Question 1

A low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

Accepted Answer

A) True 
 B)False

Question 2

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Accepted Answer

A) $0. 
B) $60. 
C) $740. 
D) $800 
A) $0. 
B) $60. 
C) $740. 
D) $800

Question 3

Complete the chart below by putting an "X" in the appropriate box:

Accepted Answer

The answer of Complete the chart below by putting an...

Question 4

The Accumulated Depreciation account:

Accepted Answer

A) is another term for depreciation expense. 
B) represents the original cost of a plant asset. 
C) is a contra asset account. 
D) has a normal balance which is the same as its companion account. 
A) is another term for depreciation expense. 
B) represents the original cost of a plant asset. 
C) is a contra asset account. 
D) has a normal balance which is the same as its companion account.

Question 5

Accrual accounting records all of the following transactions EXCEPT:

Accepted Answer

A) earning of unearned revenue received in advance. 
B) expiration of prepaid insurance. 
C) accrual of expenses incurred but not paid. 
D) receipt of Award for Service to the Community of Naperville,Illinois. 
A) earning of unearned revenue received in advance. 
B) expiration of prepaid insurance. 
C) accrual of expenses incurred but not paid. 
D) receipt of Award for Service to the Community of Naperville,Illinois.

Question 6

On July 25,Henry Company's accountant prepared a check to prepay for the August through December monthly rent payments.Henry Company mailed the check on July 27 to the landlord.The landlord received the check on July 31 and cashed it on August 2.When should Henry Company record the rent expense for August associated with this transaction? Henry Company uses accrual accounting.

Accepted Answer

A) July 25 
B) July 27 
C) August 31 
D) August 2 
A) July 25 
B) July 27 
C) August 31 
D) August 2

Question 7

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

Accepted Answer

A) True 
 B)False

Question 8

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Accepted Answer

A) True 
 B)False

Question 9

Which account is credited in the adjusting entry to allocate the cost of equipment?

Accepted Answer

A) Equipment Expense 
B) Depreciation Expense-Equipment 
C) Accumulated Equipment 
D) Accumulated Depreciation-Equipment 
A) Equipment Expense 
B) Depreciation Expense-Equipment 
C) Accumulated Equipment 
D) Accumulated Depreciation-Equipment

Question 10

When preparing the financial statements for a company:

Accepted Answer

A) the report format of the income statement lists liabilities before assets. 
B) the account format for the balance sheet lists the assets on the left and liabilities and stockholders' equity on the right. 
C) the multistep balance sheet lists assets in order of their liquidity. 
D) the single-step income statement reports more subtotals than a multistep income statement. 
A) the report format of the income statement lists liabilities before assets. 
B) the account format for the balance sheet lists the assets on the left and liabilities and stockholders' equity on the right. 
C) the multistep balance sheet lists assets in order of their liquidity. 
D) the single-step income statement reports more subtotals than a multistep income statement.

Question 11

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

Accepted Answer

A) Accounts Receivable,Prepaid Insurance,Salary Expense 
B) Depreciation Expense,Dividends,Insurance Expense,Salary Expense 
C) Depreciation Expense,Insurance Expense,Salary Expense,Prepaid Insurance 
D) Interest Revenue,Service Revenue 
A) Accounts Receivable,Prepaid Insurance,Salary Expense 
B) Depreciation Expense,Dividends,Insurance Expense,Salary Expense 
C) Depreciation Expense,Insurance Expense,Salary Expense,Prepaid Insurance 
D) Interest Revenue,Service Revenue

Question 12

Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

Accepted Answer

A) that the company had net income of $5,000. 
B) an increase in cash of $5,000. 
C) the company had a net loss of $5,000. 
D) a decrease in cash of $5,000. 
A) that the company had net income of $5,000. 
B) an increase in cash of $5,000. 
C) the company had a net loss of $5,000. 
D) a decrease in cash of $5,000.

Question 13

The accumulated depreciation account decreases over the life of the asset.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is NOT a correct statement about adjusting entries?

Accepted Answer

A) Every adjusting entry affects cash. 
B) Every adjusting entry affects the balance sheet. 
C) Every adjusting entry affects net income. 
D) Adjusting entries are posted before the adjusted trial balance is prepared. 
A) Every adjusting entry affects cash. 
B) Every adjusting entry affects the balance sheet. 
C) Every adjusting entry affects net income. 
D) Adjusting entries are posted before the adjusted trial balance is prepared.

Question 15

The balance sheet reports:

Accepted Answer

A) assets,liabilities and stockholders' equity. 
B) the changes in retained earnings. 
C) assets,liabilities,revenues and expenses. 
D) revenues and expenses. 
A) assets,liabilities and stockholders' equity. 
B) the changes in retained earnings. 
C) assets,liabilities,revenues and expenses. 
D) revenues and expenses.

Question 16

The dividends account is a permanent account.

Accepted Answer

A) True 
 B)False

Question 17

The revenue principle states that revenue should be recorded in the same period as the cash is received.

Accepted Answer

A) True 
 B)False

Question 18

The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Accepted Answer

A) credit to Unearned Revenue of $3,900. 
B) debit to Unearned Revenue of $3,900. 
C) debit to Ticket Revenue of $3,900. 
D) credit to Prepaid Revenue of $2,600. 
A) credit to Unearned Revenue of $3,900. 
B) debit to Unearned Revenue of $3,900. 
C) debit to Ticket Revenue of $3,900. 
D) credit to Prepaid Revenue of $2,600.

Question 19

Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

Accepted Answer

A) collecting cash from customers 
B) borrowing money from the bank 
C) purchasing of inventory on account 
D) issuing stock for cash 
A) collecting cash from customers 
B) borrowing money from the bank 
C) purchasing of inventory on account 
D) issuing stock for cash

Question 20

The closing entry for the Salaries Expense account includes a debit to:

Accepted Answer

A) Salaries Expense and a credit to Retained Earnings. 
B) Salaries Expense and a credit to Net Income. 
C) Retained Earnings and a credit to Salaries Expense. 
D) Net Income and a credit to Salaries Expense. 
A) Salaries Expense and a credit to Retained Earnings. 
B) Salaries Expense and a credit to Net Income. 
C) Retained Earnings and a credit to Salaries Expense. 
D) Net Income and a credit to Salaries Expense.

A low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Complete the chart below by putting an "X" in the appropriate box:

The Accumulated Depreciation account:

Accrual accounting records all of the following transactions EXCEPT:

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Which account is credited in the adjusting entry to allocate the cost of equipment?

When preparing the financial statements for a company:

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

Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

The accumulated depreciation account decreases over the life of the asset.

Which of the following is NOT a correct statement about adjusting entries?

The balance sheet reports:

The dividends account is a permanent account.

The revenue principle states that revenue should be recorded in the same period as the cash is received.

The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

The closing entry for the Salaries Expense account includes a debit to:

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 low debt ratio is safer than a high debt ratio because a company with few liabilities has low required debt payments.

A company has $800 in Prepaid Advertising before any adjustments.At the end of the year,an adjusting entry is made to debit Advertising Expense for $60.The ending balance in the Prepaid Advertising account will be:

Complete the chart below by putting an "X" in the appropriate box:

The Accumulated Depreciation account:

Accrual accounting records all of the following transactions EXCEPT:

The amount of revenue to record is the amount of cash or its equivalent that is transferred from the customer to the seller.

All companies must conform to either a pure single-step format or a pure multistep income statement format.

Which account is credited in the adjusting entry to allocate the cost of equipment?

When preparing the financial statements for a company:

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

Assume the balance in the Retained Earnings account at January 1,2019 is zero,and no dividends are declared in 2019.If a debit balance of $5,000 exists in Retained Earnings after closing out revenues and expenses at the end of 2019,this indicates:

The accumulated depreciation account decreases over the life of the asset.

Which of the following is NOT a correct statement about adjusting entries?

The balance sheet reports:

The dividends account is a permanent account.

The revenue principle states that revenue should be recorded in the same period as the cash is received.

The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Which of the following transactions would be recorded under accrual accounting but NOT under cash-basis accounting?

The closing entry for the Salaries Expense account includes a debit to:

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