Question 1

All financial statements are prepared using the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 2

Expense accounts are closed or zeroed out in the closing process.

Accepted Answer

A) True 
 B)False

Question 3

A company that forgets to recognize depreciation for the year overstates its income and assets.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following adjusting entries involves the Cash account?

Accepted Answer

A) Deferred revenue 
B) Accrued asset 
C) Deferred liability 
D) None of these are correct 
A) Deferred revenue 
B) Accrued asset 
C) Deferred liability 
D) None of these are correct

Question 5

Income statement accounts are also known as which of the following?

Accepted Answer

A) Nominal accounts 
B) Real accounts 
C) Closing accounts 
D) Final accounts 
A) Nominal accounts 
B) Real accounts 
C) Closing accounts 
D) Final accounts

Question 6

Alexander City Consultants started business on January 1,2017,and immediately purchased $1,000 of supplies on credit to use in the business.At the end of the month,25% of the supplies remain unpaid and 20% are still on hand.What amounts should appear on the financial statements for January 2017?$\begin{array}{l}
\text { Income Statement }&\text { Statement of Cash Flows }
\end{array}$
a.
$\begin{array}{cc}
&&&\$1,000&&&&&&\$1,000
\end{array}$

b.
$\begin{array}{cc}
&&&\$1,000&&&&&&\$750
\end{array}$

c.
$\begin{array}{cc}
&&&\$800&&&&&&&\$25
\end{array}$

d.
$\begin{array}{cc}
&&&\$800&&&&&&&\$750
\end{array}$

Accepted Answer

The answer of Alexander City Consultants started business on January...

Question 7

On October 31,Michael Corporation signed a one-year contract to provide services to Love Company for $80,000 throughout the next year.Love will pay for the services on November 1.Using the accrual basis of accounting,when should Michael Corporation recognize revenue?

Accepted Answer

A) November 1 of the current year when the cash is received from Love 
B) On October 31 of the next year when all services have been provided 
C) Throughout the year as the revenue is earned 
D) At December 31 of the current year and October 31 of the next year 
A) November 1 of the current year when the cash is received from Love 
B) On October 31 of the next year when all services have been provided 
C) Throughout the year as the revenue is earned 
D) At December 31 of the current year and October 31 of the next year

Question 8

Calzone,Inc.signs a 9%,four-month,$50,000 loan with Reliable Bank on October 1,2017.Determine the effects on the accounting equation for the following items:
 A. The signing of the loan on October 1,2017 , by Calzone, Inc.
B. The recording of the interest on December 31,2017 , by Calzone, Inc.

Accepted Answer

The answer of Calzone,Inc.signs a 9%,four-month,$50,000 loan with Reliable Bank...

Question 9

Scenic View Foods Corporation
The following consolidated statements of income are for Scenic View Foods Corporation for the years ending December 31,2017 and 2018:
  
-Refer to the consolidated statements of income for Scenic View Foods Corporation.
​Required
Identify three specific accounts of Scenic View Foods that might include expenses accrued as a result of adjustments.Discuss the "effects" of these on the accounting equation.Ignore amounts.

Accepted Answer

The accounts are Wages Expense,Interest

Question 10

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

Accepted Answer

A) True 
 B)False

Question 11

The following unadjusted amounts were taken from Ruben Gifts' accounting records at December 31,2017:
?
 $\begin{array}{lr}
\text { Rent Collected in Advance } & \$ 1,000 \
\text { Office Supplies } & 740
\end{array}$
 ?
 A. Determine the effects on the accounting equation of any adjusting entries necessary for Ruben Gifts at December 31,2017, for both of the following transactions:

1. During December 2017, Ruben Gifts had received payments from tenants that were renting storage space in its warehouse. The payments received by Ruben Gifts were for the period December 2017 and January 2018.

2. At the end of the year, Ruben Gifts determined that $\$ 240$ of office supplies remained on hand. ?
   B.$\text {  What is the effect of omitting these adjustments on the current year's net income? }$

Accepted Answer

A.
(1)
(2)
 @#IMG-DLM& ?
 @#IMG-DLM& B. Revenue would be und

Question 12

When revenue is earned before the receipt of cash,an adjustment that increases a receivable and decreases a liability account is recorded.

Accepted Answer

A) True 
 B)False

Question 13

Assuming the use of a work sheet,are the formal adjusting entries recorded and posted to the accounts before or after the financial statements are prepared? Explain your answer.Would your answer change if a work sheet was not prepared? Explain.

Accepted Answer

When a work sheet is used,the formal adj

Question 14

Jenning Co.
Jenning Co.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
 $\begin{array}{lr}
&\text { Debit }&\text {Credit }\
\text { Cash } & \$ 12,920 \
\text { Accounts Receivable } & 9,620 \
\text { Supplies } & 1,400 \
\text { Prepaid Insurance } & 3,120 \
\text { Equipment } & 26,000\
\text { Accumulated Depreciation-Equipment } && \$ 10,400 \
\text { Unearned Service Revenue } && 6,500 \
\text { Capital Stock } && 7,190 \
\text { Retained Earnings } && 23,500\
\text { Dividends } & 1,560 \
\text { Service Revenue } &&16,510 \
\text { Wages and Salaries Expense } & 7,800 \
\text { Utilities Expense } & 380 \
\text { Rent Expense } & \underline{1,300} \
&  \underline{\$ 64,100}& \underline{\$64,000} \
\end{array}$
-Refer to the trial balance of Jenning Co. On July 1,Jenning paid four months in advance for an insurance.Assume that the balance in the Prepaid Insurance account includes only this payment.Which of the following is included in the adjusting entry at July 31?

Accepted Answer

A) A debit to Prepaid Insurance for $780 
B) A credit to Prepaid Insurance for $2,340 
C) A debit to Prepaid Insurance for $2,340 
D) A credit to Prepaid Insurance for $780 
A) A debit to Prepaid Insurance for $780 
B) A credit to Prepaid Insurance for $2,340 
C) A debit to Prepaid Insurance for $2,340 
D) A credit to Prepaid Insurance for $780

Question 15

Which of the following statements is true concerning assets?

Accepted Answer

A) Assets represent future economic sacrifices. 
B) Assets are expired costs. 
C) Assets become expenses at the time they are paid in cash. 
D) Assets become expenses when their economic benefits expire. 
A) Assets represent future economic sacrifices. 
B) Assets are expired costs. 
C) Assets become expenses at the time they are paid in cash. 
D) Assets become expenses when their economic benefits expire.

Question 16

Which one of the following is the last step in the accounting cycle?

Accepted Answer

A) Journalizing business transactions 
B) Recording and posting adjustments 
C) Closing the accounts 
D) Preparing financial statements 
A) Journalizing business transactions 
B) Recording and posting adjustments 
C) Closing the accounts 
D) Preparing financial statements

Question 17

Agle Company purchased a dump truck at a cost of $48,000 on January 1,2016.The truck has an estimated useful life of six years and a $6,000 estimated residual value.Show how the truck and any related amounts would appear on the December 31,2017,balance sheet immediately after the adjustments are recorded and posted.

Accepted Answer

Accumulated depreciation @#LAT-DLM& year

Question 18

According to the revenue recognition principle,revenues are recognized when they are __________________ and __________________.

Accepted Answer

The answer of According to the revenue recognition principle,revenues are...

Question 19

Davis Corp.has three employees.Each earns $600 per week for a five-day workweek 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 Wages Expense for $360 and debit Wages Payable for $360 
B) Debit Wages Expense for $1,800 and credit Wages Payable for $1,800 
C) Credit Wages Expense for $1,800 and debit Wages Payable for $1,800 
D) Debit Wages Expense for $360 and credit Wages Payable for $360 
A) Credit Wages Expense for $360 and debit Wages Payable for $360 
B) Debit Wages Expense for $1,800 and credit Wages Payable for $1,800 
C) Credit Wages Expense for $1,800 and debit Wages Payable for $1,800 
D) Debit Wages Expense for $360 and credit Wages Payable for $360

Question 20

Malco Tile Shop purchased insurance coverage for two years on July 1,2017,for its retail shop for $3,600.Malco recorded the prepayment as an asset.Malco prepares its adjusting entries at year-end December 31.
?
 A. What is the effect on the accounting equation of the adjusting journal entry necessary at December 31,2017? ?
   B. How much will be reported on the balance sheet at December 31,2017 , for prepaid insurance?

C. How much will be reported on the income statement for the year ended December 31,2017, for insurance expense?

D. If the adjustment in part $A$ is not recorded, by what amount will net income be over or understated at December 31,2017 ?

E. How much will be reported on the statement of cash flows for the year ended December 31,2017? In which activity (operating investing financing)?

F. What adjusting joumal entry is necessary at December 31,2017 ?

G. How much will be reported on the balance sheet at December 31,2017 for prepaid insurance?

H. How much will be reported on the income statement for the year ended December 31,2017, for insurance expense?

I. How much will be reported on the statement of cash flows for the year ended December 31,2017? In which activity (operating investing, financing)?

Accepted Answer

A.
?
 @#IMG-DLM& B. Prepaid Insurance @#LAT-DLM&

C. Insuran

All financial statements are prepared using the accrual basis of accounting.

Expense accounts are closed or zeroed out in the closing process.

A company that forgets to recognize depreciation for the year overstates its income and assets.

Which of the following adjusting entries involves the Cash account?

Income statement accounts are also known as which of the following?

On October 31,Michael Corporation signed a one-year contract to provide services to Love Company for $80,000 throughout the next year.Love will pay for the services on November 1.Using the accrual basis of accounting,when should Michael Corporation recognize revenue?

Calzone,Inc.signs a 9%,four-month,$50,000 loan with Reliable Bank on October 1,2017.Determine the effects on the accounting equation for the following items: A. The signing of the loan on October 1,2017 , by Calzone, Inc. B. The recording of the interest on December 31,2017 , by Calzone, Inc.

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

When revenue is earned before the receipt of cash,an adjustment that increases a receivable and decreases a liability account is recorded.

Assuming the use of a work sheet,are the formal adjusting entries recorded and posted to the accounts before or after the financial statements are prepared? Explain your answer.Would your answer change if a work sheet was not prepared? Explain.

Which of the following statements is true concerning assets?

Which one of the following is the last step in the accounting cycle?

According to the revenue recognition principle,revenues are recognized when they are and .

Davis Corp.has three employees.Each earns $600 per week for a five-day workweek 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?

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 Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 4: Income Measurement and Accrual Accounting

All financial statements are prepared using the accrual basis of accounting.

Expense accounts are closed or zeroed out in the closing process.

A company that forgets to recognize depreciation for the year overstates its income and assets.

Which of the following adjusting entries involves the Cash account?

Income statement accounts are also known as which of the following?

On October 31,Michael Corporation signed a one-year contract to provide services to Love Company for $80,000 throughout the next year.Love will pay for the services on November 1.Using the accrual basis of accounting,when should Michael Corporation recognize revenue?

Calzone,Inc.signs a 9%,four-month,$50,000 loan with Reliable Bank on October 1,2017.Determine the effects on the accounting equation for the following items: A. The signing of the loan on October 1,2017 , by Calzone, Inc. B. The recording of the interest on December 31,2017 , by Calzone, Inc.

The accounting profession is currently experimenting with financial statements adjusted for the changing value of the dollar since inflation is increasing.

When revenue is earned before the receipt of cash,an adjustment that increases a receivable and decreases a liability account is recorded.

Assuming the use of a work sheet,are the formal adjusting entries recorded and posted to the accounts before or after the financial statements are prepared? Explain your answer.Would your answer change if a work sheet was not prepared? Explain.

Which of the following statements is true concerning assets?

Which one of the following is the last step in the accounting cycle?

According to the revenue recognition principle,revenues are recognized when they are __________________ and __________________.

Davis Corp.has three employees.Each earns $600 per week for a five-day workweek 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?

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 Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

According to the revenue recognition principle,revenues are recognized when they are and .