Question 1

An adjusting entry always involves two balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 2

Accrued revenues are revenues which have been received but not yet recognized.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is in accordance with generally accepted accounting principles?

Accepted Answer

A)  Accrual-basis accounting 
B)  Cash-basis accounting 
C)  Both accrual-basis and cash-basis accounting 
D)  Neither accrual-basis nor cash-basis accounting 
A)  Accrual-basis accounting 
B)  Cash-basis accounting 
C)  Both accrual-basis and cash-basis accounting 
D)  Neither accrual-basis nor cash-basis accounting

Question 4

Accrual-basis accounting is allowed 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 5

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

Accepted Answer

A) True 
 B)False

Question 6

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Accepted Answer

A) True 
 B)False

Question 7

Which of the statements below is not true?

Accepted Answer

A)  An adjusted trial balance should show ledger account balances. 
B)  An adjusted trial balance can be used to prepare financial statements. 
C)  An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D)  An adjusted trial balance is prepared before all transactions have been journalized. 
A)  An adjusted trial balance should show ledger account balances. 
B)  An adjusted trial balance can be used to prepare financial statements. 
C)  An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D)  An adjusted trial balance is prepared before all transactions have been journalized.

Question 8

The time period assumption is often referred to as the expense recognition principle.

Accepted Answer

A) True 
 B)False

Question 9

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Accepted Answer

A)  annual, annual 
B)  monthly, annual 
C)  quarterly, monthly 
D)  monthly, monthly 
A)  annual, annual 
B)  monthly, annual 
C)  quarterly, monthly 
D)  monthly, monthly

Question 10

Employees at Tengo 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 salaries and wages expense should be recorded two days later on January 2?

Accepted Answer

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

Question 11

Expenses paid and recorded as assets before they are used are called

Accepted Answer

A)  accrued expenses. 
B)  interim expenses. 
C)  prepaid expenses. 
D)  unearned expenses. 
A)  accrued expenses. 
B)  interim expenses. 
C)  prepaid expenses. 
D)  unearned expenses.

Question 12

Adjustments would not be necessary if financial statements were prepared to reflect net income from

Accepted Answer

A)  monthly operations. 
B)  fiscal year operations. 
C)  interim operations. 
D)  lifetime operations. 
A)  monthly operations. 
B)  fiscal year operations. 
C)  interim operations. 
D)  lifetime operations.

Question 13

Revenue recognition under IFRS is

Accepted Answer

A)  substantially different from revenue recognition under GAAP. 
B)  generally the same as revenue recognition under GAAP, but with more detailed guidance. 
C)  generally the same as revenue recognition under GAAP, but with less detailed guidance. 
D)  exactly the same as revenue recognition under GAAP. 
A)  substantially different from revenue recognition under GAAP. 
B)  generally the same as revenue recognition under GAAP, but with more detailed guidance. 
C)  generally the same as revenue recognition under GAAP, but with less detailed guidance. 
D)  exactly the same as revenue recognition under GAAP.

Question 14

A company usually determines the amount of supplies used during a period by

Accepted Answer

A)  adding the supplies on hand to the balance of the Supplies account. 
B)  summing the amount of supplies purchased during the period. 
C)  taking the difference between the supplies purchased and the supplies paid for during the period. 
D)  taking the difference between the balance of the Supplies account and the cost of supplies on hand. 
A)  adding the supplies on hand to the balance of the Supplies account. 
B)  summing the amount of supplies purchased during the period. 
C)  taking the difference between the supplies purchased and the supplies paid for during the period. 
D)  taking the difference between the balance of the Supplies account and the cost of supplies on hand.

Question 15

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

Accepted Answer

A) True 
 B)False

Question 16

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 balance sheet. 
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 balance sheet. 
D)  has a normal credit balance.

Question 17

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

Accepted Answer

A)  an expense should be recorded when the bill is received. 
B)  an expense should be recorded when the cash is paid out. 
C)  an adjusting entry should be made recognizing the expense. 
D)  it is optional whether to record the expense before the bill is received. 
A)  an expense should be recorded when the bill is received. 
B)  an expense should be recorded when the cash is paid out. 
C)  an adjusting entry should be made recognizing the expense. 
D)  it is optional whether to record the expense before the bill is received.

Question 18

The economic entity assumption states that economic events

Accepted Answer

A)  of different entities can be combined if all the entities are corporations. 
B)  must be reported to the IASB. 
C)  of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D)  of every entity can be separately identified and accounted for. 
A)  of different entities can be combined if all the entities are corporations. 
B)  must be reported to the IASB. 
C)  of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D)  of every entity can be separately identified and accounted for.

Question 19

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Accepted Answer

A)  Debit Supplies Expense, $1,000; Credit Supplies, $1,000. 
B)  Debit Supplies, $1,000; Credit Supplies Expense, $1,000. 
C)  Debit Supplies, $6,000; Credit Supplies Expense, $6,000. 
D)  Debit Supplies Expense, $6,000; Credit Supplies, $6,000. 
A)  Debit Supplies Expense, $1,000; Credit Supplies, $1,000. 
B)  Debit Supplies, $1,000; Credit Supplies Expense, $1,000. 
C)  Debit Supplies, $6,000; Credit Supplies Expense, $6,000. 
D)  Debit Supplies Expense, $6,000; Credit Supplies, $6,000.

Question 20

An expense is recorded under the cash basis only when

Accepted Answer

A)  services are performed. 
B)  it is earned. 
C)  cash is paid. 
D)  it is incurred. 
A)  services are performed. 
B)  it is earned. 
C)  cash is paid. 
D)  it is incurred.

An adjusting entry always involves two balance sheet accounts.

Accrued revenues are revenues which have been received but not yet recognized.

Which of the following is in accordance with generally accepted accounting principles?

Accrual-basis accounting is allowed under

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Which of the statements below is not true?

The time period assumption is often referred to as the expense recognition principle.

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.

Employees at Tengo 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 salaries and wages expense should be recorded two days later on January 2?

Expenses paid and recorded as assets before they are used are called

Adjustments would not be necessary if financial statements were prepared to reflect net income from

Revenue recognition under IFRS is

A company usually determines the amount of supplies used during a period by

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

An accumulated depreciation account

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

The economic entity assumption states that economic events

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

An expense is recorded under the cash basis only when

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

Exam 3: Adjusting the Accounts

An adjusting entry always involves two balance sheet accounts.

Accrued revenues are revenues which have been received but not yet recognized.

Which of the following is in accordance with generally accepted accounting principles?

Accrual-basis accounting is allowed under

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Which of the statements below is not true?

The time period assumption is often referred to as the expense recognition principle.

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Employees at Tengo 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 salaries and wages expense should be recorded two days later on January 2?

Expenses paid and recorded as assets before they are used are called

Adjustments would not be necessary if financial statements were prepared to reflect net income from

Revenue recognition under IFRS is

A company usually determines the amount of supplies used during a period by

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

An accumulated depreciation account

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

The economic entity assumption states that economic events

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

An expense is recorded under the cash basis only when

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

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.