Question 1

Under the double-entry system, revenues must always equal expenses.

Accepted Answer

A) True 
 B)False  False

Question 2

The operating cycle is of a similar duration for most companies.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following activities will most likely result in a reported loss on the statement of earnings?

Accepted Answer

A)  Interest expense 
B)  The sale of old equipment 
C)  The wages and benefits paid to employees 
D)  The sale of inventory to customers 
A)  Interest expense 
B)  The sale of old equipment 
C)  The wages and benefits paid to employees 
D)  The sale of inventory to customers B

Question 4

The operating cycle is the time it takes for a company to purchase goods, pay for the goods, sell them to customers, and collect the cash from the customers.

Accepted Answer

A) True 
 B)False

Question 5

Accrued expenses which must be recorded in adjusting entries represent which of the following?

Accepted Answer

A)  expenses paid in advance. 
B)  expenses incurred but not yet paid. 
C)  expenses paid in advance and not recorded. 
D)  expenses incurred but not yet recorded or paid. 
A)  expenses paid in advance. 
B)  expenses incurred but not yet paid. 
C)  expenses paid in advance and not recorded. 
D)  expenses incurred but not yet recorded or paid.

Question 6

The statement of earnings provides investors with information about a company's investing activities.

Accepted Answer

A) True 
 B)False

Question 7

During the accounting period, Luxor Company had the following data: Sales of products:   Expenses:
  This is the first year of business.
What were the sales revenue and expenses?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 8

Which of the following is not normally a condition that must be met for revenue to be recognized (recorded) under the revenue principle?

Accepted Answer

A)  The amount of revenue can be measured reliably. 
B)  Collection of receivables from credit sales is reasonably assured. 
C)  The promise to perform an exchange in the future has been made. 
D)  The earnings process is complete or nearly complete. 
A)  The amount of revenue can be measured reliably. 
B)  Collection of receivables from credit sales is reasonably assured. 
C)  The promise to perform an exchange in the future has been made. 
D)  The earnings process is complete or nearly complete.

Question 9

A decrease in a liability account is recorded by a debit.

Accepted Answer

A) True 
 B)False

Question 10

An accountant has debited an asset account for $500 and credited a revenue account for $1,000. What can be done to complete the recording of the transaction?

Accepted Answer

A)  Debit another asset account for $500. 
B)  Debit a shareholders' equity account for $500. 
C)  Nothing further must be done. 
D)  Credit a different asset account for $500. 
A)  Debit another asset account for $500. 
B)  Debit a shareholders' equity account for $500. 
C)  Nothing further must be done. 
D)  Credit a different asset account for $500.

Question 11

Recording revenue

Accepted Answer

A)  has no effect on total assets. 
B)  increases assets and shareholders' equity. 
C)  increases assets and liabilities. 
D)  increases assets and decreases shareholders' equity. 
A)  has no effect on total assets. 
B)  increases assets and shareholders' equity. 
C)  increases assets and liabilities. 
D)  increases assets and decreases shareholders' equity.

Question 12

A Taco Bell restaurant would most likely have a longer operating cycle than Walmart.

Accepted Answer

A) True 
 B)False

Question 13

Under the accrual basis of accounting

Accepted Answer

A)  cash must be received before revenue is recognized. 
B)  profit is calculated by matching cash outflows against cash inflows. 
C)  events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. 
D)  the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared. 
A)  cash must be received before revenue is recognized. 
B)  profit is calculated by matching cash outflows against cash inflows. 
C)  events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. 
D)  the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared.

Question 14

Small Company rendered services to customers amounting to $6,000 during 20A; the related cash was collected as follows: $4,000 in 20A; $2,000 in 20B. During 20A, $3,000 was incurred for wages expense; the related cash payments were made as follows: $1,200 in 20A; in 20B, $1,800. Based onl on these data, provide the following amounts:

Accepted Answer

The answer of Small Company rendered services to customers amounting...

Question 15

Which of the following is not an example of the application of the revenue principle?

Accepted Answer

A)  Recording the sale of merchandise on credit in sales revenue. 
B)  Recording accrued interest revenue on a loan made to another party. 
C)  Recording rent received in advance as rent revenue. 
D)  Recording the sale of merchandise for cash in sales revenue. 
A)  Recording the sale of merchandise on credit in sales revenue. 
B)  Recording accrued interest revenue on a loan made to another party. 
C)  Recording rent received in advance as rent revenue. 
D)  Recording the sale of merchandise for cash in sales revenue.

Question 16

Accrual basis accounting records revenues when earned and expenses when incurred, regardless of when the related cash is received or paid.

Accepted Answer

A) True 
 B)False

Question 17

Revenue accounts normally have debit balances because they represent assets received while expense accounts normally have credit balances because they represent assets used.

Accepted Answer

A) True 
 B)False

Question 18

The revenue principle recognizes revenues when the earnings process is complete or nearly complete, an exchange has taken place, and collection is probable.

Accepted Answer

A) True 
 B)False

Question 19

A credit means that an account has been increased.

Accepted Answer

A) True 
 B)False

Question 20

The revenue principle recognizes revenue from the sale of goods when ownership passes from the seller to the buyer. In the sale of services, revenue is recognized when the services are rendered.

Accepted Answer

A) True 
 B)False

Under the double-entry system, revenues must always equal expenses.

The operating cycle is of a similar duration for most companies.

Which of the following activities will most likely result in a reported loss on the statement of earnings?

The operating cycle is the time it takes for a company to purchase goods, pay for the goods, sell them to customers, and collect the cash from the customers.

Accrued expenses which must be recorded in adjusting entries represent which of the following?

The statement of earnings provides investors with information about a company's investing activities.

During the accounting period, Luxor Company had the following data: Sales of products: Expenses: This is the first year of business. What were the sales revenue and expenses?

Which of the following is not normally a condition that must be met for revenue to be recognized (recorded) under the revenue principle?

A decrease in a liability account is recorded by a debit.

An accountant has debited an asset account for $500 and credited a revenue account for $1,000. What can be done to complete the recording of the transaction?

Recording revenue

A Taco Bell restaurant would most likely have a longer operating cycle than Walmart.

Under the accrual basis of accounting

Which of the following is not an example of the application of the revenue principle?

Accrual basis accounting records revenues when earned and expenses when incurred, regardless of when the related cash is received or paid.

Revenue accounts normally have debit balances because they represent assets received while expense accounts normally have credit balances because they represent assets used.

The revenue principle recognizes revenues when the earnings process is complete or nearly complete, an exchange has taken place, and collection is probable.

A credit means that an account has been increased.

The revenue principle recognizes revenue from the sale of goods when ownership passes from the seller to the buyer. In the sale of services, revenue is recognized when the services are rendered.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 3: Operating Decisions and the Accounting System

Under the double-entry system, revenues must always equal expenses.

The operating cycle is of a similar duration for most companies.

Which of the following activities will most likely result in a reported loss on the statement of earnings?

The operating cycle is the time it takes for a company to purchase goods, pay for the goods, sell them to customers, and collect the cash from the customers.

Accrued expenses which must be recorded in adjusting entries represent which of the following?

The statement of earnings provides investors with information about a company's investing activities.

During the accounting period, Luxor Company had the following data: Sales of products: Expenses: This is the first year of business. What were the sales revenue and expenses?

Which of the following is not normally a condition that must be met for revenue to be recognized (recorded) under the revenue principle?

A decrease in a liability account is recorded by a debit.

An accountant has debited an asset account for $500 and credited a revenue account for $1,000. What can be done to complete the recording of the transaction?

Recording revenue

A Taco Bell restaurant would most likely have a longer operating cycle than Walmart.

Under the accrual basis of accounting

Which of the following is not an example of the application of the revenue principle?

Accrual basis accounting records revenues when earned and expenses when incurred, regardless of when the related cash is received or paid.

Revenue accounts normally have debit balances because they represent assets received while expense accounts normally have credit balances because they represent assets used.

The revenue principle recognizes revenues when the earnings process is complete or nearly complete, an exchange has taken place, and collection is probable.

A credit means that an account has been increased.

The revenue principle recognizes revenue from the sale of goods when ownership passes from the seller to the buyer. In the sale of services, revenue is recognized when the services are rendered.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters