Question 1

If a company provides a service and receives payment at the same time:

Accepted Answer

A)  more than one journal entry is needed. 
B)  Cash will be credited. 
C)  a revenue account will be increased with a debit. 
D)  stockholders' equity will increase. 
A)  more than one journal entry is needed. 
B)  Cash will be credited. 
C)  a revenue account will be increased with a debit. 
D)  stockholders' equity will increase.

Question 2

In this period, a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later. In the next period, the company received payment from customers of $45,000. Choose the TRUE statement.

Accepted Answer

A)  Revenue for this period is $45,000. 
B)  Accounts receivable at the end of next period is $5,000. 
C)  Accounts payable at the end of this period is $5,000. 
D)  Cash for next period will increase by $50,000. 
A)  Revenue for this period is $45,000. 
B)  Accounts receivable at the end of next period is $5,000. 
C)  Accounts payable at the end of this period is $5,000. 
D)  Cash for next period will increase by $50,000.

Question 3

Cansing Company collected $5,000 from a customer on account. What journal entry will Cansing record?

Accepted Answer

A)  Debit Cash, credit Accounts Receivable. 
B)  Debit Cash, credit Revenue. 
C)  Debit Accounts Receivable, credit Revenue. 
D)  Debit Accounts Receivable, credit Cash. 
A)  Debit Cash, credit Accounts Receivable. 
B)  Debit Cash, credit Revenue. 
C)  Debit Accounts Receivable, credit Revenue. 
D)  Debit Accounts Receivable, credit Cash.

Question 4

All operating activities increase a company's resources.

Accepted Answer

A) True 
 B)False

Question 5

Revenues represent decreases in stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 6

How many of the following statements regarding the revenue recognition and matching principles are true?
According to the revenue principle, a company should not record the revenue from a transaction until it is actually received in cash.
To ensure revenue reporting is consistent over time, a business adopts a revenue recognition policy that defines the time at which they report revenues from providing goods or services to customers.
The matching principle requires that expenses be determined first and then revenues be "matched" to those expenses.

Accepted Answer

A)  None 
B)  One 
C)  Two 
D)  Three 
A)  None 
B)  One 
C)  Two 
D)  Three

Question 7

Which of the following is an example of an error that would cause the trial balance to be out of balance?

Accepted Answer

A)  A journal entry was posted as a debit to Cash for $525 and credited to Accounts Receivable for $552. 
B)  A journal entry was posted as a debit to Cash and a credit to Sales Revenue when the company received a customer payment on account. 
C)  A journal entry was posted as a credit to Wages Expense and a debit to Wages Payable. 
D)  A transaction was not recorded at all. 
A)  A journal entry was posted as a debit to Cash for $525 and credited to Accounts Receivable for $552. 
B)  A journal entry was posted as a debit to Cash and a credit to Sales Revenue when the company received a customer payment on account. 
C)  A journal entry was posted as a credit to Wages Expense and a debit to Wages Payable. 
D)  A transaction was not recorded at all.

Question 8

Which of the following is the journal entry to record activity #1?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 9

Costs are said to have been "capitalized" when:

Accepted Answer

A)  they are financed by the company. 
B)  they are recorded as assets. 
C)  the company calculates the worth of the asset based on the revenue generated. 
D)  they are recorded as expenses 
A)  they are financed by the company. 
B)  they are recorded as assets. 
C)  the company calculates the worth of the asset based on the revenue generated. 
D)  they are recorded as expenses

Question 10

In any given industry, companies are entirely consistent in the account titles they use on financial statements.

Accepted Answer

A) True 
 B)False

Question 11

An increase in revenue will always:

Accepted Answer

A)  increase stockholders' equity. 
B)  increase assets. 
C)  decrease stockholders' equity. 
D)  decrease assets. 
A)  increase stockholders' equity. 
B)  increase assets. 
C)  decrease stockholders' equity. 
D)  decrease assets.

Question 12

Which of the following is an operating transaction?

Accepted Answer

A)  Repaying a bank loan. 
B)  Paying a dividend to owners. 
C)  Purchasing a new building. 
D)  Paying for inventory to be offered for sale. 
A)  Repaying a bank loan. 
B)  Paying a dividend to owners. 
C)  Purchasing a new building. 
D)  Paying for inventory to be offered for sale.

Question 13

Which of the following would not be associated with an expense?

Accepted Answer

A)  Using supplies. 
B)  Paying off an account payable. 
C)  Paying for electricity used by production equipment. 
D)  Paying wages for production workers. 
A)  Using supplies. 
B)  Paying off an account payable. 
C)  Paying for electricity used by production equipment. 
D)  Paying wages for production workers.

Question 14

What is the amount of net income for the year?

Accepted Answer

A)  $44,000 
B)  $34,000 
C)  $24,000 
D)  $54,000 
A)  $44,000 
B)  $34,000 
C)  $24,000 
D)  $54,000

Question 15

What is the total of the debit side of the unadjusted trial balance?

Accepted Answer

A)  $22,000 
B)  $17,350 
C)  $18,000 
D)  $13,500 
A)  $22,000 
B)  $17,350 
C)  $18,000 
D)  $13,500

Question 16

In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March. The $32,000 would be recorded during January as a:

Accepted Answer

A)  debit to Cash and a credit to Unearned Revenue. 
B)  debit to Accounts Payable and a credit to Service Revenue. 
C)  credit to Accounts Receivable and a credit to Service Revenue. 
D)  credit to Service Revenue and a debit to Prepaid Expenses. 
A)  debit to Cash and a credit to Unearned Revenue. 
B)  debit to Accounts Payable and a credit to Service Revenue. 
C)  credit to Accounts Receivable and a credit to Service Revenue. 
D)  credit to Service Revenue and a debit to Prepaid Expenses.

Question 17

As a result of these transactions, the Balance Sheet at the end of July will show

Accepted Answer

A)  an increase to total liabilities of $3,500. 
B)  a decrease to total assets of $1,000. 
C)  an increase to contributed capital of $7,500. 
D)  no change to Total Assets or Total Liabilities 
A)  an increase to total liabilities of $3,500. 
B)  a decrease to total assets of $1,000. 
C)  an increase to contributed capital of $7,500. 
D)  no change to Total Assets or Total Liabilities

Question 18

BD One Company entered into the following transactions. Choose the one which represents an accounting error.

Accepted Answer

A)  A shareholder of BD One Company purchases a new car, but this was not recorded by the company. 
B)  Revenue was recognized when a customer received services from BD One Company. 
C)  Cash received from a customer in payment of his account was debited to Cash and credited to Accounts Receivable. 
D)  BD One Company ordered inventory and the order was recorded by a debit to Inventory and a credit to 
A)  A shareholder of BD One Company purchases a new car, but this was not recorded by the company. 
B)  Revenue was recognized when a customer received services from BD One Company. 
C)  Cash received from a customer in payment of his account was debited to Cash and credited to Accounts Receivable. 
D)  BD One Company ordered inventory and the order was recorded by a debit to Inventory and a credit to

Question 19

Which of the following statements regarding cash and accrual accounting is true?

Accepted Answer

A)  If payment is received at the same time a service is produced and sold, there is no difference between how cash and accrual accounting record the transaction. 
B)  The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which they relate. 
C)  If a company receives a bill for rent for the period and decides to delay payment, the rent will not be recorded as an expense according to the accrual model of accounting. 
D)  The cash basis of accounting would record unearned revenue if a company received a deposit in advance of services to be rendered by the company. 
A)  If payment is received at the same time a service is produced and sold, there is no difference between how cash and accrual accounting record the transaction. 
B)  The cash basis of accounting works best when a lengthy delay exists between the timing of cash flows and the underlying business activities to which they relate. 
C)  If a company receives a bill for rent for the period and decides to delay payment, the rent will not be recorded as an expense according to the accrual model of accounting. 
D)  The cash basis of accounting would record unearned revenue if a company received a deposit in advance of services to be rendered by the company.

Question 20

Which of the following is not true about the unadjusted trial balance?

Accepted Answer

A)  An unadjusted trial balance may only include a preliminary amount for income tax expense. 
B)  An unadjusted trial balance might balance even if there is a mistake. 
C)  An unadjusted trial balance does not yet include end-of-the-accounting period adjustments. 
D)  An unadjusted trial balance is part of the financial statements issued to external decision makers 
A)  An unadjusted trial balance may only include a preliminary amount for income tax expense. 
B)  An unadjusted trial balance might balance even if there is a mistake. 
C)  An unadjusted trial balance does not yet include end-of-the-accounting period adjustments. 
D)  An unadjusted trial balance is part of the financial statements issued to external decision makers

If a company provides a service and receives payment at the same time:

In this period, a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later. In the next period, the company received payment from customers of $45,000. Choose the TRUE statement.

Cansing Company collected $5,000 from a customer on account. What journal entry will Cansing record?

All operating activities increase a company's resources.

Revenues represent decreases in stockholders' equity.

Which of the following is an example of an error that would cause the trial balance to be out of balance?

Which of the following is the journal entry to record activity #1?

Costs are said to have been "capitalized" when:

In any given industry, companies are entirely consistent in the account titles they use on financial statements.

An increase in revenue will always:

Which of the following is an operating transaction?

Which of the following would not be associated with an expense?

What is the amount of net income for the year?

What is the total of the debit side of the unadjusted trial balance?

In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March. The $32,000 would be recorded during January as a:

As a result of these transactions, the Balance Sheet at the end of July will show

BD One Company entered into the following transactions. Choose the one which represents an accounting error.

Which of the following statements regarding cash and accrual accounting is true?

Which of the following is not true about the unadjusted trial balance?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

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Exam 3: Reporting Operating Results on the Income Statement

If a company provides a service and receives payment at the same time:

In this period, a company recorded sales revenue of $50,000 from sales of goods to customers who agreed to pay later. In the next period, the company received payment from customers of $45,000. Choose the TRUE statement.

Cansing Company collected $5,000 from a customer on account. What journal entry will Cansing record?

All operating activities increase a company's resources.

Revenues represent decreases in stockholders' equity.

Which of the following is an example of an error that would cause the trial balance to be out of balance?

Which of the following is the journal entry to record activity #1?

Costs are said to have been "capitalized" when:

In any given industry, companies are entirely consistent in the account titles they use on financial statements.

An increase in revenue will always:

Which of the following is an operating transaction?

Which of the following would not be associated with an expense?

What is the amount of net income for the year?

What is the total of the debit side of the unadjusted trial balance?

In January, the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March. The $32,000 would be recorded during January as a:

As a result of these transactions, the Balance Sheet at the end of July will show

BD One Company entered into the following transactions. Choose the one which represents an accounting error.

Which of the following statements regarding cash and accrual accounting is true?

Which of the following is not true about the unadjusted trial balance?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters