC,before revenue should be recognized include all of the following except

Match each definition with the correct term below. -Expenses

In order to make comparison easier,financial statement time periods should

Which of the following is not a permanent account?

Which of the following accounts would most likely be found on both a trial balance and an adjusted trial balance?

When a credit sale takes place,

Closing entries will

Which of the following is an example of an accrual?

After all closing entries have been posted,which of the following accounts is most likely to have a nonzero balance?

Which of the following is not an application of accrual accounting?

Which of the following transactions results in an increase in expenses?

Use this adjusted trial balance to answer the following question. The entry to close the expense accounts includes a

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 3: Measuring Business Income

Which of the following assets is not subject to depreciation?

Which of the following is an example of an accrual?

Wages Payable were $700 at the end of October and $560 at the end of November.Wages Expense for November was $3,600.How much cash was paid for wages during November?

Formal closing entries ultimately will affect

Accumulated depreciation is classified as a(n)

Accounts Receivable was $750 at the end of November and $525 at the end of December.Revenue totaled $4,775 for December.How much cash was received from revenues during December?

Office Supplies were $1,800 at the end of January and $2,280 at the end of February.During February,Office Supplies Expense equaled $840.How much cash was paid for office supplies during February?

The four conditions that must exist,according to the SEC,before revenue should be recognized include all of the following except

Match each definition with the correct term below. -Expenses

In order to make comparison easier,financial statement time periods should

Which of the following is not a permanent account?

Which of the following accounts would most likely be found on both a trial balance and an adjusted trial balance?

When a credit sale takes place,

Closing entries will

Which of the following is an example of an accrual?

After all closing entries have been posted,which of the following accounts is most likely to have a nonzero balance?

Which of the following is not an application of accrual accounting?

Which of the following transactions results in an increase in expenses?

Use this adjusted trial balance to answer the following question. The entry to close the expense accounts includes a

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters