Question 1

Which of the following accounts is increased with a debit?

Accepted Answer

A) Insurance Expense 
B) Service Revenue 
C) Accounts Payable 
D) Common Stock 
A) Insurance Expense 
B) Service Revenue 
C) Accounts Payable 
D) Common Stock

Question 2

Generally accepted accounting principles require that a business's fiscal year must end on December 31.

Accepted Answer

A) True 
 B)False

Question 3

Many companies choose to end their fiscal years during a part of the year when they expect low activity.

Accepted Answer

A) True 
 B)False

Question 4

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies.
  
-Which of the following ratios would be most useful in evaluating a company's performance from the owners' perspective?

Accepted Answer

A) Return-on-assets ratio 
B) Debt-to-assets ratio 
C) Return-on-equity ratio 
D) Either the debt-to-assets ratio or the return-on-equity ratio 
A) Return-on-assets ratio 
B) Debt-to-assets ratio 
C) Return-on-equity ratio 
D) Either the debt-to-assets ratio or the return-on-equity ratio

Question 5

Which of the following accounts normally has a debit balance?

Accepted Answer

A) Prepaid Insurance 
B) Unearned Service Revenue 
C) Accounts Payable 
D) Common Stock 
A) Prepaid Insurance 
B) Unearned Service Revenue 
C) Accounts Payable 
D) Common Stock

Question 6

Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month.Which of the following journal entries correctly records this transaction?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 7

Closing entries move all current year data for revenues,expenses,and dividends into the retained earnings account.

Accepted Answer

A) True 
 B)False

Question 8

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies.
  
-Which company is the most profitable from the stockholders' perspective?

Accepted Answer

A) Grumpy 
B) Happy 
C) Doc 
D) Cannot be determined 
A) Grumpy 
B) Happy 
C) Doc 
D) Cannot be determined

Question 9

Which account is increased by a credit?

Accepted Answer

A) Accounts Receivable 
B) Service Revenue 
C) Interest Expense 
D) Supplies 
A) Accounts Receivable 
B) Service Revenue 
C) Interest Expense 
D) Supplies

Question 10

Wichita,Inc.reported the following amounts on its financial statements prepared as of the end of the current accounting period:
  
-What is the company's return-on-equity ratio?

Accepted Answer

A) 5% 
B) 10% 
C) 20% 
D) 50% 
A) 5% 
B) 10% 
C) 20% 
D) 50%

Question 11

On August 1,Year 1,Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year.Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

Journals are sometimes called books of original entry because transactions are recorded in journals before amounts are entered into the ledger.

Accepted Answer

A) True 
 B)False

Question 13

A liability account normally has a credit balance.

Accepted Answer

A) True 
 B)False

Question 14

A transaction has been recorded in the T-accounts of Vernon Company as follows:

Which of the following reflects how this event affects the company's financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 15

The T-account format is also called the chart of accounts.

Accepted Answer

A) True 
 B)False

Question 16

Peterson Corporation recorded an adjusting entry using T-accounts as follows:

Which of the following reflects how this adjustment affects the company's financial statements?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 17

Why are adjusting entries recorded at the end of the accounting period?

Accepted Answer

A) The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. 
B) The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. 
C) Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. 
D) The data from the temporary accounts (revenues,expenses,and dividends)must be moved into the retained earnings account. 
A) The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. 
B) The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. 
C) Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. 
D) The data from the temporary accounts (revenues,expenses,and dividends)must be moved into the retained earnings account.

Question 18

The Wagner Company acquired $500,000 cash from the issue of common stock.How would this transaction be recorded in the company's T-accounts?

Accepted Answer

A)   
  
B)   
  
C)   
  
D)   
  
A)   
  
B)   
  
C)   
  
D)

Question 19

On October 1,Year 1,Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200.On December 31,Year 1,the required adjusting entry was recorded.What are the adjusted account balances at December 31,Year 1?

Accepted Answer

A) Prepaid Rent,$300;Rent Expense,$900 
B) Prepaid Rent,$1,200;Rent Expense,$0 
C) Prepaid Rent,$0;Rent Expense,$1,200 
D) Prepaid Rent,$900;Rent Expense,$300 
A) Prepaid Rent,$300;Rent Expense,$900 
B) Prepaid Rent,$1,200;Rent Expense,$0 
C) Prepaid Rent,$0;Rent Expense,$1,200 
D) Prepaid Rent,$900;Rent Expense,$300

Question 20

When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

Accepted Answer

A) True 
 B)False

Which of the following accounts is increased with a debit?

Generally accepted accounting principles require that a business's fiscal year must end on December 31.

Many companies choose to end their fiscal years during a part of the year when they expect low activity.

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies. -Which of the following ratios would be most useful in evaluating a company's performance from the owners' perspective?

Which of the following accounts normally has a debit balance?

Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month.Which of the following journal entries correctly records this transaction?

Closing entries move all current year data for revenues,expenses,and dividends into the retained earnings account.

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies. -Which company is the most profitable from the stockholders' perspective?

Which account is increased by a credit?

Wichita,Inc.reported the following amounts on its financial statements prepared as of the end of the current accounting period: -What is the company's return-on-equity ratio?

On August 1,Year 1,Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year.Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned?

Journals are sometimes called books of original entry because transactions are recorded in journals before amounts are entered into the ledger.

A liability account normally has a credit balance.

A transaction has been recorded in the T-accounts of Vernon Company as follows: Which of the following reflects how this event affects the company's financial statements?

The T-account format is also called the chart of accounts.

Peterson Corporation recorded an adjusting entry using T-accounts as follows: Which of the following reflects how this adjustment affects the company's financial statements?

Why are adjusting entries recorded at the end of the accounting period?

The Wagner Company acquired $500,000 cash from the issue of common stock.How would this transaction be recorded in the company's T-accounts?

When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships,partnerships,and Corporations

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 3: The Double-Entry Accounting System

Which of the following accounts is increased with a debit?

Generally accepted accounting principles require that a business's fiscal year must end on December 31.

Many companies choose to end their fiscal years during a part of the year when they expect low activity.

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies. -Which of the following ratios would be most useful in evaluating a company's performance from the owners' perspective?

Which of the following accounts normally has a debit balance?

Kincaid Company provided consulting services of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month.Which of the following journal entries correctly records this transaction?

Closing entries move all current year data for revenues,expenses,and dividends into the retained earnings account.

At the end of Year 1,the following information is available for Grumpy,Happy,and Doc Companies. -Which company is the most profitable from the stockholders' perspective?

Which account is increased by a credit?

Wichita,Inc.reported the following amounts on its financial statements prepared as of the end of the current accounting period: -What is the company's return-on-equity ratio?

On August 1,Year 1,Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year.Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned?

Journals are sometimes called books of original entry because transactions are recorded in journals before amounts are entered into the ledger.

A liability account normally has a credit balance.

A transaction has been recorded in the T-accounts of Vernon Company as follows: Which of the following reflects how this event affects the company's financial statements?

The T-account format is also called the chart of accounts.

Peterson Corporation recorded an adjusting entry using T-accounts as follows: Which of the following reflects how this adjustment affects the company's financial statements?

Why are adjusting entries recorded at the end of the accounting period?

The Wagner Company acquired $500,000 cash from the issue of common stock.How would this transaction be recorded in the company's T-accounts?

When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Accounting for Inventories

Internal Control and Accounting for Cash

Accounting for Receivables

Accounting for Long-Term Operational Assets

Accounting for Current Liabilities and Payroll

Accounting for Long-Term Debt

Proprietorships,partnerships,and Corporations

Statement of Cash Flows

Financial Statement Analysis

Filters