Question 1

Characteristics associated with relevant accounting information are

Accepted Answer

A)  comparability and timeliness. 
B)  predictive value and confirmatory value. 
C)  neutral and verifiable. 
D)  consistency and understandability. 
A)  comparability and timeliness. 
B)  predictive value and confirmatory value. 
C)  neutral and verifiable. 
D)  consistency and understandability.

Question 2

An accumulated depreciation account

Accepted Answer

A)  is a contra-liability account. 
B)  increases on the debit side. 
C)  is offset against total assets on the statement of financial position. 
D)  has a normal credit balance. 
A)  is a contra-liability account. 
B)  increases on the debit side. 
C)  is offset against total assets on the statement of financial position. 
D)  has a normal credit balance.

Question 3

Which of the following is not a common time period chosen by businesses as their accounting period?

Accepted Answer

A)  Daily 
B)  Monthly 
C)  Quarterly 
D)  Annually 
A)  Daily 
B)  Monthly 
C)  Quarterly 
D)  Annually

Question 4

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Accepted Answer

A)  is increased. 
B)  is decreased. 
C)  is unaffected. 
D)  depends on if there is a profit or loss. 
A)  is increased. 
B)  is decreased. 
C)  is unaffected. 
D)  depends on if there is a profit or loss.

Question 5

Hercules Company purchased a computer for $4,500 on December 1. It is estimated that annual depreciation on the computer will be $900. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

Accepted Answer

A)  Debit Depreciation Expense, $900; Credit Accumulated Depreciation, $900. 
B)  Debit Depreciation Expense, $75; Credit Accumulated Depreciation, $75. 
C)  Debit Depreciation Expense, $3,600; Credit Accumulated Depreciation, $3,600. 
D)  Debit Office Equipment, $4,500; Credit Accumulated Depreciation, $4,500. 
A)  Debit Depreciation Expense, $900; Credit Accumulated Depreciation, $900. 
B)  Debit Depreciation Expense, $75; Credit Accumulated Depreciation, $75. 
C)  Debit Depreciation Expense, $3,600; Credit Accumulated Depreciation, $3,600. 
D)  Debit Office Equipment, $4,500; Credit Accumulated Depreciation, $4,500.

Question 6

The periodicity assumption states that the economic life of a business can be divided into

Accepted Answer

A)  equal time periods. 
B)  cyclical time periods. 
C)  artificial time periods. 
D)  perpetual time periods. 
A)  equal time periods. 
B)  cyclical time periods. 
C)  artificial time periods. 
D)  perpetual time periods.

Question 7

The following is selected information from Alpha-Beta-Gamma Corporation for the fiscal year ending October 31, 2014.   Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation's net income for the year ending October 31, 2014?

Accepted Answer

A)  $194,000. 
B)  $114,000. 
C)  $62,000. 
D)  $130,000. 
A)  $194,000. 
B)  $114,000. 
C)  $62,000. 
D)  $130,000.

Question 8

An adjusting entry

Accepted Answer

A)  affects two statement of financial position accounts. 
B)  affects two income statement accounts. 
C)  affects a statement of financial position account and an income statement account. 
D)  is always a compound entry. 
A)  affects two statement of financial position accounts. 
B)  affects two income statement accounts. 
C)  affects a statement of financial position account and an income statement account. 
D)  is always a compound entry.

Question 9

Relevant accounting information

Accepted Answer

A)  is information that has been audited. 
B)  must be reported within the operating cycle or one year, whichever is longer. 
C)  has been objectively determined. 
D)  is information that is capable of making a difference in a business decision. 
A)  is information that has been audited. 
B)  must be reported within the operating cycle or one year, whichever is longer. 
C)  has been objectively determined. 
D)  is information that is capable of making a difference in a business decision.

Question 10

Accumulated Depreciation is a liability account and has a credit normal account balance.

Accepted Answer

A) True 
 B)False

Question 11

The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as the

Accepted Answer

A)  fair value of the asset. 
B)  blue book value of the asset. 
C)  book value of the asset. 
D)  depreciated difference of the asset. 
A)  fair value of the asset. 
B)  blue book value of the asset. 
C)  book value of the asset. 
D)  depreciated difference of the asset.

Question 12

Types of adjusting entries include deferral of unearned revenue, which requires the company to record a liability on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 13

Each of the following statements is justified by a fundamental quality or an enhancing quality of useful information. Write the letter in the blank next to each statement corresponding to the quality involved.

Accepted Answer

The answer of Each of the following statements is justified...

Question 14

Employees at Julian Corporation are paid $15,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?

Accepted Answer

A)  $15,000 
B)  $9,000 
C)  None, matching requires the weekly salary to be accrued on December 31. 
D)  $6,000 
A)  $15,000 
B)  $9,000 
C)  None, matching requires the weekly salary to be accrued on December 31. 
D)  $6,000

Question 15

Under accrual-basis accounting

Accepted Answer

A)  cash must be received before revenue is recognized. 
B)  net income 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 under IFRS. 
A)  cash must be received before revenue is recognized. 
B)  net income 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 under IFRS.

Question 16

Match between columns
                        Premises:  A revenue not yet earned; collected in advance.
 Office supplies on hand that will be used in the next period.
 Interest revenue collected; not yet earned.
 Rent not yet collected; already earned.
 An expense incurred; not yet paid or recorded.
 A revenue earned; not yet collected or recorded.
 An expense not yet incurred; paid in advance.
 Interest expense incurred; not yet paid.

Accepted Answer

The Answer of Prepaid Expenses and Unearned Revenues and Accrued is...

Question 17

Adjusting entries are

Accepted Answer

A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only. 
A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only.

Question 18

On February 1, Results Income Tax Service received a ₤4,000 cash retainer for tax preparation services to be rendered equally over the next 4 months. The full amount was credited to the liability account Unearned Service Revenue. Assuming that the revenue is earned equally over the 4-month period, what balance would be reported on the February 28 statement of financial position for Unearned Revenue?

Accepted Answer

Revenue earned monthly = ₤4000

Question 19

The non-current liability section of Gamma Company's statement of financial position includes the following accounts:   Gamma Company is an established company and does not experience any financial difficulties or have any cash flow problems. Discuss at least two items that are questionable as non-current liabilities.

Accepted Answer

Salaries Payable should not be reported

Question 20

Sherman Air Charter signed a four-month note payable in the amount of $12,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is

Accepted Answer

A)  $240. 
B)  $60. 
C)  $720. 
D)  $180. 
A)  $240. 
B)  $60. 
C)  $720. 
D)  $180.

Characteristics associated with relevant accounting information are

An accumulated depreciation account

Which of the following is not a common time period chosen by businesses as their accounting period?

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Hercules Company purchased a computer for $4,500 on December 1. It is estimated that annual depreciation on the computer will be $900. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

The periodicity assumption states that the economic life of a business can be divided into

The following is selected information from Alpha-Beta-Gamma Corporation for the fiscal year ending October 31, 2014. Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation's net income for the year ending October 31, 2014?

An adjusting entry

Relevant accounting information

Accumulated Depreciation is a liability account and has a credit normal account balance.

The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as the

Types of adjusting entries include deferral of unearned revenue, which requires the company to record a liability on the statement of financial position.

Each of the following statements is justified by a fundamental quality or an enhancing quality of useful information. Write the letter in the blank next to each statement corresponding to the quality involved.

Employees at Julian Corporation are paid $15,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?

Under accrual-basis accounting

Adjusting entries are

Sherman Air Charter signed a four-month note payable in the amount of $12,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting Principles and Contingent Liabilities in Business Operations

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Exam 3: Adjusting the Accounts

Characteristics associated with relevant accounting information are

An accumulated depreciation account

Which of the following is not a common time period chosen by businesses as their accounting period?

In general, the shorter the time period, the difficulty of making the proper adjustments to accounts

Hercules Company purchased a computer for $4,500 on December 1. It is estimated that annual depreciation on the computer will be $900. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

The periodicity assumption states that the economic life of a business can be divided into

The following is selected information from Alpha-Beta-Gamma Corporation for the fiscal year ending October 31, 2014. Based on the accrual basis of accounting, what is Alpha-Beta-Gamma Corporation's net income for the year ending October 31, 2014?

An adjusting entry

Relevant accounting information

Accumulated Depreciation is a liability account and has a credit normal account balance.

The difference between the cost of a depreciable asset and its related accumulated depreciation is referred to as the

Types of adjusting entries include deferral of unearned revenue, which requires the company to record a liability on the statement of financial position.

Each of the following statements is justified by a fundamental quality or an enhancing quality of useful information. Write the letter in the blank next to each statement corresponding to the quality involved.

Employees at Julian Corporation are paid $15,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?

Under accrual-basis accounting

Adjusting entries are

Sherman Air Charter signed a four-month note payable in the amount of $12,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting Principles and Contingent Liabilities in Business Operations

Filters