Question 1

Under GAAP revaluation to fair value of items such as land and building is permitted, which is not permitted under IFRS.

Accepted Answer

A) True 
 B)False

Question 2

A small company may be able to justify using a cash basis of accounting if they have

Accepted Answer

A)  sales under $1,000,000. 
B)  no accountants on staff. 
C)  few receivables and payables. 
D)  all sales and purchases on account. 
A)  sales under $1,000,000. 
B)  no accountants on staff. 
C)  few receivables and payables. 
D)  all sales and purchases on account.

Question 3

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Accepted Answer

A)  Comparability 
B)  Relevance 
C)  Faithful representation 
D)  Consistency 
A)  Comparability 
B)  Relevance 
C)  Faithful representation 
D)  Consistency

Question 4

Depreciation expense for a period is computed by taking the

Accepted Answer

A)  original cost of an asset - accumulated depreciation. 
B)  depreciable cost ÷ depreciation rate. 
C)  cost of the asset ÷ useful life. 
D)  market value of the asset ÷ useful life. 
A)  original cost of an asset - accumulated depreciation. 
B)  depreciable cost ÷ depreciation rate. 
C)  cost of the asset ÷ useful life. 
D)  market value of the asset ÷ useful life.

Question 5

The periodicity assumption states that the business will remain in operation for the foreseeable future.

Accepted Answer

A) True 
 B)False

Question 6

The following terms relate to the fundamental qualities of useful information. Match the key letter of the correct term with the descriptive statement below.   LO 9, BT: K,

Accepted Answer

The answer of The following terms relate to the fundamental...

Question 7

Depreciation is the process of

Accepted Answer

A)  valuing an asset at its fair value. 
B)  increasing the value of an asset over its useful life in a rational and systematic manner. 
C)  allocating the cost of an asset to expense over its useful life in a rational and systematic manner. 
D)  writing down an asset to its real value each accounting period. 
A)  valuing an asset at its fair value. 
B)  increasing the value of an asset over its useful life in a rational and systematic manner. 
C)  allocating the cost of an asset to expense over its useful life in a rational and systematic manner. 
D)  writing down an asset to its real value each accounting period.

Question 8

The quality of consistency pertains to the use of the same accounting principles by firms in the same industry.

Accepted Answer

A) True 
 B)False

Question 9

GAAP

Accepted Answer

A)  requires that revenue not be recognized until cash is received. 
B)  allows revenue to be recognized when a customer makes an order. 
C)  provides only general guidance on revenue recognition, compared to the detailed guidance provided by IFRS. 
D)  provides the same type of guidance as IFRS for revenue recognition. 
A)  requires that revenue not be recognized until cash is received. 
B)  allows revenue to be recognized when a customer makes an order. 
C)  provides only general guidance on revenue recognition, compared to the detailed guidance provided by IFRS. 
D)  provides the same type of guidance as IFRS for revenue recognition.

Question 10

Which of the following statements is false regarding adjusting entries?

Accepted Answer

A)  Cash is neither debited nor credited as a result of adjusting entries. 
B)  Each adjusting entry affects one statement of financial position account and one income statement account. 
C)  Each adjusting entry affects one revenue account and one expense account. 
D)  Adjusting entries involve accruals or deferrals. 
A)  Cash is neither debited nor credited as a result of adjusting entries. 
B)  Each adjusting entry affects one statement of financial position account and one income statement account. 
C)  Each adjusting entry affects one revenue account and one expense account. 
D)  Adjusting entries involve accruals or deferrals.

Question 11

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is not true?

Accepted Answer

A)  Comparability means using the same accounting principles from year to year within a company. 
B)  Faithful representation is the quality of information that gives assurance that it is free from error. 
C)  Relevant accounting information must be capable of making a difference in the decision. 
D)  The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decision. 
A)  Comparability means using the same accounting principles from year to year within a company. 
B)  Faithful representation is the quality of information that gives assurance that it is free from error. 
C)  Relevant accounting information must be capable of making a difference in the decision. 
D)  The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decision.

Question 13

Adjusting entries are often made because some business events are not recorded as they occur.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a constraint in accounting?

Accepted Answer

A)  Comparability. 
B)  Cost. 
C)  Consistency. 
D)  Relevance. 
A)  Comparability. 
B)  Cost. 
C)  Consistency. 
D)  Relevance.

Question 15

Valuing assets at their fair value rather than at their cost is inconsistent with the:

Accepted Answer

A)  economic entity assumption. 
B)  historical cost principle. 
C)  periodicity assumption. 
D)  full disclosure principles. 
A)  economic entity assumption. 
B)  historical cost principle. 
C)  periodicity assumption. 
D)  full disclosure principles.

Question 16

Bread Basket provides baking supplies to restaurants and grocery stores. On November 1, 2014, Bread Basket signed a €500,000, 6-month note payable. The note requires Bread Basket to pay interest at an annual rate of 6%. Bread Basket's accountant is a recent college graduate who lacks practical experience. Therefore, the appropriate adjusting entry is not made. What is the impact on its December 31, 2014 statement of financial position?

