Question 1

Which of the following situations does not involve an accrual?

Accepted Answer

A) Recording accrued interest. 
B) Recording depreciation. 
C) Recording unrecorded wages. 
D) Recording unrecorded revenue. 
A) Recording accrued interest. 
B) Recording depreciation. 
C) Recording unrecorded wages. 
D) Recording unrecorded revenue. B

Question 2

Red Company created advertising copy for a client.Which of the following does not indicate that the transaction meets the SEC's four criteria for revenue recognition?

Accepted Answer

A) The company and the customer agree that the customer owes for the service. 
B) Both parties understand the price. 
C) The goods or services have been used to produce revenue. 
D) There is a reasonable expectation that the customer will pay the bill. 
A) The company and the customer agree that the customer owes for the service. 
B) Both parties understand the price. 
C) The goods or services have been used to produce revenue. 
D) There is a reasonable expectation that the customer will pay the bill. C

Question 3

Recording incurred but unpaid expenses is an example of an accrual.

Accepted Answer

A) True 
 B)False  True

Question 4

In the space below,state whether each situation is a deferral or an accrual.
______a.Unrecorded interest on savings bonds is $765.
______b.Property taxes that have been incurred but that have not yet been paid or recorded amount to $1,034.
______c.Legal fees of $2,890 were collected in advance.By year end,70 percent were still unearned.
______d.Prepaid Insurance had a $900 balance prior to adjustment.By year end,25 percent was still unexpired.
______e.Salaries earned by employees by year end but not yet paid or recorded amounted to $1,655.
______f.Services totaling $690 have been performed but not yet recorded or billed.

Accepted Answer

a.Accrual b.Accrual

Question 5

Adjusting entries are useful in apportioning costs among two or more accounting periods.

Accepted Answer

A) True 
 B)False

Question 6

Major assumptions made in measuring business income include all of the following except

Accepted Answer

A) continuity. 
B) periodicity. 
C) matching. 
D) accrual accounting. 
A) continuity. 
B) periodicity. 
C) matching. 
D) accrual accounting.

Question 7

The 20x5 income statement for Almond Company showed rent expense of $10,800 and salaries expense of $7,200.The related balance sheet account balances at year end for last year and this year were as follows:
   a.Compute cash paid for rent during the year.
b.Compute cash paid for salaries during the year.

Accepted Answer

a.$12,000 ($10,800 +

Question 8

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:
  If on December 31,2014,the insurance still unexpired amounted to $20,the adjusting entry would contain a

Accepted Answer

A) debit to Prepaid Insurance for $80. 
B) credit to Prepaid Insurance for $80 
C) debit to Insurance Expense for $20. 
D) credit to Prepaid Insurance for $20. 
A) debit to Prepaid Insurance for $80. 
B) credit to Prepaid Insurance for $80 
C) debit to Insurance Expense for $20. 
D) credit to Prepaid Insurance for $20.

Question 9

As the usefulness of a plant asset expires,

Accepted Answer

A) an amount is transferred from one asset account to another. 
B) a related expense account is reduced. 
C) a liability is created. 
D) the cost of the asset is allocated to an expense account. 
A) an amount is transferred from one asset account to another. 
B) a related expense account is reduced. 
C) a liability is created. 
D) the cost of the asset is allocated to an expense account.

Question 10

The periodicity assumption recognizes that

Accepted Answer

A) the company may continue indefinitely. 
B) all financial statements should cover a fiscal year. 
C) net income is an estimate. 
D) the value of an asset may vary from month to month. 
A) the company may continue indefinitely. 
B) all financial statements should cover a fiscal year. 
C) net income is an estimate. 
D) the value of an asset may vary from month to month.

Question 11

Custom Realty Services sold a house for a client and will be paid a commission for its services.Using the SEC's four conditions or revenue recognition,explain why Custom Realty Services either should or should not recognize the revenue now.

Accepted Answer

Custom Realty Services should recognize

Question 12

When a direct cause-and-effect relationship cannot be established between revenues and costs,the costs are

Accepted Answer

A) not expensed and remain as assets on the balance sheet. 
B) expensed among the accounting periods that benefit from the costs. 
C) expensed immediately in their entirety. 
D) expensed equally each year. 
A) not expensed and remain as assets on the balance sheet. 
B) expensed among the accounting periods that benefit from the costs. 
C) expensed immediately in their entirety. 
D) expensed equally each year.

Question 13

Net income can be used to assess a company's progress in meeting the goal of profitability.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Accepted Answer

A) Accumulated Depreciation-Equipment 
B) Prepaid Insurance 
C) Owner's Withdrawals 
D) Depreciation Expense 
A) Accumulated Depreciation-Equipment 
B) Prepaid Insurance 
C) Owner's Withdrawals 
D) Depreciation Expense

Question 15

Expenses are incurred

Accepted Answer

A) to generate revenue. 
B) to produce liabilities. 
C) only during the adjustment process. 
D) to produce assets. 
A) to generate revenue. 
B) to produce liabilities. 
C) only during the adjustment process. 
D) to produce assets.

Question 16

The recording of an expense could result in a corresponding increase in

Accepted Answer

A) owner's equity. 
B) revenue. 
C) a liability. 
D) an asset. 
A) owner's equity. 
B) revenue. 
C) a liability. 
D) an asset.

Question 17

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:
  If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a

Accepted Answer

A) credit to Supplies for $120. 
B) credit to Supplies Expense for $180. 
C) debit to Supplies Expense for $180. 
D) debit to Supplies for $120. 
A) credit to Supplies for $120. 
B) credit to Supplies Expense for $180. 
C) debit to Supplies Expense for $180. 
D) debit to Supplies for $120.

Question 18

Which of the following is an example of an accrual?

Accepted Answer

A) Purchase of equipment. 
B) Prepaid insurance. 
C) Salaries earned but not yet paid. 
D) All of these choices. 
A) Purchase of equipment. 
B) Prepaid insurance. 
C) Salaries earned but not yet paid. 
D) All of these choices.

Question 19

If a company is expected to survive,it is considered a going concern.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following transactions results in an increase in revenues?

Accepted Answer

A) Receipt of accounts receivable. 
B) Purchase of inventory. 
C) Receipt of principal from a bank loan. 
D) Delivery of a service in exchange for future payment. 
A) Receipt of accounts receivable. 
B) Purchase of inventory. 
C) Receipt of principal from a bank loan. 
D) Delivery of a service in exchange for future payment.

Which of the following situations does not involve an accrual?

Red Company created advertising copy for a client.Which of the following does not indicate that the transaction meets the SEC's four criteria for revenue recognition?

Recording incurred but unpaid expenses is an example of an accrual.

Adjusting entries are useful in apportioning costs among two or more accounting periods.

Major assumptions made in measuring business income include all of the following except

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: If on December 31,2014,the insurance still unexpired amounted to $20,the adjusting entry would contain a

As the usefulness of a plant asset expires,

The periodicity assumption recognizes that

Custom Realty Services sold a house for a client and will be paid a commission for its services.Using the SEC's four conditions or revenue recognition,explain why Custom Realty Services either should or should not recognize the revenue now.

When a direct cause-and-effect relationship cannot be established between revenues and costs,the costs are

Net income can be used to assess a company's progress in meeting the goal of profitability.

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Expenses are incurred

The recording of an expense could result in a corresponding increase in

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a

Which of the following is an example of an accrual?

If a company is expected to survive,it is considered a going concern.

Which of the following transactions results in an increase in revenues?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

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Exam 3: Adjusting the Accounts

Which of the following situations does not involve an accrual?

Red Company created advertising copy for a client.Which of the following does not indicate that the transaction meets the SEC's four criteria for revenue recognition?

Recording incurred but unpaid expenses is an example of an accrual.

Adjusting entries are useful in apportioning costs among two or more accounting periods.

Major assumptions made in measuring business income include all of the following except

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: If on December 31,2014,the insurance still unexpired amounted to $20,the adjusting entry would contain a

As the usefulness of a plant asset expires,

The periodicity assumption recognizes that

Custom Realty Services sold a house for a client and will be paid a commission for its services.Using the SEC's four conditions or revenue recognition,explain why Custom Realty Services either should or should not recognize the revenue now.

When a direct cause-and-effect relationship cannot be established between revenues and costs,the costs are

Net income can be used to assess a company's progress in meeting the goal of profitability.

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Expenses are incurred

The recording of an expense could result in a corresponding increase in

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a

Which of the following is an example of an accrual?

If a company is expected to survive,it is considered a going concern.

Which of the following transactions results in an increase in revenues?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters