Question 1

An account will have a credit balance if the

Accepted Answer

A)  last transaction entered was a credit. 
B)  first transaction entered was a credit. 
C)  debits exceed the credits. 
D)  credits exceed the debits. 
A)  last transaction entered was a credit. 
B)  first transaction entered was a credit. 
C)  debits exceed the credits. 
D)  credits exceed the debits.

Question 2

Explain why a $500 revenue collected in advance for service would be recorded as a debit to cash
and a credit to a liability account.

Accepted Answer

A debit is recorded to cash because a re

Question 3

Golden Company had these transactions during the accounting period: Sold merchandise for $600; its cost was $400. Collected $400 from a trade receivable. The account was established in the previous year. Used office supplies of $50.
Golden's profit for the period would be which of the following?

Accepted Answer

A)  $150. 
B)  $50. 
C)  $900. 
D)  $600. 
A)  $150. 
B)  $50. 
C)  $900. 
D)  $600.

Question 4

If total revenues are the same as total expenses, then a company has which of the following?

Accepted Answer

A)  a decrease in shareholders' equity. 
B)  a loss. 
C)  neither a profit nor a loss. 
D)  a profit. 
A)  a decrease in shareholders' equity. 
B)  a loss. 
C)  neither a profit nor a loss. 
D)  a profit.

Question 5

If Pizza Pizza reports an asset turnover ratio of 2.34 for 2013 and their competitor Pizza Hut reports 3.79 for their 2013 ratio, it means which of the following?

Accepted Answer

A)  Pizza Pizza is less able to pay off their current obligations with their current assets. 
B)  Pizza Pizza is better able to pay their current obligations with their current assets. 
C)  Pizza Pizza has been less effective in managing the use and level of its assets. 
D)  Pizza Pizza has been more effective in managing the use and level of its assets. 
A)  Pizza Pizza is less able to pay off their current obligations with their current assets. 
B)  Pizza Pizza is better able to pay their current obligations with their current assets. 
C)  Pizza Pizza has been less effective in managing the use and level of its assets. 
D)  Pizza Pizza has been more effective in managing the use and level of its assets.

Question 6

Debit and credit can be interpreted to mean "bad" and "good," respectively.

Accepted Answer

A) True 
 B)False

Question 7

The periodicity assumption is the basis for which of the following?

Accepted Answer

A)  keeping the company's transactions separate from the owners' transactions. 
B)  the cut-off of expense recognition only. 
C)  the cut-off of revenue recognition only. 
D)  dividing the activities of a business into a series of time periods for accounting and reporting purposes. 
A)  keeping the company's transactions separate from the owners' transactions. 
B)  the cut-off of expense recognition only. 
C)  the cut-off of revenue recognition only. 
D)  dividing the activities of a business into a series of time periods for accounting and reporting purposes.

Question 8

A payment of a portion of accounts payable will

Accepted Answer

A)  decrease net earnings. 
B)  not affect total assets. 
C)  increase liabilities. 
D)  not affect shareholders' equity. 
A)  decrease net earnings. 
B)  not affect total assets. 
C)  increase liabilities. 
D)  not affect shareholders' equity.

Question 9

The normal balance of an asset is a credit.

Accepted Answer

A) True 
 B)False

Question 10

Accrued in the case of expenses means paid in advance, and deferred in the case of expenses means not yet paid.

Accepted Answer

A) True 
 B)False

Question 11

The right side of an account

Accepted Answer

A)  is used to record decreases. 
B)  is the credit side. 
C)  is used to record increases. 
D)  shows all the balances of the accounts in the system. 
A)  is used to record decreases. 
B)  is the credit side. 
C)  is used to record increases. 
D)  shows all the balances of the accounts in the system.

Question 12

Accrued revenues are

Accepted Answer

A)  earned and recorded as liabilities before they are received. 
B)  earned but not yet received or recorded. 
C)  received and recorded as liabilities before they are earned. 
D)  earned and already received and recorded. 
A)  earned and recorded as liabilities before they are received. 
B)  earned but not yet received or recorded. 
C)  received and recorded as liabilities before they are earned. 
D)  earned and already received and recorded.

Question 13

The purchase of an asset for cash

Accepted Answer

A)  decreases assets and increases liabilities. 
B)  leaves total assets unchanged. 
C)  increases assets and liabilities. 
D)  increases assets and shareholders' equity. 
A)  decreases assets and increases liabilities. 
B)  leaves total assets unchanged. 
C)  increases assets and liabilities. 
D)  increases assets and shareholders' equity.

Question 14

The payment of a liability

Accepted Answer

A)  decreases assets and increases liabilities. 
B)  decreases assets and shareholders' equity. 
C)  decreases assets and liabilities. 
D)  increases assets and decreases liabilities. 
A)  decreases assets and increases liabilities. 
B)  decreases assets and shareholders' equity. 
C)  decreases assets and liabilities. 
D)  increases assets and decreases liabilities.

Question 15

The Upton Country Store had the following transactions in April:
a. Sold $25,000 of goods to customers and received $22,000 in cash and the rest are on account
b. The cost of the inventory sold was $13,000
c. The store purchased $8,000 of inventory and paid for $4,000 in cash and the rest were bought on account
d. They paid $7,000 in wages for the month
e. Received a $600 bill for utilities for the month that will not be paid until May
f. Received rent for the adjacent store front for the months of April and May in the amount of $3,000 Complete the following statements:
Cash Basis
Statement of earnings
Revenues:
   Accrual Basis Statement of earnings
Revenues:

Accepted Answer

(a) $22,000, (b) $3,000, (c) $

Question 16

Which of the following activities does not violate the revenue recognition principle?

Accepted Answer

A)  Recording cash received in advance from customers as revenue when the product is not yet shipped 
B)  Recording cash received in advance from customers as a liability when the product is not yet shipped 
C)  Recording revenue in December 2013 for units manufactured but not yet sold to customers 
D)  Not recording interest earned in 2013 until the cash is received in 2014 
A)  Recording cash received in advance from customers as revenue when the product is not yet shipped 
B)  Recording cash received in advance from customers as a liability when the product is not yet shipped 
C)  Recording revenue in December 2013 for units manufactured but not yet sold to customers 
D)  Not recording interest earned in 2013 until the cash is received in 2014

Question 17

Cash basis accounting is often adequate for very small businesses such as a small retail store or a doctor's office.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following liability accounts is likely to be satisfied with other than payment of cash?

Accepted Answer

A)  Income taxes payable 
B)  Deferred subscriptions revenue 
C)  Wages payable 
D)  Accounts Payable 
A)  Income taxes payable 
B)  Deferred subscriptions revenue 
C)  Wages payable 
D)  Accounts Payable

Question 19

Which principle holds that all of the expenses incurred in earning revenue should be identified with the revenue recognized and reported for the same period?

Accepted Answer

A)  liability principle. 
B)  revenue principle. 
C)  matching principle. 
D)  timing principle. 
A)  liability principle. 
B)  revenue principle. 
C)  matching principle. 
D)  timing principle.

Question 20

Operating revenues result from the sale of goods or services.

Accepted Answer

A) True 
 B)False

An account will have a credit balance if the

Explain why a $500 revenue collected in advance for service would be recorded as a debit to cash and a credit to a liability account.

Golden Company had these transactions during the accounting period: Sold merchandise for $600; its cost was $400. Collected $400 from a trade receivable. The account was established in the previous year. Used office supplies of $50. Golden's profit for the period would be which of the following?

If total revenues are the same as total expenses, then a company has which of the following?

If Pizza Pizza reports an asset turnover ratio of 2.34 for 2013 and their competitor Pizza Hut reports 3.79 for their 2013 ratio, it means which of the following?

Debit and credit can be interpreted to mean "bad" and "good," respectively.

The periodicity assumption is the basis for which of the following?

A payment of a portion of accounts payable will

The normal balance of an asset is a credit.

Accrued in the case of expenses means paid in advance, and deferred in the case of expenses means not yet paid.

The right side of an account

Accrued revenues are

The purchase of an asset for cash

The payment of a liability

Which of the following activities does not violate the revenue recognition principle?

Cash basis accounting is often adequate for very small businesses such as a small retail store or a doctor's office.

Which of the following liability accounts is likely to be satisfied with other than payment of cash?

Which principle holds that all of the expenses incurred in earning revenue should be identified with the revenue recognized and reported for the same period?

Operating revenues result from the sale of goods or services.

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

An account will have a credit balance if the

Explain why a $500 revenue collected in advance for service would be recorded as a debit to cash and a credit to a liability account.

Golden Company had these transactions during the accounting period: Sold merchandise for $600; its cost was $400. Collected $400 from a trade receivable. The account was established in the previous year. Used office supplies of $50. Golden's profit for the period would be which of the following?

If total revenues are the same as total expenses, then a company has which of the following?

If Pizza Pizza reports an asset turnover ratio of 2.34 for 2013 and their competitor Pizza Hut reports 3.79 for their 2013 ratio, it means which of the following?

Debit and credit can be interpreted to mean "bad" and "good," respectively.

The periodicity assumption is the basis for which of the following?

A payment of a portion of accounts payable will

The normal balance of an asset is a credit.

Accrued in the case of expenses means paid in advance, and deferred in the case of expenses means not yet paid.

The right side of an account

Accrued revenues are

The purchase of an asset for cash

The payment of a liability

Which of the following activities does not violate the revenue recognition principle?

Cash basis accounting is often adequate for very small businesses such as a small retail store or a doctor's office.

Which of the following liability accounts is likely to be satisfied with other than payment of cash?

Which principle holds that all of the expenses incurred in earning revenue should be identified with the revenue recognized and reported for the same period?

Operating revenues result from the sale of goods or services.

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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