Question 1

The entry to recognize depreciation expense incurred on equipment involves which of the following?

Accepted Answer

A) A decrease in assets 
B) An increase in liabilities 
C) An increase in assets 
D) A decrease in liabilities 
A) A decrease in assets 
B) An increase in liabilities 
C) An increase in assets 
D) A decrease in liabilities

Question 2

What action did the U.S.Congress take because of the audit failures at Enron,WorldCom and other companies?

Accepted Answer

A) Required publicly-traded companies to be audited by a government agency 
B) Passed the Sarbanes-Oxley Act 
C) Required companies to begin preparing an additional financial statement 
D) Passed an amendment to the Securities and Exchange Act 
A) Required publicly-traded companies to be audited by a government agency 
B) Passed the Sarbanes-Oxley Act 
C) Required companies to begin preparing an additional financial statement 
D) Passed an amendment to the Securities and Exchange Act

Question 3

Which of the following would be included in the cash flow from operating activities section of the statement of cash flows?

Accepted Answer

A) Accrual of salary expense at year-end. 
B) Purchase of equipment for cash. 
C) Payments of cash dividends to the owners of the business. 
D) Cash paid for interest on a note payable. 
A) Accrual of salary expense at year-end. 
B) Purchase of equipment for cash. 
C) Payments of cash dividends to the owners of the business. 
D) Cash paid for interest on a note payable.

Question 4

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

Accepted Answer

A) True 
 B)False

Question 5

The following accounts and balances were drawn from the records of Barnes Company:
 
Based on this information alone the amount of Barnes's retained earnings is:

Accepted Answer

A) $11,600. 
B) $17,200. 
C) $5,200. 
D) None of these answers is correct. 
A) $11,600. 
B) $17,200. 
C) $5,200. 
D) None of these answers is correct.

Question 6

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31,Year 1:
  
-What is the amount of net income that will be reported on the Year 1 income statement?

Accepted Answer

A) $2,200 
B) $3,200 
C) $1,000 
D) $200 
A) $2,200 
B) $3,200 
C) $1,000 
D) $200

Question 7

How does the adjusting entry to recognize the portion of the unearned revenue that a company earned during the accounting period affect the elements of the financial statements?

Accepted Answer

A) An increase in assets and a decrease in liabilities. 
B) An increase in liabilities and a decrease in equity. 
C) A decrease in liabilities and an increase in equity. 
D) A decrease in assets and a decrease in liabilities. 
A) An increase in assets and a decrease in liabilities. 
B) An increase in liabilities and a decrease in equity. 
C) A decrease in liabilities and an increase in equity. 
D) A decrease in assets and a decrease in liabilities.

Question 8

Which of the following events involves a deferral?

Accepted Answer

A) Recording interest that has been earned but not received. 
B) Recording revenue that has been earned but not yet collected in cash. 
C) Recording supplies that have been purchased with cash but not yet used. 
D) Recording salaries owed to employees at the end of the year that will be paid during the following year. 
A) Recording interest that has been earned but not received. 
B) Recording revenue that has been earned but not yet collected in cash. 
C) Recording supplies that have been purchased with cash but not yet used. 
D) Recording salaries owed to employees at the end of the year that will be paid during the following year.

Question 9

Which of the following is not one of the common elements that are typically present when fraud occurs?

Accepted Answer

A) The capacity to rationalize 
B) The existence of pressure leading to an incentive 
C) The assistance of others 
D) The presence of an opportunity 
A) The capacity to rationalize 
B) The existence of pressure leading to an incentive 
C) The assistance of others 
D) The presence of an opportunity

Question 10

Accrual accounting usually fails to match expenses with revenues.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a claims exchange transaction?

Accepted Answer

A) Recognized revenue earned on a contract where the cash had been collected at an earlier date. 
B) Issued common stock. 
C) Invested cash in an interest earning account. 
D) Purchased machine for cash. 
A) Recognized revenue earned on a contract where the cash had been collected at an earlier date. 
B) Issued common stock. 
C) Invested cash in an interest earning account. 
D) Purchased machine for cash.

Question 12

Recognition of depreciation expense on equipment decreases the equipment account.

Accepted Answer

A) True 
 B)False

Question 13

The Sarbanes-Oxley Act includes several significant reforms that affect the auditing profession,but it did not reduce an audit firm's ability to provide non-audit services to its audit clients.

Accepted Answer

A) True 
 B)False

Question 14

On January 1,Year 1,Alabama Company purchased a machine for $26,000.The machine has an estimated useful life of 4 years and an estimated salvage value of $6,000.What is the book value of the machine reported on Alabama's balance sheet as of December 31,Year 1?

Accepted Answer

A) $26,000 
B) $19,500 
C) $21,000 
D) $15,000 
A) $26,000 
B) $19,500 
C) $21,000 
D) $15,000

Question 15

A payment to an employee in settlement of salaries payable decreases an asset and decreases equity.

