Question 1

Which of the following statements does not present financial information based on the accrual basis of accounting?

Accepted Answer

A) Balance Sheet 
B) Income Statement 
C) Statement of Retained Earnings 
D) Statement of Cash Flows 
A) Balance Sheet 
B) Income Statement 
C) Statement of Retained Earnings 
D) Statement of Cash Flows

Question 2

Tracy,Inc. Tracy,Inc.adjusts its books each month but closes its books at the end of the year.The trial balance at July 31 before adjustments is as follows:
  Refer to the trial balance of Tracy,Inc.
On July 1,Tracy paid four months in advance for insurance.Which of the following is included in the adjusting entry at July 31?

Accepted Answer

A) A debit to Prepaid Insurance for $780. 
B) A credit to Prepaid Insurance for $2,340. 
C) A debit to Prepaid Insurance for $2,340. 
D) A credit to Prepaid Insurance for $780. 
A) A debit to Prepaid Insurance for $780. 
B) A credit to Prepaid Insurance for $2,340. 
C) A debit to Prepaid Insurance for $2,340. 
D) A credit to Prepaid Insurance for $780.

Question 3

Describe the benefit(s)of using the accrual process as compared to the cash basis.

Accepted Answer

Cash basis accounting is not conducive t

Question 4

Failure to record dividends paid would result in which of the following?

Accepted Answer

A) Net income being understated 
B) An increase in total liabilities 
C) Stockholders' equity being overstated 
D) Total assets being understated 
A) Net income being understated 
B) An increase in total liabilities 
C) Stockholders' equity being overstated 
D) Total assets being understated

Question 5

The selection of historical cost over current value as the attribute to be measured for assets is an example of the trade-off of

Accepted Answer

A) Reliability over relevance 
B) Costs over benefit 
C) Comparability over consistency 
D) Understandability over verifiability 
A) Reliability over relevance 
B) Costs over benefit 
C) Comparability over consistency 
D) Understandability over verifiability

Question 6

Which of the following is the attribute used to measure many assets that are recognized on a balance sheet,because it is more objective and verifiable?

Accepted Answer

A) Market value 
B) Historical cost 
C) Liquidation value 
D) Current replacement cost 
A) Market value 
B) Historical cost 
C) Liquidation value 
D) Current replacement cost

Question 7

The difference between accrual-based revenue and accrual-based expenses is called _________________________.

Accepted Answer

The answer of The difference between accrual-based revenue and accrual-based...

Question 8

An adjusting entry could not consist of:

Accepted Answer

A) A debit to a liability and a credit to revenue. 
B) A debit to an expense and a credit to a liability. 
C) A debit to an expense and a credit to an asset. 
D) A debit to an expense and a credit to revenue. 
A) A debit to a liability and a credit to revenue. 
B) A debit to an expense and a credit to a liability. 
C) A debit to an expense and a credit to an asset. 
D) A debit to an expense and a credit to revenue.

Question 9

Mountainside Kafe Corporation
The following is the consolidated statements of income for Mountainside Kafe Corporation for the years ending December 31,2013 and 2014
   Refer to the consolidated statements of income for Mountainside Kafe Corporation.
REQUIRED: Identify three specific accounts of Mountainside Kafe that might include expenses accrued as a result of adjustments.Discuss the 'effects' of these on the accounting equation.Ignore amounts.

Accepted Answer

The accounts are: Wages expense,interest

Question 10

Under the accrual method,expenses are recognized when revenue is earned.

Accepted Answer

A) True 
 B)False

Question 11

The Dividend account is known as which of the following?

Accepted Answer

A) Nominal account 
B) Closing account 
C) Real account 
D) both b and c 
A) Nominal account 
B) Closing account 
C) Real account 
D) both b and c

Question 12

What is the matching principle? How does it relate to the revenue recognition process?

Accepted Answer

The matching principle is the associatio

Question 13

Adjustments are recorded for all transactions involving outside entities.

Accepted Answer

A) True 
 B)False

Question 14

Meadow Produce sells fresh vegetables and fruits in Polk County.The following unadjusted amounts were taken from the company's accounting records at December 31,2014:
Note Payable,12%,4-month,dated December 1,2014,for $20,000
Note Receivable,10%,6-month,dated October 1,2014,for $12,000

Accepted Answer

The answer of Meadow Produce sells fresh vegetables and fruits...

Question 15

Starlight Associates,Inc.recorded salary expense of $100,000 in 2014.However,additional salaries of $5,000 had been earned,but not paid or recorded at December 31,2014.After the adjustments are recorded and posted at December 31,2014,the balances in the Salaries Expense and Salaries Payable accounts will be Salaries Expense Salaries Payable

Accepted Answer

A) $ 105,000 $ 5,000 
B) $ 100,000 $ -0- 
C) $ 100,000 $ 5,000 
D) $ 105,000 $ -0- 
A) $ 105,000 $ 5,000 
B) $ 100,000 $ -0- 
C) $ 100,000 $ 5,000 
D) $ 105,000 $ -0-

Question 16

Which one of the following adjustments will increase assets?