Accepted Answer

A)  Assets are overstated by € 15,000. 
B)  Equity is overstated by € 15,000. 
C)  Liabilities are understated by € 15,000. 
D)  Liabilities are understated by € 5,000. 
A)  Assets are overstated by € 15,000. 
B)  Equity is overstated by € 15,000. 
C)  Liabilities are understated by € 15,000. 
D)  Liabilities are understated by € 5,000.

Question 17

James Corporation purchased a one-year insurance policy in January 2013 for € 36,000. The insurance policy is in effect from May 2013 through April 2014. If the company neglects to make the proper year-end adjustment for the expired insurance

Accepted Answer

A)  Net income and assets will be understated by € 24,000. 
B)  Net income and assets will be overstated by € 24,000. 
C)  Net income and assets will be understated by € 12,000. 
D)  Net income and assets will be overstated by € 12,000. 
A)  Net income and assets will be understated by € 24,000. 
B)  Net income and assets will be overstated by € 24,000. 
C)  Net income and assets will be understated by € 12,000. 
D)  Net income and assets will be overstated by € 12,000.

Question 18

A business pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Accepted Answer

A)  debit Salaries and Wages Payable, $24,000; credit Cash, $24,000. 
B)  debit Salaries and Wages Expense, $24,000; credit Cash, $24,000. 
C)  debit Salaries and Wages Expense, $24,000; credit Salaries and Wages Payable, $24,000. 
D)  debit Salaries and Wages Expense, $6,000; credit Salaries and Wages Payable, $6,000. 
A)  debit Salaries and Wages Payable, $24,000; credit Cash, $24,000. 
B)  debit Salaries and Wages Expense, $24,000; credit Cash, $24,000. 
C)  debit Salaries and Wages Expense, $24,000; credit Salaries and Wages Payable, $24,000. 
D)  debit Salaries and Wages Expense, $6,000; credit Salaries and Wages Payable, $6,000.

Question 19

Accrued revenues are amounts recorded and received but not yet earned.

Accepted Answer

A) True 
 B)False

Question 20

On January 1, 2013, Grills and Grates Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation is

Accepted Answer

A)  $800. 
B)  $9,600. 
C)  $10,400. 
D)  $49,600. 
A)  $800. 
B)  $9,600. 
C)  $10,400. 
D)  $49,600.

Under GAAP revaluation to fair value of items such as land and building is permitted, which is not permitted under IFRS.

A small company may be able to justify using a cash basis of accounting if they have

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Depreciation expense for a period is computed by taking the

The periodicity assumption states that the business will remain in operation for the foreseeable future.

The following terms relate to the fundamental qualities of useful information. Match the key letter of the correct term with the descriptive statement below. LO 9, BT: K,

Depreciation is the process of

The quality of consistency pertains to the use of the same accounting principles by firms in the same industry.

GAAP

Which of the following statements is false regarding adjusting entries?

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Which of the following statements is not true?

Adjusting entries are often made because some business events are not recorded as they occur.

Which of the following is a constraint in accounting?

Valuing assets at their fair value rather than at their cost is inconsistent with the:

James Corporation purchased a one-year insurance policy in January 2013 for € 36,000. The insurance policy is in effect from May 2013 through April 2014. If the company neglects to make the proper year-end adjustment for the expired insurance

A business pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Accrued revenues are amounts recorded and received but not yet earned.

On January 1, 2013, Grills and Grates Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation 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 and Financial Reporting for Contingent Liabilities and Leases

Filters

Exam 3: Adjusting the Accounts

Under GAAP revaluation to fair value of items such as land and building is permitted, which is not permitted under IFRS.

A small company may be able to justify using a cash basis of accounting if they have

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Depreciation expense for a period is computed by taking the

The periodicity assumption states that the business will remain in operation for the foreseeable future.

The following terms relate to the fundamental qualities of useful information. Match the key letter of the correct term with the descriptive statement below. LO 9, BT: K,

Depreciation is the process of

The quality of consistency pertains to the use of the same accounting principles by firms in the same industry.

GAAP

Which of the following statements is false regarding adjusting entries?

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Which of the following statements is not true?

Adjusting entries are often made because some business events are not recorded as they occur.

Which of the following is a constraint in accounting?

Valuing assets at their fair value rather than at their cost is inconsistent with the:

James Corporation purchased a one-year insurance policy in January 2013 for € 36,000. The insurance policy is in effect from May 2013 through April 2014. If the company neglects to make the proper year-end adjustment for the expired insurance

A business pays weekly salaries of $30,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Accrued revenues are amounts recorded and received but not yet earned.

On January 1, 2013, Grills and Grates Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation 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 and Financial Reporting for Contingent Liabilities and Leases

Filters