Accepted Answer

A) True 
 B)False

Question 16

An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.

Accepted Answer

A) True 
 B)False

Question 17

Warren Enterprises began operations during Year 1.The company had the following events during Year 1:
The business issued $40,000 of common stock to its stockholders.
The business purchased land for $24,000 cash.
Services were provided to customers for $32,000 cash.
Services were provided to customers for $10,000 on account.
The company borrowed $32,000 from the bank.
Operating expenses of $24,000 were incurred and paid in cash.
Salary expense of $1,600 was accrued.
A dividend of $8,000 was paid to the stockholders of Warren Enterprises.
After closing,what is the balance of the Retained Earnings account as of December 31,Year 1?

Accepted Answer

A) $10,000 
B) $8,400 
C) $16,400 
D) $42,000 
A) $10,000 
B) $8,400 
C) $16,400 
D) $42,000

Question 18

Which of the following is not an element of the fraud triangle?

Accepted Answer

A) Reliance 
B) Rationalization 
C) Opportunity 
D) Pressure 
A) Reliance 
B) Rationalization 
C) Opportunity 
D) Pressure

Question 19

Which of the following is an asset use transaction?

Accepted Answer

A) Purchased machine for cash. 
B) Recorded insurance expense at the end of the period. 
C) Invested cash in an interest earning account. 
D) Accrued salary expense at the end of the period. 
A) Purchased machine for cash. 
B) Recorded insurance expense at the end of the period. 
C) Invested cash in an interest earning account. 
D) Accrued salary expense at the end of the period.

Question 20

Recognizing an expense may be accompanied by which of the following?

Accepted Answer

A) An increase in liabilities 
B) A decrease in liabilities 
C) A decrease in revenue 
D) An increase in assets 
A) An increase in liabilities 
B) A decrease in liabilities 
C) A decrease in revenue 
D) An increase in assets

The entry to recognize depreciation expense incurred on equipment involves which of the following?

What action did the U.S.Congress take because of the audit failures at Enron,WorldCom and other companies?

Which of the following would be included in the cash flow from operating activities section of the statement of cash flows?

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

The following accounts and balances were drawn from the records of Barnes Company: Based on this information alone the amount of Barnes's retained earnings is:

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31,Year 1: -What is the amount of net income that will be reported on the Year 1 income statement?

How does the adjusting entry to recognize the portion of the unearned revenue that a company earned during the accounting period affect the elements of the financial statements?

Which of the following events involves a deferral?

Which of the following is not one of the common elements that are typically present when fraud occurs?

Accrual accounting usually fails to match expenses with revenues.

Which of the following is a claims exchange transaction?

Recognition of depreciation expense on equipment decreases the equipment account.

The Sarbanes-Oxley Act includes several significant reforms that affect the auditing profession,but it did not reduce an audit firm's ability to provide non-audit services to its audit clients.

On January 1,Year 1,Alabama Company purchased a machine for $26,000.The machine has an estimated useful life of 4 years and an estimated salvage value of $6,000.What is the book value of the machine reported on Alabama's balance sheet as of December 31,Year 1?

A payment to an employee in settlement of salaries payable decreases an asset and decreases equity.

An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.

Which of the following is not an element of the fraud triangle?

Which of the following is an asset use transaction?

Recognizing an expense may be accompanied by which of the following?

An Introduction to Accounting

The Double-Entry Accounting System

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 2: Accounting for Accruals and Deferrals

The entry to recognize depreciation expense incurred on equipment involves which of the following?

What action did the U.S.Congress take because of the audit failures at Enron,WorldCom and other companies?

Which of the following would be included in the cash flow from operating activities section of the statement of cash flows?

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

The following accounts and balances were drawn from the records of Barnes Company: Based on this information alone the amount of Barnes's retained earnings is:

The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31,Year 1: -What is the amount of net income that will be reported on the Year 1 income statement?

How does the adjusting entry to recognize the portion of the unearned revenue that a company earned during the accounting period affect the elements of the financial statements?

Which of the following events involves a deferral?

Which of the following is not one of the common elements that are typically present when fraud occurs?

Accrual accounting usually fails to match expenses with revenues.

Which of the following is a claims exchange transaction?

Recognition of depreciation expense on equipment decreases the equipment account.

The Sarbanes-Oxley Act includes several significant reforms that affect the auditing profession,but it did not reduce an audit firm's ability to provide non-audit services to its audit clients.

On January 1,Year 1,Alabama Company purchased a machine for $26,000.The machine has an estimated useful life of 4 years and an estimated salvage value of $6,000.What is the book value of the machine reported on Alabama's balance sheet as of December 31,Year 1?

A payment to an employee in settlement of salaries payable decreases an asset and decreases equity.

An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.

Which of the following is not an element of the fraud triangle?

Which of the following is an asset use transaction?

Recognizing an expense may be accompanied by which of the following?

An Introduction to Accounting

The Double-Entry Accounting System

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