Question 1

Prepaid expenses are

Accepted Answer

A)  paid and recorded in an asset account before they are used or consumed. 
B)  paid and recorded in an asset account after they are used or consumed. 
C)  incurred but not yet paid or recorded. 
D)  incurred and already paid or recorded. 
A)  paid and recorded in an asset account before they are used or consumed. 
B)  paid and recorded in an asset account after they are used or consumed. 
C)  incurred but not yet paid or recorded. 
D)  incurred and already paid or recorded.

Question 2

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

Accepted Answer

A) True 
 B)False

Question 3

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

Accepted Answer

A)  a fiscal year. 
B)  an interim period. 
C)  the time period assumption. 
D)  a reporting period. 
A)  a fiscal year. 
B)  an interim period. 
C)  the time period assumption. 
D)  a reporting period.

Question 4

SurferRosa Music Store borrowed $30,000 from the bank signing a 9%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be

Accepted Answer

A)  Debit Interest Expense, $2,700; Credit Interest Payable, $2,700. 
B)  Debit Interest Expense, $225; Credit Interest Payable, $225. 
C)  Debit Notes Payable, $2,700; Credit Cash, $2,700. 
D)  Debit Cash, $675; Credit Interest Payable, $675. 
A)  Debit Interest Expense, $2,700; Credit Interest Payable, $2,700. 
B)  Debit Interest Expense, $225; Credit Interest Payable, $225. 
C)  Debit Notes Payable, $2,700; Credit Cash, $2,700. 
D)  Debit Cash, $675; Credit Interest Payable, $675.

Question 5

169. 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 6

Expenses include losses that are not part of normal operations under

Accepted Answer

A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP. 
A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.

Question 7

Accrued revenues are

Accepted Answer

A)  cash received and a liability recorded before services are performed. 
B)  revenue for services performed and recorded as liabilities before they are received. 
C)  revenue for services performed but not yet received in cash or recorded. 
D)  revenue for services performed and already received in cash and recorded. 
A)  cash received and a liability recorded before services are performed. 
B)  revenue for services performed and recorded as liabilities before they are received. 
C)  revenue for services performed but not yet received in cash or recorded. 
D)  revenue for services performed and already received in cash and recorded.

Question 8

The revenue recognition principle dictates that revenue be recognized in the accounting period

Accepted Answer

A)  before it is earned. 
B)  after it is earned. 
C)  in which the performance obligation is satisfied. 
D)  in which it is collected. 
A)  before it is earned. 
B)  after it is earned. 
C)  in which the performance obligation is satisfied. 
D)  in which it is collected.

Question 9

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 10

Depreciation based on revaluation of land and buildings is permitted under

Accepted Answer

A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP. 
A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.

Question 11

Which of the following would not result in unearned revenue?

Accepted Answer

A)  Rent collected in advance from tenants 
B)  Services performed on account 
C)  Sale of season tickets to football games 
D)  Sale of two-year magazine subscriptions 
A)  Rent collected in advance from tenants 
B)  Services performed on account 
C)  Sale of season tickets to football games 
D)  Sale of two-year magazine subscriptions

Question 12

Asset prepayments become expenses when they expire.

Accepted Answer

A) True 
 B)False

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

Adjusting entries are required

Accepted Answer

A)  yearly. 
B)  quarterly. 
C)  monthly. 
D)  every time financial statements are prepared. 
A)  yearly. 
B)  quarterly. 
C)  monthly. 
D)  every time financial statements are prepared.

Question 15

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

Accepted Answer

A) True 
 B)False

Question 16

175. 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 17

Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600. The December 31, 2015 balance sheet would report Prepaid Insurance of

Accepted Answer

A)  $0 because Prepaid Insurance is reported on the Income Statement. 
B)  $1,400. 
C)  $2,200. 
D)  $3,600. 
A)  $0 because Prepaid Insurance is reported on the Income Statement. 
B)  $1,400. 
C)  $2,200. 
D)  $3,600.

Question 18

The balance in the Prepaid Rent account before adjustment at the end of the year is $21,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to

Accepted Answer

A)  debit Rent Expense, $7,000; credit Prepaid Rent, $7,000. 
B)  debit Rent Expense, $14,000; credit Prepaid Rent $14,000. 
C)  debit Prepaid Rent, $7,000; credit Rent Expense, $7,000. 
D)  debit Prepaid Rent, $14,000; credit Rent Expense, $14,000. 
A)  debit Rent Expense, $7,000; credit Prepaid Rent, $7,000. 
B)  debit Rent Expense, $14,000; credit Prepaid Rent $14,000. 
C)  debit Prepaid Rent, $7,000; credit Rent Expense, $7,000. 
D)  debit Prepaid Rent, $14,000; credit Rent Expense, $14,000.

Question 19

If the adjusting entry for depreciation is not made,

Accepted Answer

A)  assets will be understated. 
B)  stockholders' equity will be understated. 
C)  net income will be understated. 
D)  expenses will be understated. 
A)  assets will be understated. 
B)  stockholders' equity will be understated. 
C)  net income will be understated. 
D)  expenses will be understated.

Question 20

Alternative adjusting entries do not apply to

Accepted Answer

A)  accrued revenues and accrued expenses. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  prepaid expenses and unearned revenues. 
A)  accrued revenues and accrued expenses. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  prepaid expenses and unearned revenues.

Prepaid expenses are

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

SurferRosa Music Store borrowed $30,000 from the bank signing a 9%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be

169. Which of the following is a constraint in accounting?

Expenses include losses that are not part of normal operations under

Accrued revenues are

The revenue recognition principle dictates that revenue be recognized in the accounting period

Which of the following statements is not true?

Depreciation based on revaluation of land and buildings is permitted under

Which of the following would not result in unearned revenue?

Asset prepayments become expenses when they expire.

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

Adjusting entries are required

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

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

Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600. The December 31, 2015 balance sheet would report Prepaid Insurance of

The balance in the Prepaid Rent account before adjustment at the end of the year is $21,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to

If the adjusting entry for depreciation is not made,

Alternative adjusting entries do not apply to

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

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Exam 3: Adjusting the Accounts

Prepaid expenses are

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

169. Which of the following is a constraint in accounting?

Expenses include losses that are not part of normal operations under

Accrued revenues are

The revenue recognition principle dictates that revenue be recognized in the accounting period

Which of the following statements is not true?

Depreciation based on revaluation of land and buildings is permitted under

Which of the following would not result in unearned revenue?

Asset prepayments become expenses when they expire.

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

Adjusting entries are required

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

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

Mary Chain Investments purchased an 18-month insurance policy on May 31, 2015 for $3,600. The December 31, 2015 balance sheet would report Prepaid Insurance of

The balance in the Prepaid Rent account before adjustment at the end of the year is $21,000, which represents three months' rent paid on December 1. The adjusting entry required on December 31 is to

If the adjusting entry for depreciation is not made,

Alternative adjusting entries do not apply to

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters