Question 1

Prior to closing, XYZ Company's accounting records showed the following balances:   After closing, XYZ's retained earnings balance would be

Accepted Answer

A)  $5,600. 
B)  $7,000. 
C)  $7,900. 
D)  None of these. 
A)  $5,600. 
B)  $7,000. 
C)  $7,900. 
D)  None of these.

Question 2

The matching concept refers to the "matching" of:

Accepted Answer

A)  expenses and liabilities 
B)  expenses and revenues 
C)  assets and equity 
D)  assets and liabilities 
A)  expenses and liabilities 
B)  expenses and revenues 
C)  assets and equity 
D)  assets and liabilities

Question 3

Which of the following transactions does not involve an accrual?

Accepted Answer

A)  Recording interest earned that will be received in the next period. 
B)  Recording operating expense incurred but not yet paid. 
C)  Recording salary expense incurred but not yet paid. 
D)  Recording the pre-payment of two years' worth of insurance. 
A)  Recording interest earned that will be received in the next period. 
B)  Recording operating expense incurred but not yet paid. 
C)  Recording salary expense incurred but not yet paid. 
D)  Recording the pre-payment of two years' worth of insurance.

Question 4

Which of the following events would not require an end-of-year adjusting entry?

Accepted Answer

A)  Purchasing supplies for cash 
B)  Providing services on account 
C)  Purchasing a 12-month insurance policy on July 1 
D)  All of these would require an end-of-year adjustment 
A)  Purchasing supplies for cash 
B)  Providing services on account 
C)  Purchasing a 12-month insurance policy on July 1 
D)  All of these would require an end-of-year adjustment

Question 5

Which of the following is an asset use transaction?

Accepted Answer

A)  Purchased machine for cash. 
B)  Recorded supplies expense at the end of the period. 
C)  Invested cash in an interest earning account. 
D)  Accrued salary expense. 
A)  Purchased machine for cash. 
B)  Recorded supplies expense at the end of the period. 
C)  Invested cash in an interest earning account. 
D)  Accrued salary expense.

Question 6

Giambrone Corporation began business operations and experienced the following transactions during 2013:
1) Issued common stock for $15,000 cash.
2) Issued a $10,000, 6% 4-year note to the bank on February 1.
3) Provided services to customers for $40,000 cash.
4) Paid $19,000 for operating expenses.
5) Accrued interest expense on the note.
6) Paid a $2,000 dividend to shareholders.
Required:
Record the above transactions on a horizontal statements model to reflect their effect on Giambrone's financial statements.

Accepted Answer

The answer of Giambrone Corporation began business operations and experienced...

Question 7

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

Accepted Answer

A) True 
 B)False

Question 8

The term "recognition" means to report an economic event in the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would cause net income on the accrual basis to be different than (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?

Accepted Answer

A)  Purchased supplies for cash. 
B)  Purchased land for cash. 
C)  Invested cash in an interest earning account. 
D)  All of these are correct. 
A)  Purchased supplies for cash. 
B)  Purchased land for cash. 
C)  Invested cash in an interest earning account. 
D)  All of these are correct.

Question 10

Asset use transactions always involve the payment of cash.

Accepted Answer

A) True 
 B)False

Question 11

Franklin Trash Removal Company received a cash advance of $9,000 on December 1, 2013 to provide services during the months of December, January, and February. The year-end adjustment to recognize the partial expiration of the contract will

Accepted Answer

A)  increase equity by $3,000 
B)  increase assets by $3,000 
C)  increase liabilities by $3,000 
D)  Increase Equity by $3,000 and assets by $3,000. 
A)  increase equity by $3,000 
B)  increase assets by $3,000 
C)  increase liabilities by $3,000 
D)  Increase Equity by $3,000 and assets by $3,000.

Question 12

Which of the following financial statement elements is closed at the end of an accounting cycle?

Accepted Answer

A)  Liabilities 
B)  Common stock 
C)  Assets 
D)  Revenues 
A)  Liabilities 
B)  Common stock 
C)  Assets 
D)  Revenues

Question 13

The temporary or nominal accounts are closed prior to the start of the next accounting cycle. In this closing process, the amounts in each of these accounts are transferred to what other account(s)?

Accepted Answer

Retained Earnings
Explanation: Closing r

Question 14

Tell whether each of the following events are asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE) transactions.
 ) Issued common stock to investors for $8,000 cash
_____2) Paid one year's rent in advance
_____3) Provided services to customers and received $35,000 cash
_____4) Paid creditors $10,000
_____5) Received $3,000 of revenue in advance
_____6) Provided services to customers on account, $12,000
_____7) Collected $2,000 from accounts receivable
_____8) Recognized accrued salary expense of $2,000
_____9) Borrowed $6,000 from creditors
 ) Adjusted the records for supplies used of $800

Accepted Answer

1) AS 2) AE 3) AS 4) AU 5) AS 6) AS 7) A

Question 15

Companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received.

Accepted Answer

A) True 
 B)False

Question 16

Norris Company experienced the following transactions during 2013, its first year in operation.
1) Issued $6,000 of common stock to stockholders.
2) Provided $2,300 of services on account.
3) Paid $1,600 cash for operating expenses.
4) Collected $1,900 of cash from accounts receivable.
5) Paid a $100 cash dividend to stockholders.
The total amount of assets shown on Norris Company's December 31, 2013 balance sheet is:

Accepted Answer

A)  $6,200. 
B)  $6,600. 
C)  $6,700. 
D)  None of these. 
A)  $6,200. 
B)  $6,600. 
C)  $6,700. 
D)  None of these.

Question 17

The balance in a revenue account at the beginning of an accounting period will always be

Accepted Answer

A)  equal to the amount of retained earnings for the previous period. 
B)  last period's ending balance. 
C)  higher than the previous periods beginning balance. 
D)  zero. 
A)  equal to the amount of retained earnings for the previous period. 
B)  last period's ending balance. 
C)  higher than the previous periods beginning balance. 
D)  zero.

Question 18

Norris Company experienced the following transactions during 2013, its first year in operation.
1) Issued $6,000 of common stock to stockholders.
2) Provided $2,300 of services on account.
3) Paid $1,600 cash for operating expenses.
4) Collected $1,900 of cash from accounts receivable.
5) Paid a $100 cash dividend to stockholders.
The amount of net cash flow from operating activities shown on Norris Company's 2013 statement of cash flows is

Accepted Answer

A)  $200. 
B)  $300. 
C)  $700. 
D)  $600. 
A)  $200. 
B)  $300. 
C)  $700. 
D)  $600.

Question 19

The following accounts and balances were drawn from the records of Hoover Company on December 31, 2013: $$\begin{array} { l r l r } 
\text { Cash } & \$ 1,000 & \text { Accounts Receivable } & \$ 850 \
\text { Dividends } & 500 & \text { Common Stock } & 975 \
\text { Land } & 800 & \text { Revenue } & 800 \
\text { Accounts Payable } & 450 & \text { Expense } & 550
\end{array}$$ The amount of net income shown on the December 31, 2013 income statement would amount to:

Accepted Answer

A)  $550. 
B)  $800. 
C)  $50. 
D)  $250. 
A)  $550. 
B)  $800. 
C)  $50. 
D)  $250.

Question 20

Describe the difference between temporary and permanent accounts, and state which ones are closed.

Accepted Answer

Temporary (nominal) accounts (revenues,

Prior to closing, XYZ Company's accounting records showed the following balances: After closing, XYZ's retained earnings balance would be

The matching concept refers to the "matching" of:

Which of the following transactions does not involve an accrual?

Which of the following events would not require an end-of-year adjusting entry?

Which of the following is an asset use transaction?

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

The term "recognition" means to report an economic event in the financial statements.

Which of the following would cause net income on the accrual basis to be different than (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?

Asset use transactions always involve the payment of cash.

Franklin Trash Removal Company received a cash advance of $9,000 on December 1, 2013 to provide services during the months of December, January, and February. The year-end adjustment to recognize the partial expiration of the contract will

Which of the following financial statement elements is closed at the end of an accounting cycle?

The temporary or nominal accounts are closed prior to the start of the next accounting cycle. In this closing process, the amounts in each of these accounts are transferred to what other account(s)?

Companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received.

The balance in a revenue account at the beginning of an accounting period will always be

Describe the difference between temporary and permanent accounts, and state which ones are closed.

An Introduction to Accounting

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

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Exam 2: Accounting for Accruals and Deferrals

Prior to closing, XYZ Company's accounting records showed the following balances: After closing, XYZ's retained earnings balance would be

The matching concept refers to the "matching" of:

Which of the following transactions does not involve an accrual?

Which of the following events would not require an end-of-year adjusting entry?

Which of the following is an asset use transaction?

Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.

The term "recognition" means to report an economic event in the financial statements.

Which of the following would cause net income on the accrual basis to be different than (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?

Asset use transactions always involve the payment of cash.

Franklin Trash Removal Company received a cash advance of $9,000 on December 1, 2013 to provide services during the months of December, January, and February. The year-end adjustment to recognize the partial expiration of the contract will

Which of the following financial statement elements is closed at the end of an accounting cycle?

The temporary or nominal accounts are closed prior to the start of the next accounting cycle. In this closing process, the amounts in each of these accounts are transferred to what other account(s)?

Companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received.

The balance in a revenue account at the beginning of an accounting period will always be

Describe the difference between temporary and permanent accounts, and state which ones are closed.

An Introduction to Accounting

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters