Question 1

When preparing the financial statements,why is the income statement prepared first?

Accepted Answer

A) The income statement is used to prepare the balance sheet. 
B) The income statement is the easiest statement to prepare. 
C) The income statement is the most important statement to investors and creditors. 
D) Net income or net loss from the income statement is used for the statement of retained earnings. 
A) The income statement is used to prepare the balance sheet. 
B) The income statement is the easiest statement to prepare. 
C) The income statement is the most important statement to investors and creditors. 
D) Net income or net loss from the income statement is used for the statement of retained earnings.

Question 2

Following the expense recognition principle,to recognize expenses along with the related revenues,means to:

Accepted Answer

A) add expenses and revenues together to compute net income or net loss. 
B) recognize the expense of a period against the cash revenues of another period. 
C) abandon the matching principle. 
D) subtract expenses from the related revenues to compute net income or net loss. 
A) add expenses and revenues together to compute net income or net loss. 
B) recognize the expense of a period against the cash revenues of another period. 
C) abandon the matching principle. 
D) subtract expenses from the related revenues to compute net income or net loss.

Question 3

Unearned Service Revenue is a revenue account.

Accepted Answer

A) True 
 B)False

Question 4

On December 15,2019,a company receives an order from a customer for services to be performed on December 28,2019.Due to a backlog of orders,the company does not perform the services until January 3,2020.The customer pays for the services on January 6,2020.The revenue principle requires the revenue to be recorded by the company on:

Accepted Answer

A) December 15,2019. 
B) January 3,2020. 
C) December 28,2019. 
D) January 6,2020. 
A) December 15,2019. 
B) January 3,2020. 
C) December 28,2019. 
D) January 6,2020.

Question 5

Under cash-basis accounting,accounts receivable is increased when a company makes a sale on account.

Accepted Answer

A) True 
 B)False

Question 6

On August 1,2018,Brian Quinn received $8,400 for legal services to be performed evenly throughout the next twelve months,beginning August 1,2018.An adjusted trial balance prepared on December 31,2018 will show a credit balance in Unearned Revenue in the amount of:

Accepted Answer

A) $0. 
B) $700. 
C) $3,500. 
D) $4,900. 
A) $0. 
B) $700. 
C) $3,500. 
D) $4,900.

Question 7

A company has the following information available for the year ending December 31,2019:
    Required:
Calculate the company's (A)net income or loss for the year ending December 31,2019 and (B)the balance in Retained earnings on January 1,2019,the beginning of the fiscal year.

Accepted Answer

A.Revenues + Gain - Operating

Question 8

A company started the year with $300 of supplies.During the year the company purchased additional supplies costing $1,300.There were $1,100 of supplies on hand at the end of the year.An adjusted trial balance,prepared at the end of the accounting period,will show the following balance in Supplies Expense:

Accepted Answer

A) $800. 
B) $1,100. 
C) $500. 
D) $1,300. 
A) $800. 
B) $1,100. 
C) $500. 
D) $1,300.

Question 9

The adjusting entry,to recognize salaries that are owed to employees,increases net income and increases liabilities.

Accepted Answer

A) True 
 B)False

Question 10

Cash-basis accounting does NOT record:

Accepted Answer

A) receipt of cash from interest earned on note receivable. 
B) payment of salaries to employees. 
C) expiration of prepaid rent. 
D) borrowing money from the local bank. 
A) receipt of cash from interest earned on note receivable. 
B) payment of salaries to employees. 
C) expiration of prepaid rent. 
D) borrowing money from the local bank.

Question 11

Which accounts are used in the adjusting entry to record salaries owed to employees,but not paid until the next accounting period?

Accepted Answer

A) Salaries Expense and Salaries Payable 
B) Unearned Salaries and Salaries Payable 
C) Salaries Payable and Deferred Salaries Expense 
D) Deferred Salaries Payable and Salaries Receivable 
A) Salaries Expense and Salaries Payable 
B) Unearned Salaries and Salaries Payable 
C) Salaries Payable and Deferred Salaries Expense 
D) Deferred Salaries Payable and Salaries Receivable

Question 12

Under accrual-basis accounting,if a company fails to record a sale on account:

Accepted Answer

A) revenue will be understated. 
B) assets will be understated. 
C) net income will still be correct. 
D) A and B. 
A) revenue will be understated. 
B) assets will be understated. 
C) net income will still be correct. 
D) A and B.

Question 13

Journalize the adjusting entries needed on December 31,2019 for Kaimann Industries using the following data.Explanations are not required.
A.The balance in the Supplies account before adjustment is $5,000.A physical count reveals $2,750 of supplies on hand at December 31.
B.A computer was purchased on January 1,2019 for $15,000.The computer has a useful life of 3 years and is depreciated using the straight-line method.The computer has no residual value.
C.A one-year insurance policy costing $6,000 was purchased on November 1,2019.The insurance begins on November 1.
D.Employee salaries are owed for 4 days of a regular 5-day work week.Weekly payroll is $15,000.
E.Unearned Maintenance Revenue has a balance of $22,000 before adjustment.Records show that $14,000 of that amount has been earned by December 31.

Accepted Answer

The answer of Journalize the adjusting entries needed on December...

Question 14

To obtain a new customer,a business sells merchandise to the customer for $130.Normally,the merchandise sells for $260.For this sale,the business should record revenue of:

Accepted Answer

A) $130. 
B) $260. 
C) either amount. 
D) an average of the two amounts. 
A) $130. 
B) $260. 
C) either amount. 
D) an average of the two amounts.

Question 15

Income tax expense and the related income tax payable are typically accrued as the final adjusting entry of the period.

Accepted Answer

A) True 
 B)False

Question 16

A company's debt ratio is increasing every year and currently stands at 90%.This indicates:

Accepted Answer

A) an improving financial position. 
B) an increase in financial risk. 
C) a greater ability to pay current and long-term liabilities. 
D) a company that is going bankrupt. 
A) an improving financial position. 
B) an increase in financial risk. 
C) a greater ability to pay current and long-term liabilities. 
D) a company that is going bankrupt.

Question 17

When cash-basis accounting is used,and services are provided on account:

Accepted Answer

A) only the income statement will be incorrect. 
B) only the balance sheet will be incorrect. 
C) both the income statement and the balance sheet will be incorrect. 
D) either the income statement or the balance sheet will be incorrect. 
A) only the income statement will be incorrect. 
B) only the balance sheet will be incorrect. 
C) both the income statement and the balance sheet will be incorrect. 
D) either the income statement or the balance sheet will be incorrect.

Question 18

One company's prepaid expense is another company's unearned revenue.

Accepted Answer

A) True 
 B)False

Question 19

The following accounts and balances are taken from Jenny Company's adjusted trial balance:   In the closing process,which accounts are debited?

Accepted Answer

A) Accounts Payable,Retained Earnings 
B) Service Revenue,Interest Revenue 
C) Depreciation Expense,Insurance Expense,Salary Expense 
D) Depreciation Expense,Insurance Expense,Salary Expense,Dividends 
A) Accounts Payable,Retained Earnings 
B) Service Revenue,Interest Revenue 
C) Depreciation Expense,Insurance Expense,Salary Expense 
D) Depreciation Expense,Insurance Expense,Salary Expense,Dividends

Question 20

As a rule of thumb,a strong current ratio is:

Accepted Answer

A) 1.0. 
B) .50. 
C) 1.5. 
D) none of the above. 
A) 1.0. 
B) .50. 
C) 1.5. 
D) none of the above.

When preparing the financial statements,why is the income statement prepared first?

Following the expense recognition principle,to recognize expenses along with the related revenues,means to:

Unearned Service Revenue is a revenue account.

Under cash-basis accounting,accounts receivable is increased when a company makes a sale on account.

On August 1,2018,Brian Quinn received $8,400 for legal services to be performed evenly throughout the next twelve months,beginning August 1,2018.An adjusted trial balance prepared on December 31,2018 will show a credit balance in Unearned Revenue in the amount of:

A company has the following information available for the year ending December 31,2019: Required: Calculate the company's (A)net income or loss for the year ending December 31,2019 and (B)the balance in Retained earnings on January 1,2019,the beginning of the fiscal year.

The adjusting entry,to recognize salaries that are owed to employees,increases net income and increases liabilities.

Cash-basis accounting does NOT record:

Which accounts are used in the adjusting entry to record salaries owed to employees,but not paid until the next accounting period?

Under accrual-basis accounting,if a company fails to record a sale on account:

To obtain a new customer,a business sells merchandise to the customer for $130.Normally,the merchandise sells for $260.For this sale,the business should record revenue of:

Income tax expense and the related income tax payable are typically accrued as the final adjusting entry of the period.

A company's debt ratio is increasing every year and currently stands at 90%.This indicates:

When cash-basis accounting is used,and services are provided on account:

One company's prepaid expense is another company's unearned revenue.

The following accounts and balances are taken from Jenny Company's adjusted trial balance: In the closing process,which accounts are debited?

As a rule of thumb,a strong current ratio is:

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

When preparing the financial statements,why is the income statement prepared first?

Following the expense recognition principle,to recognize expenses along with the related revenues,means to:

Unearned Service Revenue is a revenue account.

Under cash-basis accounting,accounts receivable is increased when a company makes a sale on account.

On August 1,2018,Brian Quinn received $8,400 for legal services to be performed evenly throughout the next twelve months,beginning August 1,2018.An adjusted trial balance prepared on December 31,2018 will show a credit balance in Unearned Revenue in the amount of:

A company has the following information available for the year ending December 31,2019: Required: Calculate the company's (A)net income or loss for the year ending December 31,2019 and (B)the balance in Retained earnings on January 1,2019,the beginning of the fiscal year.

The adjusting entry,to recognize salaries that are owed to employees,increases net income and increases liabilities.

Cash-basis accounting does NOT record:

Which accounts are used in the adjusting entry to record salaries owed to employees,but not paid until the next accounting period?

Under accrual-basis accounting,if a company fails to record a sale on account:

To obtain a new customer,a business sells merchandise to the customer for $130.Normally,the merchandise sells for $260.For this sale,the business should record revenue of:

Income tax expense and the related income tax payable are typically accrued as the final adjusting entry of the period.

A company's debt ratio is increasing every year and currently stands at 90%.This indicates:

When cash-basis accounting is used,and services are provided on account:

One company's prepaid expense is another company's unearned revenue.

The following accounts and balances are taken from Jenny Company's adjusted trial balance: In the closing process,which accounts are debited?

As a rule of thumb,a strong current ratio is:

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