Question 1

Frank Corporation purchased supplies at a cost of $15,000 during 2015. At January 1, 2015, supplies on hand were $2,000. At December 31, 2015, supplies on hand are $2,500. Calculate supplies expense for 2015.

Accepted Answer

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

Question 2

From the list of accounts below, determine whether the account would be a nominal account or a real account.
-Cash

Accepted Answer

A) nominal account 
B) real account

Question 3

Which of the following statements is true concerning the matching principle?

Accepted Answer

A)  All costs can be directly matched with revenue. 
B)  All costs can be indirectly matched with periods in which they provide a benefit. 
C)  The association of assets for a period with the liabilities necessary to generate the assets is known as the matching principle. 
D)  Cost of goods sold matched with sales revenue is a classic example of direct matching under the matching principle.

Question 4

Given below are the accounts from Surf Corporation's ledger accounts after adjustments have been posted at December 31, 2014.
  A Identify which adjustments that Surf Corporation most likely made that are:
1 Accrued assets
2 Accrued liabilities
B Which accounts listed above would not be used in a cash basis system?

Accepted Answer

The answer of Given below are the accounts from Surf...

Question 5

What effect does "recognizing an accrued liability for utilities at the end of the accounting period" have on the accounting equation?

Accepted Answer

A)  Assets decrease and stockholders' equity decreases 
B)  Liabilities increase and stockholders' equity increases 
C)  Assets decrease and liabilities decrease 
D)  Liabilities increase and stockholders' equity decreases

Question 6

On May 1, 2014, Meehan Inc. lends $125,000 to Solar Power Inc. The loan will be repaid in 90 days with interest at 12%.
REQUIRED:
1. Identify and analyze the effect of the transaction on Meehan's books on May 1, 2014.
2. Assume that Meehan prepares quarterly statements on May 30, 2014. Prepare the adjusting entry on Meehan's books on May 30, 2014 regarding the loan.
3. Identify and analyze the effect of the transaction on Meehan's books on July 29, 2014, when Solar Power repays the principal and interest.

Accepted Answer

The answer of On May 1, 2014, Meehan Inc. lends...

Question 7

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

Accepted Answer

The answer of What is the matching principle? How does...

Question 8

Failure to record the earned portion of unearned revenue would result in which of the following?

Accepted Answer

A)  Net income being understated 
B)  No effect on total liabilities 
C)  Stockholders' equity being overstated 
D)  Total assets being understated

Question 9

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

Question 10

The basis of accounting that fails to take into consideration amounts earned that are not collected and expenses incurred but are not paid is the _________________________.

Accepted Answer

The answer of The basis of accounting that fails to...

Question 11

For each transaction select the letter of the type of adjustment that would be required.
-The cost of commissions to salesmen that has been earned, but not paid at the end of the accounting period is recorded

Accepted Answer

A) Deferred expense 
B) Deferred revenue 
C) Accrued liability 
D) Accrued asset

Question 12

The statement of cash flows reflects the revenues actually earned by the business, regardless of whether cash has been collected.

Accepted Answer

A) True 
 B)False

Question 13

Fennel Flooring purchased office supplies for its showroom during the month of April for $2,600. The supplies were paid for during April. On April 1, the Supplies account had a balance of $350. On April 30, supplies on hand amounted to $200.
A What is the effect on the accounting equation of the adjusting journal entry necessary at April 30th?
  B How much will be reported on the balance sheet at April 30 for Supplies?
C How much will be reported on the income statement for the month of April for supplies expense?
D If the adjustment in part A is not recorded, by what amount will net income be over or understated at April 30?

Accepted Answer

The answer of Fennel Flooring purchased office supplies for its...

Question 14

Country Club Center sells season memberships for $200 each. During January of 2015, 60 season memberships were sold. As of March 31, 2015, only $3,000 of season membership fees had been collected from customers. The season runs for 4 months starting May 15, 2015. Which one of the following is an amount reported on the financial statements for the period ending March 31, 2015?

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

Question 15

On January 1, 2015, Davin Avenue Associates, Inc. purchased a copier for $6,000 cash and decided to depreciate it over 5 years. What amounts associated with the copier will appear on Davin's financial statements for the year ending December 31, 2015?

Accepted Answer

The answer of On January 1, 2015, Davin Avenue Associates,...

Question 16

Claxton Corp. purchased equipment at a cost of $320,000 in January, 2010. As of January 1, 2014, depreciation of $160,000 had been recorded on this asset. Depreciation expense for 2014 is $40,000. After the adjustments are recorded and posted at December 31, 2014, what are the balances for the Equipment and Accumulated Depreciation?

Accepted Answer

The answer of Claxton Corp. purchased equipment at a cost...

Question 17

The following unadjusted amount was reported on Rental Entertainment Corporation's accounting records at December 31, 2015:
Unearned Subscription Revenue $ 36,000
A Determine the effect on the accounting equation of any adjusting entries necessary at
December 31, 2015, for each of the following transactions:
1 During the year, Rental Entertainment sold 12-month subscriptions for its newly developed Internet service. Half of the subscriptions began October 1, 2014, while the other half began December 1, 2015.
2 Rental estimates its income taxes to be 30 percent of its estimated income of
$60,000
  B
Prepare the current liabilities section of Rental's balance sheet by listing any current
liabilities and the related amounts as a result of the adjustments in Part A

Accepted Answer

The answer of The following unadjusted amount was reported on...

Question 18

When revenue is earned before the receipt of cash, an adjustment that increases a receivable and decreases a liability account is recorded.

Accepted Answer

A) True 
 B)False

Question 19

From the list of accounts below, determine whether the account would be a nominal account or a real account.
-Depreciation Expense

Accepted Answer

A) nominal account 
B) real account

Question 20

Most companies use the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Exam 4: Income Measurement and Accrual Accounting

Frank Corporation purchased supplies at a cost of $15,000 during 2015. At January 1, 2015, supplies on hand were $2,000. At December 31, 2015, supplies on hand are $2,500. Calculate supplies expense for 2015.

From the list of accounts below, determine whether the account would be a nominal account or a real account. -Cash

Which of the following statements is true concerning the matching principle?

What effect does "recognizing an accrued liability for utilities at the end of the accounting period" have on the accounting equation?

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

Failure to record the earned portion of unearned revenue would result in which of the following?

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

The basis of accounting that fails to take into consideration amounts earned that are not collected and expenses incurred but are not paid is the _________________________.

For each transaction select the letter of the type of adjustment that would be required. -The cost of commissions to salesmen that has been earned, but not paid at the end of the accounting period is recorded

The statement of cash flows reflects the revenues actually earned by the business, regardless of whether cash has been collected.

On January 1, 2015, Davin Avenue Associates, Inc. purchased a copier for $6,000 cash and decided to depreciate it over 5 years. What amounts associated with the copier will appear on Davin's financial statements for the year ending December 31, 2015?

When revenue is earned before the receipt of cash, an adjustment that increases a receivable and decreases a liability account is recorded.

From the list of accounts below, determine whether the account would be a nominal account or a real account. -Depreciation Expense

Most companies use the cash basis of accounting.