Question 1

Which of the following is NOT a component of an accounting system?

Accepted Answer

A)  the input source documents 
B)  the framework for operation of the system 
C)  the output reports 
D)  all of the above are components of an accounting system 
A)  the input source documents 
B)  the framework for operation of the system 
C)  the output reports 
D)  all of the above are components of an accounting system

Question 2

Which of the following is the correct reversing entry?

Accepted Answer

A)  Depreciation Expense 1550 
Accumulated Depreciation 1550 
B)  Interest Revenue 2350 
Interest Receivable 2350 
C)  Salary Expense 1980 
Salary Payable 1980 
D)  Income Tax Expense 2500
 Income Tax Payable 2500 
A)  Depreciation Expense 1550 
Accumulated Depreciation 1550 
B)  Interest Revenue 2350 
Interest Receivable 2350 
C)  Salary Expense 1980 
Salary Payable 1980 
D)  Income Tax Expense 2500
 Income Tax Payable 2500

Question 3

Reversing entries should not be made for which of the following?

Accepted Answer

A)  Adjusting entries that defer costs by recording them as prepaid expenses. 
B)  Adjusting entries to expenses that are to be paid in the next period. 
C)  Adjusting entries to accrue revenue to be collected in the next period. 
D)  Adjusting entries related to estimates. 
A)  Adjusting entries that defer costs by recording them as prepaid expenses. 
B)  Adjusting entries to expenses that are to be paid in the next period. 
C)  Adjusting entries to accrue revenue to be collected in the next period. 
D)  Adjusting entries related to estimates.

Question 4

On a worksheet, the balance in the accumulated depreciation account should be extended to which column?

Accepted Answer

A)  Balance Sheet debit column 
B)  Balance Sheet credit column 
C)  Income Statement debit column 
D)  Income Statement credit column 
A)  Balance Sheet debit column 
B)  Balance Sheet credit column 
C)  Income Statement debit column 
D)  Income Statement credit column

Question 5

The accrual and the cash bases of accounting were discussed in the textbook. Please (a) define the cash-basis accounting method and state how net income is determined using this method, (b) describe accrual accounting, and (c) indicate which of the two methods (i.e., cash or accrual) is recommended under GAAP.

Accepted Answer

a.Under cash-basis accounting, a company

Question 6

........

Accepted Answer

The answer of ...........

Question 7

On June 1, 2014, Little Corporation received $5,320 in advance for a two-year rental of some land and properly credited Unearned Rent. In the adjusting entry at December 31, 2014, there would be a

Accepted Answer

A)  debit to Unearned Rent for $1108 
B)  credit to Rent Revenue for $1552 
C)  credit to Unearned Rent for $1552 
D)  debit to Unearned Rent for $5,320 
A)  debit to Unearned Rent for $1108 
B)  credit to Rent Revenue for $1552 
C)  credit to Unearned Rent for $1552 
D)  debit to Unearned Rent for $5,320

Question 8

The Merry Company uses the cash basis of accounting. Merry Company made $600,000 in payments to its suppliers during the year. Merry's beginning inventory was $20,000, and its ending inventory was $35,000. In addition, Merry had a beginning accounts payable of $40,000 and an ending accounts payable of $70,000. What is Merry's cost of goods sold under the accrual basis of accounting?

Accepted Answer

A)  $585,000 
B)  $600,000 
C)  $615,000 
D)  $625,000 
A)  $585,000 
B)  $600,000 
C)  $615,000 
D)  $625,000

Question 9

Which of the following adjusting entries would not be reversed in the following accounting period?

Accepted Answer

A)  an entry that recognized an accrued expense of the current period 
B)  an entry that allocated the expired portion of a long-lived asset to the current year's income statement 
C)  an entry that transferred a portion of a revenue account to a liability account 
D)  an entry that recognized an accrued revenue earned during the current period 
A)  an entry that recognized an accrued expense of the current period 
B)  an entry that allocated the expired portion of a long-lived asset to the current year's income statement 
C)  an entry that transferred a portion of a revenue account to a liability account 
D)  an entry that recognized an accrued revenue earned during the current period

Question 10

What is the purpose of a reversing entry?

Accepted Answer

It is an optional entry that simplifies

Question 11

Which of the following errors does a trial balance not identify?

Accepted Answer

A)  Unposted transaction 
B)  transposition 
C)  slide 
D)  recording of a debit amount that differs from the credit amount recorded 
A)  Unposted transaction 
B)  transposition 
C)  slide 
D)  recording of a debit amount that differs from the credit amount recorded

Question 12

Which T-account is incorrect?

Accepted Answer

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

Question 13

Which of the following is not a reason why a company first prepares a worksheet?

Accepted Answer

A)  simplify recording of adjusting and closing entries in the general journal 
B)  substitute for the trial balance 
C)  make it easier to prepare financial statements 
D)  minimize errors 
A)  simplify recording of adjusting and closing entries in the general journal 
B)  substitute for the trial balance 
C)  make it easier to prepare financial statements 
D)  minimize errors

Question 14

The financial statements are the responsibility of the

Accepted Answer

A)  auditors 
B)  management 
C)  independent certified accountants 
D)  Public Accounting Oversight Board 
A)  auditors 
B)  management 
C)  independent certified accountants 
D)  Public Accounting Oversight Board

Question 15

Which of the following adjusting entries would be the most likely to be reversed?

Accepted Answer

A)  Depreciation Expense 1,500 
Accumulated Depreciation 1,500 
B)  Unearned Rent 700 
Rent Revenue 700 
C)  Insurance Expense 800 
Prepaid Insurance 800 
D)  Income Tax Expense 950 
Income Taxes Payable 950 
A)  Depreciation Expense 1,500 
Accumulated Depreciation 1,500 
B)  Unearned Rent 700 
Rent Revenue 700 
C)  Insurance Expense 800 
Prepaid Insurance 800 
D)  Income Tax Expense 950 
Income Taxes Payable 950

Question 16

The worksheet is not a substitute for accounting records or financial statements but it is a tool helpful for external users to see the detailed information behind the statements.

Accepted Answer

A) True 
 B)False

Question 17

When you prepare a journal entry, the standard format is to list all

Accepted Answer

A)  asset accounts first 
B)  accounts to be debited first 
C)  liability accounts first 
D)  accounts to be credited first 
A)  asset accounts first 
B)  accounts to be debited first 
C)  liability accounts first 
D)  accounts to be credited first

Question 18

Which of the following is a permanent account?

Accepted Answer

A)  Dividend Revenue 
B)  Allowance for Doubtful Accounts 
C)  Interest Expense 
D)  Sales Revenue 
A)  Dividend Revenue 
B)  Allowance for Doubtful Accounts 
C)  Interest Expense 
D)  Sales Revenue

Question 19

Which of the following accounts would not be closed to Income Summary during the year-end closing process?

Accepted Answer

A)  Loss on Sale of Land 
B)  Prepaid Rent 
C)  Freight-In 
D)  Sales Discounts 
A)  Loss on Sale of Land 
B)  Prepaid Rent 
C)  Freight-In 
D)  Sales Discounts

Question 20

Which of the following is a purchase return?

Accepted Answer

A)  A company agrees to keep damaged inventory and receives a refund from the supplier. 
B)  A customer agrees to keep damaged inventory and receives a partial refund of the selling price. 
C)  A company returns inventory to the supplier and receives a refund of the purchase price. 
D)  A customer returns inventory to a company and receives a refund of the purchase price. 
A)  A company agrees to keep damaged inventory and receives a refund from the supplier. 
B)  A customer agrees to keep damaged inventory and receives a partial refund of the selling price. 
C)  A company returns inventory to the supplier and receives a refund of the purchase price. 
D)  A customer returns inventory to a company and receives a refund of the purchase price.

Exam 3: Review of a Companys Accounting System

Which of the following is NOT a component of an accounting system?

Which of the following is the correct reversing entry?

Reversing entries should not be made for which of the following?

On a worksheet, the balance in the accumulated depreciation account should be extended to which column?

........

On June 1, 2014, Little Corporation received $5,320 in advance for a two-year rental of some land and properly credited Unearned Rent. In the adjusting entry at December 31, 2014, there would be a

Which of the following adjusting entries would not be reversed in the following accounting period?

What is the purpose of a reversing entry?

Which of the following errors does a trial balance not identify?

Which T-account is incorrect?

Which of the following is not a reason why a company first prepares a worksheet?

The financial statements are the responsibility of the

Which of the following adjusting entries would be the most likely to be reversed?

The worksheet is not a substitute for accounting records or financial statements but it is a tool helpful for external users to see the detailed information behind the statements.

When you prepare a journal entry, the standard format is to list all

Which of the following is a permanent account?

Which of the following accounts would not be closed to Income Summary during the year-end closing process?

Which of the following is a purchase return?

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

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