Question 1

A loan agreement may require that a company's current ratio not fall below a certain level and/or that the company's debt ratio may not rise above a threshold.

Accepted Answer

A) True 
 B)False  True

Question 2

The requirement to report accounting information at regular intervals is known as the:

Accepted Answer

A) interim reporting concept. 
B) revenue principle. 
C) time-period concept. 
D) expense recognition principle. 
A) interim reporting concept. 
B) revenue principle. 
C) time-period concept. 
D) expense recognition principle. C

Question 3

When using the trial balance worksheet to prepare the statement of retained earnings,what information is used from the trial balance worksheet?

Accepted Answer

A) net income or net loss 
B) revenues and expenses 
C) beginning balance of retained earnings and dividends 
D) cash balance 
A) net income or net loss 
B) revenues and expenses 
C) beginning balance of retained earnings and dividends 
D) cash balance C

Question 4

At the beginning of the year,Butters Company's balance sheet showed current assets of $36,000 and current liabilities of $19,000.During the current year,Butters issued common stock for $5,000 for cash and purchased $3,400 of inventory on account.After these transactions were recorded,Butter's current ratio was: (Round your final answer to two decimal places. )

Accepted Answer

A) 1.38. 
B) 1.83. 
C) 1.98. 
D) 1.89. 
A) 1.38. 
B) 1.83. 
C) 1.98. 
D) 1.89.

Question 5

Which of the following statements regarding the time-period concept is NOT correct?

Accepted Answer

A) Interim financial reports are rarely prepared. 
B) Accountants prepare financial statements for specific periods of time. 
C) The basic accounting period is one year. 
D) Most large companies use a calendar year for financial reporting. 
A) Interim financial reports are rarely prepared. 
B) Accountants prepare financial statements for specific periods of time. 
C) The basic accounting period is one year. 
D) Most large companies use a calendar year for financial reporting.

Question 6

On January 1,2019,a customer places an order for a new customized vehicle.The contract price is $42,000.The vehicle is delivered to the dealer and customer on April 1,2019.What amount of revenue does the dealer record on January 1,2019 and April 1,2019?

Accepted Answer

A) $42,000;$0 
B) $21,000;$21,000 
C) $14,000;$14,000 
D) $0;$42,000 
A) $42,000;$0 
B) $21,000;$21,000 
C) $14,000;$14,000 
D) $0;$42,000

Question 7

A multistep income statement reports a number of subtotals to highlight important relationships between assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 8

The following accounts and balances are taken from Moore Company's adjusted trial balance:   What is the ending balance in Retained Earnings after the closing entries are completed?

Accepted Answer

A) $8,140 
B) $10,140 
C) $18,240 
D) $39,140 
A) $8,140 
B) $10,140 
C) $18,240 
D) $39,140

Question 9

Dooley Company had current assets of $1,552,current liabilities of $1,413,total assets of $1,742,and long-term liabilities of $1,210.If Dooley acquires inventory by executing a six-month note for $1,550,what is the new current ratio? (Round your final answer to two decimal places. )

Accepted Answer

A) 1.10 
B) 1.05 
C) 0.96 
D) 2.20 
A) 1.10 
B) 1.05 
C) 0.96 
D) 2.20

Question 10

Winter Company earned revenues of $150,000 in cash and $200,000 on account during 2018.Of the $200,000 on account,$63,000 was collected in cash in 2018 and the rest in 2019.The company incurred expenses of $115,000 in 2018 and made payments of $70,000 towards the expenses in 2018.What is net income in 2018 under accrual accounting?

Accepted Answer

A) $85,000 
B) $235,000 
C) $280,000 
D) $350,000 
A) $85,000 
B) $235,000 
C) $280,000 
D) $350,000

Question 11

Which of the following is CORRECT regarding liquidity?

Accepted Answer

A) Liquidity measures how quickly revenue can be earned. 
B) Accounts receivable is not a liquid asset. 
C) A balance sheet lists assets and liabilities in the order of relative liquidity. 
D) Equipment is a highly liquid asset. 
A) Liquidity measures how quickly revenue can be earned. 
B) Accounts receivable is not a liquid asset. 
C) A balance sheet lists assets and liabilities in the order of relative liquidity. 
D) Equipment is a highly liquid asset.

Question 12

The expense recognition principle requires the recognition of expenses:

Accepted Answer

A) in the same period in which the related revenues are earned. 
B) in the period they are paid. 
C) in the period assets are created. 
D) in the period in which future benefit for the company occurs. 
A) in the same period in which the related revenues are earned. 
B) in the period they are paid. 
C) in the period assets are created. 
D) in the period in which future benefit for the company occurs.

Question 13

The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet is obtained by taking the:

Accepted Answer

A) Unadjusted Trial Balance Debit column plus the Debit Adjustments column minus the Credit Adjustments column. 
B) Unadjusted Trial Balance Debit column. 
C) Unadjusted Trial Balance Credit column. 
D) Unadjusted Trial Balance Credit column plus closing entries. 
A) Unadjusted Trial Balance Debit column plus the Debit Adjustments column minus the Credit Adjustments column. 
B) Unadjusted Trial Balance Debit column. 
C) Unadjusted Trial Balance Credit column. 
D) Unadjusted Trial Balance Credit column plus closing entries.

Question 14

Expenses are the costs of assets used up and liabilities created in earning revenue.

Accepted Answer

A) True 
 B)False

Question 15

When an adjustment is made for prepaid rent:

Accepted Answer

A) an asset increases and an expense decreases. 
B) one asset increases and another decreases. 
C) an asset decreases and an expense increases. 
D) a liability decreases and an expense decreases. 
A) an asset increases and an expense decreases. 
B) one asset increases and another decreases. 
C) an asset decreases and an expense increases. 
D) a liability decreases and an expense decreases.

Question 16

Jackson Company holds a $50,000 note receivable dated July 1,2019,with 10% interest.What adjusting entry is needed on December 31,2019?

Accepted Answer

@#IMG-DLM& $50,000 ×

Question 17

The Financial Accounting Standards Board(FASB)and the International Accounting Standards Board (IASB)are working together to develop similar standards.Which of the following statements is FALSE?

Accepted Answer

A) The FASB and IASB have recently issued a joint new standard that provides a globally consistent,converged,and simplified way to recognize revenue. 
B) The new revenue standard has five steps. 
C) The first step in the new revenue standard is to allocate the transaction price to the performance obligations. 
D) The joint new revenue recognition standard is based on the idea that all business transactions involve contracts that exchange goods or services for cash or claims to receive cash. 
A) The FASB and IASB have recently issued a joint new standard that provides a globally consistent,converged,and simplified way to recognize revenue. 
B) The new revenue standard has five steps. 
C) The first step in the new revenue standard is to allocate the transaction price to the performance obligations. 
D) The joint new revenue recognition standard is based on the idea that all business transactions involve contracts that exchange goods or services for cash or claims to receive cash.

Question 18

Under cash-basis accounting,cash receipts are treated as ________ and cash payments are treated as ________.

Accepted Answer

A) retained earnings;dividends 
B) retained earnings;income 
C) revenues;expenses 
D) gains;losses 
A) retained earnings;dividends 
B) retained earnings;income 
C) revenues;expenses 
D) gains;losses

Question 19

On October 1,2018,Golde Company paid $22,200 for one year of insurance for the period,October 1,2018 through September 30,2019.Which of the following will be part of the adjusting entry on December 31,2018?

Accepted Answer

A) Debit Prepaid Insurance for $5,550 
B) Debit Prepaid Insurance for $16,650 
C) Debit Insurance Expense for $5,550 
D) Debit Insurance Expense for $16,650 
A) Debit Prepaid Insurance for $5,550 
B) Debit Prepaid Insurance for $16,650 
C) Debit Insurance Expense for $5,550 
D) Debit Insurance Expense for $16,650

Question 20

With an accrual of revenue:

Accepted Answer

A) the cash is received after the revenue is recorded. 
B) the cash is received before the revenue is recorded. 
C) plant assets can create an accrual adjustment. 
D) prepaid expenses can create an accrual adjustment. 
A) the cash is received after the revenue is recorded. 
B) the cash is received before the revenue is recorded. 
C) plant assets can create an accrual adjustment. 
D) prepaid expenses can create an accrual adjustment.

A loan agreement may require that a company's current ratio not fall below a certain level and/or that the company's debt ratio may not rise above a threshold.

The requirement to report accounting information at regular intervals is known as the:

When using the trial balance worksheet to prepare the statement of retained earnings,what information is used from the trial balance worksheet?

Which of the following statements regarding the time-period concept is NOT correct?

On January 1,2019,a customer places an order for a new customized vehicle.The contract price is $42,000.The vehicle is delivered to the dealer and customer on April 1,2019.What amount of revenue does the dealer record on January 1,2019 and April 1,2019?

A multistep income statement reports a number of subtotals to highlight important relationships between assets and liabilities.

The following accounts and balances are taken from Moore Company's adjusted trial balance: What is the ending balance in Retained Earnings after the closing entries are completed?

Dooley Company had current assets of $1,552,current liabilities of $1,413,total assets of $1,742,and long-term liabilities of $1,210.If Dooley acquires inventory by executing a six-month note for $1,550,what is the new current ratio? (Round your final answer to two decimal places. )

Which of the following is CORRECT regarding liquidity?

The expense recognition principle requires the recognition of expenses:

The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet is obtained by taking the:

Expenses are the costs of assets used up and liabilities created in earning revenue.

When an adjustment is made for prepaid rent:

Jackson Company holds a $50,000 note receivable dated July 1,2019,with 10% interest.What adjusting entry is needed on December 31,2019?

The Financial Accounting Standards Board(FASB)and the International Accounting Standards Board (IASB)are working together to develop similar standards.Which of the following statements is FALSE?

Under cash-basis accounting,cash receipts are treated as and cash payments are treated as .

On October 1,2018,Golde Company paid $22,200 for one year of insurance for the period,October 1,2018 through September 30,2019.Which of the following will be part of the adjusting entry on December 31,2018?

With an accrual of revenue:

The Financial Statements

Transaction Analysis

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 3: Accrual Accounting Income

A loan agreement may require that a company's current ratio not fall below a certain level and/or that the company's debt ratio may not rise above a threshold.

The requirement to report accounting information at regular intervals is known as the:

When using the trial balance worksheet to prepare the statement of retained earnings,what information is used from the trial balance worksheet?

Which of the following statements regarding the time-period concept is NOT correct?

On January 1,2019,a customer places an order for a new customized vehicle.The contract price is $42,000.The vehicle is delivered to the dealer and customer on April 1,2019.What amount of revenue does the dealer record on January 1,2019 and April 1,2019?

A multistep income statement reports a number of subtotals to highlight important relationships between assets and liabilities.

The following accounts and balances are taken from Moore Company's adjusted trial balance: What is the ending balance in Retained Earnings after the closing entries are completed?

Dooley Company had current assets of $1,552,current liabilities of $1,413,total assets of $1,742,and long-term liabilities of $1,210.If Dooley acquires inventory by executing a six-month note for $1,550,what is the new current ratio? (Round your final answer to two decimal places. )

Which of the following is CORRECT regarding liquidity?

The expense recognition principle requires the recognition of expenses:

The dollar amount for Accounts Receivable in the Adjusted Trial Balance Debit column of a Trial Balance Worksheet is obtained by taking the:

Expenses are the costs of assets used up and liabilities created in earning revenue.

When an adjustment is made for prepaid rent:

Jackson Company holds a $50,000 note receivable dated July 1,2019,with 10% interest.What adjusting entry is needed on December 31,2019?

The Financial Accounting Standards Board(FASB)and the International Accounting Standards Board (IASB)are working together to develop similar standards.Which of the following statements is FALSE?

Under cash-basis accounting,cash receipts are treated as ________ and cash payments are treated as ________.

On October 1,2018,Golde Company paid $22,200 for one year of insurance for the period,October 1,2018 through September 30,2019.Which of the following will be part of the adjusting entry on December 31,2018?

With an accrual of revenue:

The Financial Statements

Transaction Analysis

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Plant Assets, natural Resources, Intangibles

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Under cash-basis accounting,cash receipts are treated as and cash payments are treated as .