Question 1

Which one of the following accounts is not closed at the end of an accounting period?

Accepted Answer

A)  Retained Earnings account 
B)  Dividends account 
C)  Service Revenue account 
D)  Insurance Expense account 
A)  Retained Earnings account 
B)  Dividends account 
C)  Service Revenue account 
D)  Insurance Expense account A

Question 2

Tawdry Company debited Prepaid Insurance for $900 on May 1, 2012, for a one-year fire insurance policy. If the company prepares monthly financial statements, failure to make an adjusting entry on May 31, for the amount of insurance that has expired would cause:

Accepted Answer

A)  assets to be overstated by $900 and expenses to be understated by $900. 
B)  expenses to be overstated by $75 and assets to be understated by $75. 
C)  assets to be overstated by $75 and expenses to be understated by $75. 
D)  expenses to be overstated by $900 and assets to be understated by $900. 
A)  assets to be overstated by $900 and expenses to be understated by $900. 
B)  expenses to be overstated by $75 and assets to be understated by $75. 
C)  assets to be overstated by $75 and expenses to be understated by $75. 
D)  expenses to be overstated by $900 and assets to be understated by $900. C

Question 3

An increase in a revenue:

Accepted Answer

A)  decreases net income. 
B)  decreases assets. 
C)  increases liabilities. 
D)  increases stockholders' equity. 
A)  decreases net income. 
B)  decreases assets. 
C)  increases liabilities. 
D)  increases stockholders' equity. D

Question 4

The primary accounting standard-setting body in the United States is the:

Accepted Answer

A)  Securities and Exchange Commission. 
B)  Internal Revenue Service. 
C)  Financial Accounting Standards Board. 
D)  corporate board of directors. 
A)  Securities and Exchange Commission. 
B)  Internal Revenue Service. 
C)  Financial Accounting Standards Board. 
D)  corporate board of directors.

Question 5

Gross profit is calculated by

Accepted Answer

A)  subtracting total expenses from total revenues. 
B)  subtracting cost of goods sold from net sales. 
C)  subtracting the ending inventory from cost of goods sold. 
D)  adding cost of goods sold to net sales. 
A)  subtracting total expenses from total revenues. 
B)  subtracting cost of goods sold from net sales. 
C)  subtracting the ending inventory from cost of goods sold. 
D)  adding cost of goods sold to net sales.

Question 6

The purpose of recording depreciation on a productive assets is to:

Accepted Answer

A)  reflect the decline in the fair value of the assets each period. 
B)  reduce income when the company has an exceptionally profitable year. 
C)  be in conformity with the revenue recognition principle. 
D)  allocate the original cost of a productive asset to expense over its useful life. 
A)  reflect the decline in the fair value of the assets each period. 
B)  reduce income when the company has an exceptionally profitable year. 
C)  be in conformity with the revenue recognition principle. 
D)  allocate the original cost of a productive asset to expense over its useful life.

Question 7

A corporation with total stockholders' equity of $75,000 paid a $12,000 business debt. As a result of this transaction, total stockholders' equity:

Accepted Answer

A)  did not change. 
B)  increased by $12,000. 
C)  decreased by $12,000. 
D)  decreased to $63,000. 
A)  did not change. 
B)  increased by $12,000. 
C)  decreased by $12,000. 
D)  decreased to $63,000.

Question 8

Posting is the process of:

Accepted Answer

A)  preparing a chart of accounts. 
B)  adding a column of figures. 
C)  transferring journal entries to ledger accounts. 
D)  recording entries in a journal. 
A)  preparing a chart of accounts. 
B)  adding a column of figures. 
C)  transferring journal entries to ledger accounts. 
D)  recording entries in a journal.

Question 9

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is

Accepted Answer

A)  collected. 
B)  earned. 
C)  earned and collected. 
D)  most likely to be collected. 
A)  collected. 
B)  earned. 
C)  earned and collected. 
D)  most likely to be collected.

Question 10

The left side of an account is always:

Accepted Answer

A)  the debit side. 
B)  the credit side. 
C)  the balance of that account. 
D)  carried forward to the next accounting period. 
A)  the debit side. 
B)  the credit side. 
C)  the balance of that account. 
D)  carried forward to the next accounting period.

Which one of the following accounts is not closed at the end of an accounting period?

Tawdry Company debited Prepaid Insurance for $900 on May 1, 2012, for a one-year fire insurance policy. If the company prepares monthly financial statements, failure to make an adjusting entry on May 31, for the amount of insurance that has expired would cause:

An increase in a revenue:

The primary accounting standard-setting body in the United States is the:

Gross profit is calculated by

The purpose of recording depreciation on a productive assets is to:

A corporation with total stockholders' equity of $75,000 paid a $12,000 business debt. As a result of this transaction, total stockholders' equity:

Posting is the process of:

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is

The left side of an account is always:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

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Exam 7: Fraud, Internal Control, and Cash

Which one of the following accounts is not closed at the end of an accounting period?

Tawdry Company debited Prepaid Insurance for $900 on May 1, 2012, for a one-year fire insurance policy. If the company prepares monthly financial statements, failure to make an adjusting entry on May 31, for the amount of insurance that has expired would cause:

An increase in a revenue:

The primary accounting standard-setting body in the United States is the:

Gross profit is calculated by

The purpose of recording depreciation on a productive assets is to:

A corporation with total stockholders' equity of $75,000 paid a $12,000 business debt. As a result of this transaction, total stockholders' equity:

Posting is the process of:

The revenue recognition principle dictates that revenue should be recognized in the accounting period in which it is

The left side of an account is always:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Filters