Question 1

A deferral is the recognition of an expense that has arisen but has not yet been recorded.

Accepted Answer

A) True 
 B)False

Question 2

The adjustment for estimated property taxes would include a

Accepted Answer

A)  credit to Property Taxes Payable. 
B)  debit to Unearned Property Taxes. 
C)  credit to Property Taxes Expense. 
D)  credit to Cash. 
A)  credit to Property Taxes Payable. 
B)  debit to Unearned Property Taxes. 
C)  credit to Property Taxes Expense. 
D)  credit to Cash.

Question 3

Which of the following accounts would appear on an adjusted trial balance but probably would not appear on a trial balance?

Accepted Answer

A)  Supplies Expense 
B)  Accounts Payable 
C)  Service Revenue 
D)  Cash 
A)  Supplies Expense 
B)  Accounts Payable 
C)  Service Revenue 
D)  Cash

Question 4

Which of the following is an application of accrual accounting?

Accepted Answer

A)  Depreciating a building as quickly as allowed by income tax regulations 
B)  Recording utilities expense in the accounting period covered by the monthly bill 
C)  Expensing a machine in its entirety when purchased 
D)  Recording revenue at the time payment is received 
A)  Depreciating a building as quickly as allowed by income tax regulations 
B)  Recording utilities expense in the accounting period covered by the monthly bill 
C)  Expensing a machine in its entirety when purchased 
D)  Recording revenue at the time payment is received

Question 5

Failure to adjust for accrued wages at year end will result in an

Accepted Answer

A)  overstatement of liabilities. 
B)  understatement of assets. 
C)  understatement of owner's equity. 
D)  overstatement of net income. 
A)  overstatement of liabilities. 
B)  understatement of assets. 
C)  understatement of owner's equity. 
D)  overstatement of net income.

Question 6

Recording incurred but unpaid expenses is an example of an accrual.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of a deferral?

Accepted Answer

A)  Debit Interest Expense, credit Interest Payable 
B)  Debit Accounts Receivable, credit Legal Fees Earned 
C)  Debit Property Taxes Expense, credit Property Taxes Payable 
D)  Debit Depreciation Expense-Truck, credit Accumulated Depreciation-Truck 
A)  Debit Interest Expense, credit Interest Payable 
B)  Debit Accounts Receivable, credit Legal Fees Earned 
C)  Debit Property Taxes Expense, credit Property Taxes Payable 
D)  Debit Depreciation Expense-Truck, credit Accumulated Depreciation-Truck

Question 8

When preparing financial statements, the accountant assumes that the business will continue to operate indefinitely unless there is evidence to the contrary.

Accepted Answer

A) True 
 B)False

Question 9

One application of accrual accounting is adjusting the accounts.

Accepted Answer

A) True 
 B)False

Question 10

Accrual accounting recognizes revenues and expenses at the point that cash changes hands.

Accepted Answer

A) True 
 B)False

Question 11

Retailers often end their fiscal years .

Accepted Answer

A)  during the slack season 
B)  during the peak of the busy season. 
C)  at different times each year, depending on the tax consequences. 
D)  on June 30. 
A)  during the slack season 
B)  during the peak of the busy season. 
C)  at different times each year, depending on the tax consequences. 
D)  on June 30.

Question 12

Use this information to answer the following question. The trial balance for Sanchez Company appears as follows:
  If on December 31, 2010, the insurance still unexpired amounted to $20, the adjusting entry would contain a

Accepted Answer

A)  debit to Prepaid Insurance for $30. 
B)  credit to Prepaid Insurance for $30 
C)  debit to Insurance Expense for $20. 
D)  credit to Prepaid Insurance for $20. 
A)  debit to Prepaid Insurance for $30. 
B)  credit to Prepaid Insurance for $30 
C)  debit to Insurance Expense for $20. 
D)  credit to Prepaid Insurance for $20.

Question 13

If a company is expected to survive, it is considered a going concern.

Accepted Answer

A) True 
 B)False

Question 14

The cash basis of accounting is prohibited for income tax purposes.

Accepted Answer

A) True 
 B)False

Question 15

As the usefulness of a plant asset expires,

Accepted Answer

A)  an amount is transferred from one asset account to another. 
B)  a related expense account is reduced. 
C)  a liability is created. 
D)  the cost of the asset is allocated to an expense account. 
A)  an amount is transferred from one asset account to another. 
B)  a related expense account is reduced. 
C)  a liability is created. 
D)  the cost of the asset is allocated to an expense account.

Question 16

Which of the following is an example of a deferral?

Accepted Answer

A)  Wages recorded but not yet paid 
B)  The purchase of a company vehicle 
C)  Legal fees earned but not yet collected 
D)  The accumulation of interest in a bank account 
A)  Wages recorded but not yet paid 
B)  The purchase of a company vehicle 
C)  Legal fees earned but not yet collected 
D)  The accumulation of interest in a bank account

Question 17

The entry to record depreciation on a building is

Accepted Answer

A)  Accumulated Depreciation-Building - Debit; Building - Credit 
B)  Depreciation Expense-Building - Debit; Building - Credit 
C)  Depreciation Expense-Building - Debit; Cash - Credit 
D)  Depreciation Expense-Building - Debit; Accumulated Depreciation-Building - Credit 
A)  Accumulated Depreciation-Building - Debit; Building - Credit 
B)  Depreciation Expense-Building - Debit; Building - Credit 
C)  Depreciation Expense-Building - Debit; Cash - Credit 
D)  Depreciation Expense-Building - Debit; Accumulated Depreciation-Building - Credit

Question 18

Which of the following accounts most likely would 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 19

If an adjusting entry were not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account,

Accepted Answer

A)  assets would be understated. 
B)  owner's equity would be overstated. 
C)  liabilities would be understated. 
D)  liabilities would be overstated. 
A)  assets would be understated. 
B)  owner's equity would be overstated. 
C)  liabilities would be understated. 
D)  liabilities would be overstated.

Question 20

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

Accepted Answer

A)  Recording advertising fees earned at the time the work is done 
B)  Adjusting unearned advertising fees to the proper balance at the end of the month 
C)  Recording advertising fees earned at the time the cash payment is received 
D)  Recording telephone expense in the accounting period covered by the monthly bill 
A)  Recording advertising fees earned at the time the work is done 
B)  Adjusting unearned advertising fees to the proper balance at the end of the month 
C)  Recording advertising fees earned at the time the cash payment is received 
D)  Recording telephone expense in the accounting period covered by the monthly bill

Exam 3: Measuring Business Income

A deferral is the recognition of an expense that has arisen but has not yet been recorded.

The adjustment for estimated property taxes would include a

Which of the following accounts would appear on an adjusted trial balance but probably would not appear on a trial balance?

Which of the following is an application of accrual accounting?

Failure to adjust for accrued wages at year end will result in an

Recording incurred but unpaid expenses is an example of an accrual.

Which of the following is an example of a deferral?

When preparing financial statements, the accountant assumes that the business will continue to operate indefinitely unless there is evidence to the contrary.

One application of accrual accounting is adjusting the accounts.

Accrual accounting recognizes revenues and expenses at the point that cash changes hands.

Retailers often end their fiscal years .

Use this information to answer the following question. The trial balance for Sanchez Company appears as follows: If on December 31, 2010, the insurance still unexpired amounted to $20, the adjusting entry would contain a

If a company is expected to survive, it is considered a going concern.

The cash basis of accounting is prohibited for income tax purposes.

As the usefulness of a plant asset expires,

Which of the following is an example of a deferral?

The entry to record depreciation on a building is

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

If an adjusting entry were not made at the end of an accounting period to remove the earned revenue from the Unearned Revenue account,

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

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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