Question 1

When cash is paid to suppliers on 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 2

The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A) A gain on the sale of land 
B) A decrease in accounts payable 
C) An increase in accrued liabilities 
D) Dividends paid on common stock 
A) A gain on the sale of land 
B) A decrease in accounts payable 
C) An increase in accrued liabilities 
D) Dividends paid on common stock

Question 4

The unearned rent account has a balance of $50,000.If $3,000 of the $50,000 is unearned at the end of the accounting period,the amount of the adjusting entry is

Accepted Answer

A) $47,000. 
B) $53,000. 
C) $50,000. 
D) $3,000. 
A) $47,000. 
B) $53,000. 
C) $50,000. 
D) $3,000.

Question 5

The financial statements are affected by which type(s)of adjustments?

Accepted Answer

A) Deferrals 
B) Accruals 
C) Both deferrals and accruals 
D) Neither deferrals nor accruals 
A) Deferrals 
B) Accruals 
C) Both deferrals and accruals 
D) Neither deferrals nor accruals

Question 6

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A) An increase in inventory 
B) A decrease in accounts payable 
C) Preferred dividends declared and paid 
D) A decrease in accounts receivable 
A) An increase in inventory 
B) A decrease in accounts payable 
C) Preferred dividends declared and paid 
D) A decrease in accounts receivable

Question 7

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 8

Updating accrual accounting records prior to preparing financial statements is called

Accepted Answer

A) the closing process. 
B) converting to cash basis accounting. 
C) the adjustment process. 
D) going concern adjustments. 
A) the closing process. 
B) converting to cash basis accounting. 
C) the adjustment process. 
D) going concern adjustments.

Question 9

Expenses on the income statement are assets used up or services consumed in the process of generating revenues.

Accepted Answer

A) True 
 B)False

Question 10

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT reported as revenue on the income statement?

Accepted Answer

A) Unearned revenue 
B) Fees revenue 
C) Commissions revenue 
D) Rent revenue 
A) Unearned revenue 
B) Fees revenue 
C) Commissions revenue 
D) Rent revenue

Question 12

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 13

Receiving cash in advance of performing a service creates a liability for the company.

Accepted Answer

A) True 
 B)False

Question 14

Accounts receivable arising from trade transactions amounted to $50,000 and $56,000 at the beginning and end of the year,respectively.Net income reported on the income statement for the year was $105,000.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) $105,000. 
B) $111,000. 
C) $99,000. 
D) $156,000. 
A) $105,000. 
B) $111,000. 
C) $99,000. 
D) $156,000.

Question 15

A&M Co.provided services of $1,000,000 to clients on account.How does this transaction affect A&M's accounts?

Accepted Answer

A) Increase accounts receivable and cash by $1,000,000 each 
B) Increase accounts receivable and revenues by $1,000,000 each 
C) Increase accounts receivable and unearned revenues by $1,000,000 each 
D) Increase cash and decrease accounts receivable by $1,000,000 each 
A) Increase accounts receivable and cash by $1,000,000 each 
B) Increase accounts receivable and revenues by $1,000,000 each 
C) Increase accounts receivable and unearned revenues by $1,000,000 each 
D) Increase cash and decrease accounts receivable by $1,000,000 each

Question 16

When are sales recognized under the cash basis of accounting? When are expenses recognized?

Accepted Answer

Under the cash basis of accounting,the o

Question 17

St.Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800.There were $400 of supplies on hand at year-end.The year-end adjustment would include an increase in Toy-Making Supplies Expense for

Accepted Answer

A) $1,000. 
B) $800. 
C) $600. 
D) $400. 
A) $1,000. 
B) $800. 
C) $600. 
D) $400.

Question 18

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Accepted Answer

A) True 
 B)False

Question 19

Under the cash basis of accounting,no adjustments are necessary prior to the preparation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 20

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

When cash is paid to suppliers on account,which section of the Statement of Cash Flows is affected?

The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle.

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

The unearned rent account has a balance of $50,000.If $3,000 of the $50,000 is unearned at the end of the accounting period,the amount of the adjusting entry is

The financial statements are affected by which type(s)of adjustments?

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

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?

Updating accrual accounting records prior to preparing financial statements is called

Expenses on the income statement are assets used up or services consumed in the process of generating revenues.

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Which of the following is NOT reported as revenue on the income statement?

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

Receiving cash in advance of performing a service creates a liability for the company.

A&M Co.provided services of $1,000,000 to clients on account.How does this transaction affect A&M's accounts?

When are sales recognized under the cash basis of accounting? When are expenses recognized?

St.Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800.There were $400 of supplies on hand at year-end.The year-end adjustment would include an increase in Toy-Making Supplies Expense for

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Under the cash basis of accounting,no adjustments are necessary prior to the preparation of the financial statements.

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

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

When cash is paid to suppliers on account,which section of the Statement of Cash Flows is affected?

The process that begins with the analysis of transactions and ends with preparing the accounting records for the next accounting period is called the accounting cycle.

Which one of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

The unearned rent account has a balance of $50,000.If $3,000 of the $50,000 is unearned at the end of the accounting period,the amount of the adjusting entry is

The financial statements are affected by which type(s)of adjustments?

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

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?

Updating accrual accounting records prior to preparing financial statements is called

Expenses on the income statement are assets used up or services consumed in the process of generating revenues.

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Which of the following is NOT reported as revenue on the income statement?

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

Receiving cash in advance of performing a service creates a liability for the company.

A&M Co.provided services of $1,000,000 to clients on account.How does this transaction affect A&M's accounts?

When are sales recognized under the cash basis of accounting? When are expenses recognized?

St.Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800.There were $400 of supplies on hand at year-end.The year-end adjustment would include an increase in Toy-Making Supplies Expense for

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Under the cash basis of accounting,no adjustments are necessary prior to the preparation of the financial statements.

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

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