Question 1

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

Accepted Answer

A) U.S.dollar remains stable over a long period of time 
B) U.S.dollar is universally recognized as a reliable financial measure 
C) U.S.dollar is the medium of monetary exchange in the U.S. 
D) U.S.dollar is required for financial statement presentation by the FASB and SEC 
A) U.S.dollar remains stable over a long period of time 
B) U.S.dollar is universally recognized as a reliable financial measure 
C) U.S.dollar is the medium of monetary exchange in the U.S. 
D) U.S.dollar is required for financial statement presentation by the FASB and SEC

Question 2

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Accepted Answer

A) Assets increase and liabilities increase 
B) Assets increase and stockholders' equity increases 
C) Assets decrease and liabilities decrease 
D) Stockholders' equity increases and decreases by the same amount 
A) Assets increase and liabilities increase 
B) Assets increase and stockholders' equity increases 
C) Assets decrease and liabilities decrease 
D) Stockholders' equity increases and decreases by the same amount

Question 3

Explain the differences between the cash and accrual basis of accounting and how the adjusting process fits in.

Accepted Answer

The cash basis of accounting assumes rev

Question 4

Three months before year-end,Skyway Company signed a $100,000,10%,8-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

Accepted Answer

A) True 
 B)False

Question 5

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

Accepted Answer

A) Expenses increase 
B) Revenues decrease 
C) Liabilities increase 
D) Net income increases 
A) Expenses increase 
B) Revenues decrease 
C) Liabilities increase 
D) Net income increases

Question 6

A company that forgets to recognize depreciation for the year overstates its income and assets.

Accepted Answer

A) True 
 B)False

Question 7

Windstar Corp.purchased supplies at a cost of $6,000 during the year.At December 31,supplies on hand are $1,400.Supplies expense for the year was $5,200.How much were supplies on hand at January 1?

Accepted Answer

A) $ 2,200 
B) $ 11,200 
C) $ 1,400 
D) $ 600 
A) $ 2,200 
B) $ 11,200 
C) $ 1,400 
D) $ 600

Question 8

Expense accounts are debited in the closing process.

Accepted Answer

A) True 
 B)False

Question 9

Income summary does not appear on the income statement.

Accepted Answer

A) True 
 B)False

Question 10

Farris Finese operates an automatic car wash business,The Final Finese.The following amounts were taken from the company's unadjusted trial balance at December 31,2013:
   Determine the effect on the accounting equation of any adjusting entries necessary at December 31,2013,for each of the transactions that follow.

Accepted Answer

The answer of Farris Finese operates an automatic car wash...

Question 11

What two choices must be made in the measurement process for a company that acquires a piece of equipment and needs to record it in the accounting records? Explain.

Accepted Answer

The first choice is deciding the attribu

Question 12

Adjusting entries are recorded at the end of each accounting period so that net income is accurately reflected in the financial statements for the period

Accepted Answer

A) True 
 B)False

Question 13

Eaton Corporation purchased supplies at a cost of $15,000 during 2014.At January 1,2014,supplies on hand were $2,000.At December 31,2014,supplies on hand are $2,500.Calculate supplies expense for 2014.

Accepted Answer

A) $ 15,500 
B) $ 14,500 
C) $ 15,000 
D) $ 17,000 
A) $ 15,500 
B) $ 14,500 
C) $ 15,000 
D) $ 17,000

Question 14

Which of the following journal entries is required to close the Income Summary account of a company with a net loss ?

Accepted Answer

A) Debit Income Summary,credit Capital Stock. 
B) Debit Income Summary,credit Retained earnings. 
C) Credit Income Summary,debit Retained earnings. 
D) Credit Income Summary,debit Dividends. 
A) Debit Income Summary,credit Capital Stock. 
B) Debit Income Summary,credit Retained earnings. 
C) Credit Income Summary,debit Retained earnings. 
D) Credit Income Summary,debit Dividends.

Question 15

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:
(1)Notice that Mountainside Kafe reported "Provision for income taxes." What type of account is this? What adjustment would have been made if this accrual were necessary at December 31,2014?
(2)Mountainside Kafe reported $3.1 million and $2.8 million of accrued interest in the liability section of its balance sheet at December 31,2014 and 2013,respectively.How much cash did it pay during 2014 for interest?
(3)Is Mountainside Kafe income statement an "interim statement"? Explain.

Accepted Answer

(1)This account represents income taxes

Question 16

When initially recording the cost of land purchased,most companies use the current value.

Accepted Answer

A) True 
 B)False

Question 17

Accumulated Depreciation

Accepted Answer

A) increases assets. 
B) decreases assets. 
C) increases liabilities. 
D) decreases liabilities. 
A) increases assets. 
B) decreases assets. 
C) increases liabilities. 
D) decreases liabilities.

Question 18

There is one single format for a work sheet.

Accepted Answer

A) True 
 B)False

Question 19

Based on its income for the month,Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Accepted Answer

A) Increase retained earnings 
B) Increase income taxes expense 
C) Increase net income 
D) Decrease income taxes payable 
A) Increase retained earnings 
B) Increase income taxes expense 
C) Increase net income 
D) Decrease income taxes payable

Question 20

Revenue is always earned continuously over time.

Accepted Answer

A) True 
 B)False

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Explain the differences between the cash and accrual basis of accounting and how the adjusting process fits in.

Three months before year-end,Skyway Company signed a $100,000,10%,8-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

A company that forgets to recognize depreciation for the year overstates its income and assets.

Windstar Corp.purchased supplies at a cost of $6,000 during the year.At December 31,supplies on hand are $1,400.Supplies expense for the year was $5,200.How much were supplies on hand at January 1?

Expense accounts are debited in the closing process.

Income summary does not appear on the income statement.

What two choices must be made in the measurement process for a company that acquires a piece of equipment and needs to record it in the accounting records? Explain.

Adjusting entries are recorded at the end of each accounting period so that net income is accurately reflected in the financial statements for the period

Eaton Corporation purchased supplies at a cost of $15,000 during 2014.At January 1,2014,supplies on hand were $2,000.At December 31,2014,supplies on hand are $2,500.Calculate supplies expense for 2014.

Which of the following journal entries is required to close the Income Summary account of a company with a net loss ?

When initially recording the cost of land purchased,most companies use the current value.

Accumulated Depreciation

There is one single format for a work sheet.

Based on its income for the month,Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Revenue is always earned continuously over time.

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

Filters

Exam 4: Income Measurement and Accrual Accounting

Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

What happens to the accounting equation when the adjustment that recognizes accrued interest revenue is recorded?

Explain the differences between the cash and accrual basis of accounting and how the adjusting process fits in.

Three months before year-end,Skyway Company signed a $100,000,10%,8-month note.Principal and interest will be paid at maturity.No interest should be accrued at year-end because the company has no obligation to pay the interest until the note matures.

What is the effect on the accounting equation when a company recognizes rent as earned that had previously been received in advance from customers?

A company that forgets to recognize depreciation for the year overstates its income and assets.

Windstar Corp.purchased supplies at a cost of $6,000 during the year.At December 31,supplies on hand are $1,400.Supplies expense for the year was $5,200.How much were supplies on hand at January 1?

Expense accounts are debited in the closing process.

Income summary does not appear on the income statement.

What two choices must be made in the measurement process for a company that acquires a piece of equipment and needs to record it in the accounting records? Explain.

Adjusting entries are recorded at the end of each accounting period so that net income is accurately reflected in the financial statements for the period

Eaton Corporation purchased supplies at a cost of $15,000 during 2014.At January 1,2014,supplies on hand were $2,000.At December 31,2014,supplies on hand are $2,500.Calculate supplies expense for 2014.

Which of the following journal entries is required to close the Income Summary account of a company with a net loss ?

When initially recording the cost of land purchased,most companies use the current value.

Accumulated Depreciation

There is one single format for a work sheet.

Based on its income for the month,Reel Company estimates that federal income taxes for the month of May will be $11,000.What is the effect of the adjustment on the financial statements?

Revenue is always earned continuously over time.

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

Filters