Question 1

Which of the following statements about a company's operating cycle is not true:

Accepted Answer

A)  Non-current items are those expected to come due within one year or the company's operating cycle. 
B)  The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services. 
C)  The length of a company's operating cycle depends on its activities. 
D)  For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers. 
E)  Most operating cycles are less than one year. 
A)  Non-current items are those expected to come due within one year or the company's operating cycle. 
B)  The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services. 
C)  The length of a company's operating cycle depends on its activities. 
D)  For a merchandiser selling products, the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers. 
E)  Most operating cycles are less than one year.

Question 2

Which of the following accounts could not be classified as a current liability?

Accepted Answer

A)  Unearned revenues. 
B)  Accounts payable. 
C)  Notes payable (due in 11 months). 
D)  Current portion of long-term note payable. 
E)  Notes payable (due in 5 years). 
A)  Unearned revenues. 
B)  Accounts payable. 
C)  Notes payable (due in 11 months). 
D)  Current portion of long-term note payable. 
E)  Notes payable (due in 5 years).

Question 3

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Accepted Answer

A) True 
 B)False

Question 4

The unadjusted trial balance and the adjustment data for Porter Business Institute are shown below along with adjusting entry information.What is the impact of the adjusting entries on the balance sheet? Show the calculation for total assets,total liabilities,and equity without the adjustments; show the calculation for total assets,total liabilities,and equity with the adjustments.Which one provides the most accurate presentation of the balance sheet?   
Additional information items:
a.The Prepaid Insurance account consists of a payment for a 1 year policy.An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.
b.A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent.
c.Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

Accepted Answer

@#LAT-DLM& (58,000 + 59,000+12,000+8,000-2,000+57,

Question 5

A ________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

Accepted Answer

The answer of A ________ account is an account linked...

Question 6

If Regent Tax Services' office supplies account balance on March 1 was $1,400,the company purchased $675 of supplies during the month,and a physical count of supplies on hand at the end of March indicated $1,250 unused,what is the amount of the adjusting entry for office supplies on March 31?

Accepted Answer

A)  $675 
B)  $825 
C)  $1,250 
D)  $1,975 
E)  $525 
A)  $675 
B)  $825 
C)  $1,250 
D)  $1,975 
E)  $525

Question 7

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

Accepted Answer

A)  debit Interest Payable, $2,000; credit Interest Expense, $2,000. 
B)  debit Interest Expense, $2,000; credit Interest Payable, $2,000. 
C)  debit Interest Expense, $2,000; credit Cash, $2,000. 
D)  debit Interest Expense, $4,000; credit Interest Payable, $4,000. 
E)  debit Interest Expense, $24,000; credit Interest Payable, $24,000. 
A)  debit Interest Payable, $2,000; credit Interest Expense, $2,000. 
B)  debit Interest Expense, $2,000; credit Interest Payable, $2,000. 
C)  debit Interest Expense, $2,000; credit Cash, $2,000. 
D)  debit Interest Expense, $4,000; credit Interest Payable, $4,000. 
E)  debit Interest Expense, $24,000; credit Interest Payable, $24,000.

Question 8

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday.If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday,the month-end adjusting entry to record the salaries earned but unpaid is:

Accepted Answer

A)  Debit Unpaid Salaries $600 and credit Salaries Payable $600. 
B)  Debit Salaries Expense $400 and credit Salaries Payable $400. 
C)  Debit Salaries Expense $600 and credit Salaries Payable $600. 
D)  Debit Salaries Payable $400 and credit Salaries Expense $400. 
E)  Debit Salaries Expense $400 and credit Cash $400. 
A)  Debit Unpaid Salaries $600 and credit Salaries Payable $600. 
B)  Debit Salaries Expense $400 and credit Salaries Payable $400. 
C)  Debit Salaries Expense $600 and credit Salaries Payable $600. 
D)  Debit Salaries Payable $400 and credit Salaries Expense $400. 
E)  Debit Salaries Expense $400 and credit Cash $400.

Question 9

The balances in the unadjusted columns of a work sheet will agree with:

Accepted Answer

A)  the balances reflected in the company's financial statements. 
B)  the balances reflected in the company's unadjusted trial balance. 
C)  whatever balances management has decided to report. 
D)  the balances in the company's post-closing trial balance. 
E)  the balances management budgeted for the accounting period. 
A)  the balances reflected in the company's financial statements. 
B)  the balances reflected in the company's unadjusted trial balance. 
C)  whatever balances management has decided to report. 
D)  the balances in the company's post-closing trial balance. 
E)  the balances management budgeted for the accounting period.

Question 10

A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Glisten Co.leases an office to a tenant at the rate of $3,000 per month.The tenant contacted Glisten and arranged to pay the rent for December on January 8 of the following year.Glisten agrees to this arrangement.
a.)Prepare the journal entry that Glisten must make at year ended December 31 to record the accrued rent revenue.
b.)Prepare the journal entry to record the receipt of the rent on January 8 of the following year (Assume no reversing entries were made).

Accepted Answer

None

Question 12

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

Accepted Answer

A) True 
 B)False

Question 13

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

Accepted Answer

A) True 
 B)False

Question 14

The closing process is necessary in order to:

Accepted Answer

A)  Calculate net income or net loss for an accounting period. 
B)  Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C)  Ensure that the company complies with state laws. 
D)  Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E)  Ensure that management is aware of how well the company is operating. 
A)  Calculate net income or net loss for an accounting period. 
B)  Ensure that all permanent accounts are closed to zero at the end of each accounting period. 
C)  Ensure that the company complies with state laws. 
D)  Ensure that net income or net loss and dividends for the period are closed into the retained earnings account. 
E)  Ensure that management is aware of how well the company is operating.

Question 15

All of the following regarding the current ratio are true except:

Accepted Answer

A)  Current ratio is calculated by dividing current assets by current liabilities. 
B)  Current ratio helps to assess a company's ability to pay its debts in the near future. 
C)  Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit. 
D)  Current ratio can affect a creditor's decision about whether to lend money to a company. 
E)  Current ratio can reveal challenges in covering short-term obligations if it is less than 1. 
A)  Current ratio is calculated by dividing current assets by current liabilities. 
B)  Current ratio helps to assess a company's ability to pay its debts in the near future. 
C)  Current ratio does not affect a creditor's decision on whether to allow a company to buy on credit. 
D)  Current ratio can affect a creditor's decision about whether to lend money to a company. 
E)  Current ratio can reveal challenges in covering short-term obligations if it is less than 1.

Question 16

Use the information in the adjusted trial balance presented below to calculate the current ratio for Taron Company:
$\begin{array}{lrr}
\text {Account Title}&\text {Dr.}&\text {Cr} \
\text { Cash } & \$ 23,000 \
\text { Accounts receivable } & 16,000 \
\text { Prepaid insurance } & 6,600 \
\text { Equipment } & 100,000\
\text { Accumulated depreciation-Equipment } & & \$ 5,000 \
\text { Land } & 95,000 & \
\text { Accounts payable } & & 17,000 \
\text { Interest payable } & & 2,400 \
\text { Unearned revenue } & & 5,000 \
\text { Long-term notes payable } & & 30,000 \
\text { Retained earnings } & & 136,200 \
\text { Totals } & \$ 240,600 & \$ 240,600
\end{array}$

Accepted Answer

A)  1.87. 
B)  .54. 
C)  3.92. 
D)  1.77. 
E)  1.60. 
A)  1.87. 
B)  .54. 
C)  3.92. 
D)  1.77. 
E)  1.60.

Question 17

Which of the following statements regarding reporting under GAAP and IFRS is not true:

Accepted Answer

A)  Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
B)  The definition of an asset under GAAP and IFRS involves three basic criteria. 
C)  Both GAAP and IFRS define the initial asset value as replacement value. 
D)  The definition of a liability under GAAP and IFRS involves three basic criteria. 
E)  After acquisition, one of two asset measurement systems is applied. 
A)  Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets. 
B)  The definition of an asset under GAAP and IFRS involves three basic criteria. 
C)  Both GAAP and IFRS define the initial asset value as replacement value. 
D)  The definition of a liability under GAAP and IFRS involves three basic criteria. 
E)  After acquisition, one of two asset measurement systems is applied.

Question 18

The Retained earnings account has a credit balance of $37,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000,what is the ending balance in the Retained earnings account after all closing entries are made?

Accepted Answer

A)  $37,000. 
B)  $35,400. 
C)  $43,400. 
D)  $28,000. 
E)  $52,400. 
A)  $37,000. 
B)  $35,400. 
C)  $43,400. 
D)  $28,000. 
E)  $52,400.

Question 19

An adjusting entry could be made for each of the following except:

Accepted Answer

A)  Prepaid expenses. 
B)  Depreciation. 
C)  Stockholder investments. 
D)  Unearned revenues. 
E)  Accrued expenses. 
A)  Prepaid expenses. 
B)  Depreciation. 
C)  Stockholder investments. 
D)  Unearned revenues. 
E)  Accrued expenses.

Question 20

Rogers Company's employees are paid a total of $1,600 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Rogers Company should make to accrue salaries.

Accepted Answer

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Which of the following statements about a company's operating cycle is not true:

Which of the following accounts could not be classified as a current liability?

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

A ________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

If Regent Tax Services' office supplies account balance on March 1 was $1,400,the company purchased $675 of supplies during the month,and a physical count of supplies on hand at the end of March indicated $1,250 unused,what is the amount of the adjusting entry for office supplies on March 31?

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

The balances in the unadjusted columns of a work sheet will agree with:

A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements.

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

The closing process is necessary in order to:

All of the following regarding the current ratio are true except:

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The Retained earnings account has a credit balance of $37,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000,what is the ending balance in the Retained earnings account after all closing entries are made?

An adjusting entry could be made for each of the following except:

Rogers Company's employees are paid a total of $1,600 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Rogers Company should make to accrue salaries.

Accounting in Business

Analyzing for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

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Exam 3: Adjusting Accounts for Financial Statements

Which of the following statements about a company's operating cycle is not true:

Which of the following accounts could not be classified as a current liability?

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

A ________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

If Regent Tax Services' office supplies account balance on March 1 was $1,400,the company purchased $675 of supplies during the month,and a physical count of supplies on hand at the end of March indicated $1,250 unused,what is the amount of the adjusting entry for office supplies on March 31?

On December 1,Milton Company borrowed $300,000,at 8% annual interest,from the Tennessee National Bank.Interest is paid when the loan matures one year from the issue date.What is the adjusting entry for accruing interest that Milton would need to make on December 31,the calendar year-end?

The balances in the unadjusted columns of a work sheet will agree with:

A work sheet contains all of the balances for each account and therefore may be used as a substitute for the set of financial statements.

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

Revenue accounts are temporary accounts that should begin each accounting period with zero balances.

The closing process is necessary in order to:

All of the following regarding the current ratio are true except:

Which of the following statements regarding reporting under GAAP and IFRS is not true:

The Retained earnings account has a credit balance of $37,000 before closing entries are made.If total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000,what is the ending balance in the Retained earnings account after all closing entries are made?

An adjusting entry could be made for each of the following except:

Rogers Company's employees are paid a total of $1,600 per day for a 5-day workweek.The employees are paid each Friday.This year the accounting period ends on Tuesday.Prepare the December 31 year-end adjusting journal entry Rogers Company should make to accrue salaries.

Accounting in Business

Analyzing for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters