Question 1

An example of a transposition is

Accepted Answer

A)  presenting the cash account at $1,500 instead of $15,000 
B)  presenting prepaid insurance at $920 instead of $290 
C)  incorrectly posting a credit amount as a debit amount in the general ledger 
D)  not journalizing a sales transaction at all 
A)  presenting the cash account at $1,500 instead of $15,000 
B)  presenting prepaid insurance at $920 instead of $290 
C)  incorrectly posting a credit amount as a debit amount in the general ledger 
D)  not journalizing a sales transaction at all

Question 2

The Slater Company uses the cash basis of accounting. Slater Company collected $950,000 from its customers during 2014. Customers owed Slaughter $150,000 of accounts receivable at the beginning of 2014, and $190,000 of accounts receivable at the end of 2014. What is Slater's sales revenue for 2014 under the accrual basis of accounting?

Accepted Answer

A)  $810,000 
B)  $950,000 
C)  $990,000 
D)  $940,000 
A)  $810,000 
B)  $950,000 
C)  $990,000 
D)  $940,000

Question 3

The purpose of closing entries is to reduce the balance in the periodic accounts to zero and to compute net income for the period.

Accepted Answer

A) True 
 B)False

Question 4

Step two in completing a worksheet is to

Accepted Answer

A)  prepare the trial balance 
B)  subtotal income debit and credit columns 
C)  combine the trial balance amount of each account with the adjustments 
D)  analyze accounts 
A)  prepare the trial balance 
B)  subtotal income debit and credit columns 
C)  combine the trial balance amount of each account with the adjustments 
D)  analyze accounts

Question 5

The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue (credited); Depreciation Expense (debited); Unearned Rental Revenue (debited); and Prepaid Insurance (credited). Which account is likely to appear in Yellow Canoe's reversing entries?

Accepted Answer

A)  Prepaid Insurance 
B)  Interest Revenue 
C)  Depreciation Expense 
D)  None of these choices 
A)  Prepaid Insurance 
B)  Interest Revenue 
C)  Depreciation Expense 
D)  None of these choices

Question 6

On October 1, 2014, Jacob's Beach Umbrellas borrowed $5,000 on a 12%, one-year note payable. Interest was payable semiannually. A correct adjusting entry was made on December 31, 2014, and a correct reversing entry was made on January 1, 2015. The entry that should be made on March 31, 2015, is

Accepted Answer

A)  Interest Payable 300 
Cash 300 
B)  Interest Expense 150 
Interest Payable 150
Cash 300 
C)  Interest Expense 150 
Cash 150 
D)  Interest Expense 300 
Cash 300 
A)  Interest Payable 300 
Cash 300 
B)  Interest Expense 150 
Interest Payable 150
Cash 300 
C)  Interest Expense 150 
Cash 150 
D)  Interest Expense 300 
Cash 300

Question 7

In order to compute revenue the ending accounts receivable balance must be added to the collections from customers minus the beginning balance in accounts receivable. This adjustment will convert the cash-basis information to the accrual-basis accounting.

Accepted Answer

A) True 
 B)False

Question 8

The Michael Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit. Which of the following statements about the general ledger account is not true?

Accepted Answer

A)  The general ledger account is also called a contra account. 
B)  The balance of the general ledger account should agree with the total of all of the accounts in the subsidiary ledger. 
C)  The general ledger account is called a permanent account. 
D)  The general ledger account is properly referred to as a control account. 
A)  The general ledger account is also called a contra account. 
B)  The balance of the general ledger account should agree with the total of all of the accounts in the subsidiary ledger. 
C)  The general ledger account is called a permanent account. 
D)  The general ledger account is properly referred to as a control account.

Question 9

The accounting cycle followed each period by a company includes recording transactions, storing the data, organizing the information, summarizing the events and arrangements and then reporting the accounting information.

Accepted Answer

A) True 
 B)False

Question 10

When cash is debited for rents that are collected but are not yet earned, the amount credited should be

Accepted Answer

A)  recognized as revenue when collected 
B)  presented as a liability until earned 
C)  recorded as an asset until earned 
D)  presented as a separate item in stockholders' equity 
A)  recognized as revenue when collected 
B)  presented as a liability until earned 
C)  recorded as an asset until earned 
D)  presented as a separate item in stockholders' equity

Question 11

The Joseph, Inc. uses the accrual basis of accounting. Joseph's insurance expense account had a $23,000 balance at the end of the year. The prepaid insurance account had a $6,000 balance at the beginning of the year and a $3,000 balance at the end of the year. How much cash was paid for insurance during the year?

Accepted Answer

A)  $ 4,000 
B)  $20,000 
C)  $21,000 
D)  $29,000 
A)  $ 4,000 
B)  $20,000 
C)  $21,000 
D)  $29,000

Question 12

Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred or revenues earned.

Accepted Answer

A) True 
 B)False

Question 13

What are closing entries and why are they necessary?

Accepted Answer

Closing entries are required at the end

Question 14

The accrual basis of accounting is a system that attempts to measure changes in economic value in an entity as they affect the accounting equation, regardless of the timing of actual cash flows.
Required:
First, describe the timing of revenue and expense recognition under the accrual basis versus the cash basis of accounting. Then, give two examples of (1) a revenue-related transaction and (2) an expense-related transaction that would be reported at significantly different points in time using the accrual basis versus the cash basis.

Accepted Answer

Revenue recognition occurs when the reve

Question 15

The Long, Inc. uses the accrual basis of accounting. Long's rent expense account had a $18,000 balance at the end of the year. The prepaid rent account had a $5,000 balance at the beginning of the year and a $9,000 balance at the end of the year. How much cash was paid for rent during the year?

Accepted Answer

A)  $ 5,000 
B)  $ 9,000 
C)  $18,000 
D)  $22,000 
A)  $ 5,000 
B)  $ 9,000 
C)  $18,000 
D)  $22,000

Question 16

Adjusting journal entries are made

Accepted Answer

A)  at the beginning of the accounting period 
B)  at the end of the accounting period 
C)  when revenue is realized (or realizable) 
D)  anytime we need to adjust an account 
A)  at the beginning of the accounting period 
B)  at the end of the accounting period 
C)  when revenue is realized (or realizable) 
D)  anytime we need to adjust an account

Question 17

Under cash-basis accounting,

Accepted Answer

A)  revenue is recorded when earned 
B)  revenue is recorded when cash is received 
C)  expenses are recorded when incurred 
D)  expenses are recorded when due 
A)  revenue is recorded when earned 
B)  revenue is recorded when cash is received 
C)  expenses are recorded when incurred 
D)  expenses are recorded when due

Question 18

In order to prepare the financial statements each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

Accepted Answer

A) True 
 B)False

Question 19

The Bell Corporation uses a general journal, a sales journal, a purchases journal, a cash receipts journal, and a cash payments journal. Below are listed 12 of Bell Corporation's transactions in 2013. a.	Purchased $3,000 of merchandise on credit.
b.	Sold $500 merchandise on account.
c.	Sold $1,500 merchandise for cash.
d.	Credited $300 in sales returns to customer accounts.
e.	Prepared adjusting and closing entries.
f.	Paid $200 office salaries.
g.	Returned $250 of defective merchandise to supplier for credit on account.
h.	Purchased building site for $7,500 cash.
i.	Purchased $1,000 merchandise for cash.
j.	Collected $750 from customers on account.
k.	Purchased building by issuing $10,000 note payable.
l.	Received a $600 income tax refund.

Required:
List letters (a) through (l) and indicate which journal would be used by Bell to record each transaction.

Accepted Answer

a.	purchases journal
b.	sales journal
c.

Question 20

An advantage of using the general journal is to prevent errors.

Accepted Answer

A) True 
 B)False

An example of a transposition is

The purpose of closing entries is to reduce the balance in the periodic accounts to zero and to compute net income for the period.

Step two in completing a worksheet is to

The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue (credited); Depreciation Expense (debited); Unearned Rental Revenue (debited); and Prepaid Insurance (credited). Which account is likely to appear in Yellow Canoe's reversing entries?

On October 1, 2014, Jacob's Beach Umbrellas borrowed $5,000 on a 12%, one-year note payable. Interest was payable semiannually. A correct adjusting entry was made on December 31, 2014, and a correct reversing entry was made on January 1, 2015. The entry that should be made on March 31, 2015, is

In order to compute revenue the ending accounts receivable balance must be added to the collections from customers minus the beginning balance in accounts receivable. This adjustment will convert the cash-basis information to the accrual-basis accounting.

The Michael Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit. Which of the following statements about the general ledger account is not true?

The accounting cycle followed each period by a company includes recording transactions, storing the data, organizing the information, summarizing the events and arrangements and then reporting the accounting information.

When cash is debited for rents that are collected but are not yet earned, the amount credited should be

Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred or revenues earned.

What are closing entries and why are they necessary?

The Long, Inc. uses the accrual basis of accounting. Long's rent expense account had a $18,000 balance at the end of the year. The prepaid rent account had a $5,000 balance at the beginning of the year and a $9,000 balance at the end of the year. How much cash was paid for rent during the year?

Adjusting journal entries are made

Under cash-basis accounting,

In order to prepare the financial statements each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

An advantage of using the general journal is to prevent errors.

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

Filters

Exam 3: Review of a Companys Accounting System

An example of a transposition is

The purpose of closing entries is to reduce the balance in the periodic accounts to zero and to compute net income for the period.

Step two in completing a worksheet is to

The Yellow Canoe Company made year-end adjusting entries affecting each of the following accounts: Interest Revenue (credited); Depreciation Expense (debited); Unearned Rental Revenue (debited); and Prepaid Insurance (credited). Which account is likely to appear in Yellow Canoe's reversing entries?

On October 1, 2014, Jacob's Beach Umbrellas borrowed $5,000 on a 12%, one-year note payable. Interest was payable semiannually. A correct adjusting entry was made on December 31, 2014, and a correct reversing entry was made on January 1, 2015. The entry that should be made on March 31, 2015, is

In order to compute revenue the ending accounts receivable balance must be added to the collections from customers minus the beginning balance in accounts receivable. This adjustment will convert the cash-basis information to the accrual-basis accounting.

The Michael Company has an accounts receivable account in its general ledger, and it also maintains a subsidiary ledger that contains an individual account for each of its customers who buys merchandise on credit. Which of the following statements about the general ledger account is not true?

The accounting cycle followed each period by a company includes recording transactions, storing the data, organizing the information, summarizing the events and arrangements and then reporting the accounting information.

When cash is debited for rents that are collected but are not yet earned, the amount credited should be

Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred or revenues earned.

What are closing entries and why are they necessary?

The Long, Inc. uses the accrual basis of accounting. Long's rent expense account had a $18,000 balance at the end of the year. The prepaid rent account had a $5,000 balance at the beginning of the year and a $9,000 balance at the end of the year. How much cash was paid for rent during the year?

Adjusting journal entries are made

Under cash-basis accounting,

In order to prepare the financial statements each account in the ledger is recomputed to ensure all effects of the adjusting entries have been captured.

An advantage of using the general journal is to prevent errors.

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

Filters