Accepted Answer

A) Interest incurred on money borrowed during the period but not yet paid to the bank is accrued 
B) Rent revenue is recorded for amounts owed by a tenant but not yet paid 
C) The use of supplies is recorded 
D) Depreciation for the period is recorded 
A) Interest incurred on money borrowed during the period but not yet paid to the bank is accrued 
B) Rent revenue is recorded for amounts owed by a tenant but not yet paid 
C) The use of supplies is recorded 
D) Depreciation for the period is recorded

Question 17

Gear Shop purchased supplies at a cost of $1,000 during the year.At January 1,the beginning balance in the supplies account was $300.At December 31,supplies on hand are $100.Determine supplies expense for the year.

Accepted Answer

A) $ 1,300 
B) $ 1,200 
C) $ 1,100 
D) $ 1,400 
A) $ 1,300 
B) $ 1,200 
C) $ 1,100 
D) $ 1,400

Question 18

Market Club Center sells season memberships for $200 each.During January of 2014,60 season memberships were sold.As of March 31,2014,only $3,000 of season membership fees had been collected from customers.The season runs for 4 months starting May 15,2014.Which one of the following is an amount reported on the financial statements for the period ending March 31,2014?

Accepted Answer

A) Unearned membership revenue of $3,000 
B) Unearned membership revenue of $9,000 
C) Accounts receivable of $3,000 
D) Membership revenue of $9,000 
A) Unearned membership revenue of $3,000 
B) Unearned membership revenue of $9,000 
C) Accounts receivable of $3,000 
D) Membership revenue of $9,000

Question 19

Area Company purchased a delivery van at a cost of $30,000 cash on January 1,2013.The van has an estimated useful life of 6 years and a $6,000 estimated residual value.

Accepted Answer

The answer of Area Company purchased a delivery van at...

Question 20

Stanfield Equipment sells new tractors and pays each salesperson a commission of $1,000 for each tractor sold.During the month of August,a salesperson,Jason,sold 3 new tractors.Stanfield pays Jason on the 10th day of the month following the sale.Jason operates on the cash basis;the tractor dealer operates on the accrual basis.Which of the following statements is true?

Accepted Answer

A) Jason will recognize commission revenue earned in the amount of $3,000 in August. 
B) Stanfield will recognize commission expense in the amount of $3,000 in August. 
C) Jason will recognize commission expense in the amount of $3,000 in September. 
D) Jason will recognize revenue in the same month that the tractor dealer recognizes expense. 
A) Jason will recognize commission revenue earned in the amount of $3,000 in August. 
B) Stanfield will recognize commission expense in the amount of $3,000 in August. 
C) Jason will recognize commission expense in the amount of $3,000 in September. 
D) Jason will recognize revenue in the same month that the tractor dealer recognizes expense.

Which of the following statements does not present financial information based on the accrual basis of accounting?

Describe the benefit(s)of using the accrual process as compared to the cash basis.

Failure to record dividends paid would result in which of the following?

The selection of historical cost over current value as the attribute to be measured for assets is an example of the trade-off of

Which of the following is the attribute used to measure many assets that are recognized on a balance sheet,because it is more objective and verifiable?

The difference between accrual-based revenue and accrual-based expenses is called _________________________.

An adjusting entry could not consist of:

Under the accrual method,expenses are recognized when revenue is earned.

The Dividend account is known as which of the following?

What is the matching principle? How does it relate to the revenue recognition process?

Adjustments are recorded for all transactions involving outside entities.

Meadow Produce sells fresh vegetables and fruits in Polk County.The following unadjusted amounts were taken from the company's accounting records at December 31,2014: Note Payable,12%,4-month,dated December 1,2014,for $20,000 Note Receivable,10%,6-month,dated October 1,2014,for $12,000

Which one of the following adjustments will increase assets?

Gear Shop purchased supplies at a cost of $1,000 during the year.At January 1,the beginning balance in the supplies account was $300.At December 31,supplies on hand are $100.Determine supplies expense for the year.

Area Company purchased a delivery van at a cost of $30,000 cash on January 1,2013.The van has an estimated useful life of 6 years and a $6,000 estimated residual value.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 4: Income Measurement and Accrual Accounting

Which of the following statements does not present financial information based on the accrual basis of accounting?

Describe the benefit(s)of using the accrual process as compared to the cash basis.

Failure to record dividends paid would result in which of the following?

The selection of historical cost over current value as the attribute to be measured for assets is an example of the trade-off of

Which of the following is the attribute used to measure many assets that are recognized on a balance sheet,because it is more objective and verifiable?

The difference between accrual-based revenue and accrual-based expenses is called _________________________.

An adjusting entry could not consist of:

Under the accrual method,expenses are recognized when revenue is earned.

The Dividend account is known as which of the following?

What is the matching principle? How does it relate to the revenue recognition process?

Adjustments are recorded for all transactions involving outside entities.

Meadow Produce sells fresh vegetables and fruits in Polk County.The following unadjusted amounts were taken from the company's accounting records at December 31,2014: Note Payable,12%,4-month,dated December 1,2014,for $20,000 Note Receivable,10%,6-month,dated October 1,2014,for $12,000

Which one of the following adjustments will increase assets?

Gear Shop purchased supplies at a cost of $1,000 during the year.At January 1,the beginning balance in the supplies account was $300.At December 31,supplies on hand are $100.Determine supplies expense for the year.

Area Company purchased a delivery van at a cost of $30,000 cash on January 1,2013.The van has an estimated useful life of 6 years and a $6,000 estimated residual value.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Operating Assets: Property, plant, and Equipment, and Intangibles

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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