Question 1

If an inventory account is overstated at the beginning of the year, the effect will be to

Accepted Answer

A)  overstate net purchases. 
B)  overstate gross margin. 
C)  overstate cost of goods available for sale. 
D)  understate cost of goods sold. 
A)  overstate net purchases. 
B)  overstate gross margin. 
C)  overstate cost of goods available for sale. 
D)  understate cost of goods sold. C

Question 2

Bannister Inc.'s fiscal year ended on November 30, 2011. The accounts had not been adjusted for the fiscal year ending November 30, 2011. The balance in the prepaid insurance account as of November 30, 2011, was $35,200 (before adjustment at Nov. 30, 2011) and consisted of the following policies:
 
The adjusting entry required on November 30, 2011, would be

Accepted Answer

A)  Insurance Expense ................... 24,000 Prepaid Insurance ................. 24,000 
B)  Insurance Expense ................... 9,600 Prepaid Insurance ................. 9,600 
C)  Insurance Expense ................... 11,200 Prepaid Insurance ................. 11,200 
D)  Insurance Expense ................... 16,400 Prepaid Insurance ................. 16,400 
A)  Insurance Expense ................... 24,000 Prepaid Insurance ................. 24,000 
B)  Insurance Expense ................... 9,600 Prepaid Insurance ................. 9,600 
C)  Insurance Expense ................... 11,200 Prepaid Insurance ................. 11,200 
D)  Insurance Expense ................... 16,400 Prepaid Insurance ................. 16,400 A

Question 3

Under the cash basis of accounting,

Accepted Answer

A)  revenues are recorded when they are earned. 
B)  accounts receivable would appear on the balance sheet. 
C)  depreciation of assets having an economic life of more than one year is recognized. 
D)  the matching principle is ignored. 
A)  revenues are recorded when they are earned. 
B)  accounts receivable would appear on the balance sheet. 
C)  depreciation of assets having an economic life of more than one year is recognized. 
D)  the matching principle is ignored. D

Question 4

A trial balance is useful because it indicates that

Accepted Answer

A)  owners' equity is correct. 
B)  net income is correct. 
C)  all entries were made correctly. 
D)  total debits equal total credits. 
A)  owners' equity is correct. 
B)  net income is correct. 
C)  all entries were made correctly. 
D)  total debits equal total credits.

Question 5

Which of the following is not among the first five steps in the accounting cycle?

Accepted Answer

A)  Record transactions in journals. 
B)  Record closing entries. 
C)  Adjust the general ledger accounts. 
D)  Post entries to general ledger accounts. 
A)  Record transactions in journals. 
B)  Record closing entries. 
C)  Adjust the general ledger accounts. 
D)  Post entries to general ledger accounts.

Question 6

Which of the following is not considered a book of original entry?

Accepted Answer

A)  General journal 
B)  General ledger 
C)  Sales journal 
D)  Purchases journal 
A)  General journal 
B)  General ledger 
C)  Sales journal 
D)  Purchases journal

Question 7

An example of an adjusting entry involving a deferred revenue is

Accepted Answer

A)  Cash ............................... xxx Unearned Rental Revenue .......... xxx 
B)  Rental Revenue ..................... xxx Cash ............................. xxx 
C)  Unearned Rental Revenue ............ xxx Rental Revenue ................... xxx 
D)  Accounts Receivable ................ xxx Sales ............................ xxx 
A)  Cash ............................... xxx Unearned Rental Revenue .......... xxx 
B)  Rental Revenue ..................... xxx Cash ............................. xxx 
C)  Unearned Rental Revenue ............ xxx Rental Revenue ................... xxx 
D)  Accounts Receivable ................ xxx Sales ............................ xxx

Question 8

The records of Jerick Corp. show the following information:
   
Prepare journal entries to adjust the books of Jerick Corp. at December 31, 2011.

Accepted Answer

The answer of The records of Jerick Corp. show the...

Question 9

The premium on a two-year insurance policy expiring on June 30, 2013, was paid in total on July 1, 2011. The original payment was debited to the insurance expense account. The appropriate journal entry has been recorded on December 31, 2011. The balance in the prepaid asset account on December 31, 2011, should be

Accepted Answer

A)  the same as the original payment. 
B)  higher than if the original payment had been initially debited to an asset account. 
C)  lower than if the original payment had been initially debited to an asset account. 
D)  the same as it would have been if the original payment had been initially debited to an asset account. 
A)  the same as the original payment. 
B)  higher than if the original payment had been initially debited to an asset account. 
C)  lower than if the original payment had been initially debited to an asset account. 
D)  the same as it would have been if the original payment had been initially debited to an asset account.

Question 10

Which of the following is not presented in an income statement?

Accepted Answer

A)  Revenues 
B)  Expenses 
C)  Net income 
D)  Dividends 
A)  Revenues 
B)  Expenses 
C)  Net income 
D)  Dividends

Question 11

For a given year, beginning and ending total liabilities were $18,000 and $20,400, respectively. At year-end, owners' equity was $40,200 and total assets were $4,000 larger than at the beginning of the year. If new capital stock issued exceeded dividends by $4,800, net income (loss) for the year was apparently

Accepted Answer

A)  $(3,200). 
B)  $(4,000). 
C)  $800. 
D)  $3,200. 
A)  $(3,200). 
B)  $(4,000). 
C)  $800. 
D)  $3,200.

Question 12

The trial balance and transaction descriptions below are for Coachman Company:
   
Summary transactions for February:
   
What is Coachman's total equity at the end of February?

Accepted Answer

Total equity = Retai

Question 13

The following balances have been excerpted from Edwards' balance sheets:
 
Edwards Company paid or collected during 2011 the following items:
 
The salary expense on the income statement for 2011 was

Accepted Answer

A)  $366,500. 
B)  $472,500. 
C)  $489,500. 
D)  $595,500. 
A)  $366,500. 
B)  $472,500. 
C)  $489,500. 
D)  $595,500.

Question 14

Which of the following accounts would be increased by a debit?

Accepted Answer

A)  Common Stock 
B)  Notes Payable 
C)  Accounts Payable 
D)  Dividends 
A)  Common Stock 
B)  Notes Payable 
C)  Accounts Payable 
D)  Dividends

Question 15

Which of the following is true regarding the accounting process?

Accepted Answer

A)  Preparation of the trial balance ensures that all amounts have been posted to the correct accounts. 
B)  Preparation of the trial balance is a step in the recording process. 
C)  Preparation of the trial balance determines that total debits equal total credits. 
D)  Preparation of the trial balance determines both that total debits equal total credits and that all amounts have been posted to the correct accounts. 
A)  Preparation of the trial balance ensures that all amounts have been posted to the correct accounts. 
B)  Preparation of the trial balance is a step in the recording process. 
C)  Preparation of the trial balance determines that total debits equal total credits. 
D)  Preparation of the trial balance determines both that total debits equal total credits and that all amounts have been posted to the correct accounts.

Question 16

Which of the following errors will be detected when a trial balance is properly prepared?

Accepted Answer

A)  An amount that was entered in the wrong account 
B)  A transaction that was entered twice 
C)  A transaction that had been omitted 
D)  None of these 
A)  An amount that was entered in the wrong account 
B)  A transaction that was entered twice 
C)  A transaction that had been omitted 
D)  None of these

Question 17

Pheasant Tail Company's total equity increased by $32,000 during 2011. New stockholder investment during the year totaled $65,000. Total revenues during the year were $500,000 and total expenses were $460,000. Cash on hand decreased by $7,500 during the year. What amount of dividends did Pheasant Tail declare during 2011?

Accepted Answer

The answer of Pheasant Tail Company's total equity increased by...

Question 18

Ingle Company paid $12,960 for a four-year insurance policy on September 1 and recorded the $12,960 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Ingle make on December 31, the end of the accounting period?

Accepted Answer

A)  Prepaid Insurance .................. 810 Insurance Expense ................ 810 
B)  Insurance Expense .................. 1,080 Prepaid Insurance ................ 1,080 
C)  Insurance Expense .................. 3,240 Prepaid Insurance ................ 3,240 
D)  Prepaid Insurance .................. 11,880 Insurance Expense ................ 11,880 
A)  Prepaid Insurance .................. 810 Insurance Expense ................ 810 
B)  Insurance Expense .................. 1,080 Prepaid Insurance ................ 1,080 
C)  Insurance Expense .................. 3,240 Prepaid Insurance ................ 3,240 
D)  Prepaid Insurance .................. 11,880 Insurance Expense ................ 11,880

Question 19

On September 1, 2010, Star Corp. issued a note payable to Federal Bank in the amount of $450,000. The note had an interest rate of 12 percent and called for three equal annual principal payments of $150,000. The first payment for interest and principal was made on September 1, 2011. At December 31, 2011, Star should record accrued interest payable of

Accepted Answer

A)  $11,000. 
B)  $12,000. 
C)  $16,500. 
D)  $18,000. 
A)  $11,000. 
B)  $12,000. 
C)  $16,500. 
D)  $18,000.

Question 20

The following balances have been excerpted from Edwards' balance sheets:
 
Edwards Company paid or collected during 2011 the following items:
 
The interest revenue on the income statement for 2011 was

Accepted Answer

A)  $90,500. 
B)  $112,700. 
C)  $117,500. 
D)  $156,500. 
A)  $90,500. 
B)  $112,700. 
C)  $117,500. 
D)  $156,500.

If an inventory account is overstated at the beginning of the year, the effect will be to

Under the cash basis of accounting,

A trial balance is useful because it indicates that

Which of the following is not among the first five steps in the accounting cycle?

Which of the following is not considered a book of original entry?

An example of an adjusting entry involving a deferred revenue is

The records of Jerick Corp. show the following information: Prepare journal entries to adjust the books of Jerick Corp. at December 31, 2011.

Which of the following is not presented in an income statement?

The trial balance and transaction descriptions below are for Coachman Company: Summary transactions for February: What is Coachman's total equity at the end of February?

The following balances have been excerpted from Edwards' balance sheets: Edwards Company paid or collected during 2011 the following items: The salary expense on the income statement for 2011 was

Which of the following accounts would be increased by a debit?

Which of the following is true regarding the accounting process?

Which of the following errors will be detected when a trial balance is properly prepared?

Ingle Company paid $12,960 for a four-year insurance policy on September 1 and recorded the $12,960 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Ingle make on December 31, the end of the accounting period?

The following balances have been excerpted from Edwards' balance sheets: Edwards Company paid or collected during 2011 the following items: The interest revenue on the income statement for 2011 was

Financial Reporting

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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Exam 2: A Review of the Accounting Cycle

If an inventory account is overstated at the beginning of the year, the effect will be to

Under the cash basis of accounting,

A trial balance is useful because it indicates that

Which of the following is not among the first five steps in the accounting cycle?

Which of the following is not considered a book of original entry?

An example of an adjusting entry involving a deferred revenue is

The records of Jerick Corp. show the following information: Prepare journal entries to adjust the books of Jerick Corp. at December 31, 2011.

Which of the following is not presented in an income statement?

The trial balance and transaction descriptions below are for Coachman Company: Summary transactions for February: What is Coachman's total equity at the end of February?

The following balances have been excerpted from Edwards' balance sheets: Edwards Company paid or collected during 2011 the following items: The salary expense on the income statement for 2011 was

Which of the following accounts would be increased by a debit?

Which of the following is true regarding the accounting process?

Which of the following errors will be detected when a trial balance is properly prepared?

Ingle Company paid $12,960 for a four-year insurance policy on September 1 and recorded the $12,960 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Ingle make on December 31, the end of the accounting period?

The following balances have been excerpted from Edwards' balance sheets: Edwards Company paid or collected during 2011 the following items: The interest revenue on the income statement for 2011 was

Financial Reporting

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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