Question 1

Accrued expenses are ordinarily reported on the balance sheet as:

Accepted Answer

A)  assets. 
B)  liabilities. 
C)  fixed assets. 
D)  prepaid expenses. 
A)  assets. 
B)  liabilities. 
C)  fixed assets. 
D)  prepaid expenses.

Question 2

On April 1, Smart, Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

Accepted Answer

A)  Increase insurance expense and decrease cash by $7,200 each 
B)  Increase prepaid insurance and decrease cash by $7,200 each 
C)  Increase unearned insurance and decrease cash by $7,200 each 
D)  Increase prepaid insurance and decrease retained earnings by $7,200 each 
A)  Increase insurance expense and decrease cash by $7,200 each 
B)  Increase prepaid insurance and decrease cash by $7,200 each 
C)  Increase unearned insurance and decrease cash by $7,200 each 
D)  Increase prepaid insurance and decrease retained earnings by $7,200 each

Question 3

Identify the type of adjustment necessary (the type of item involved) and record the transaction for the event.Make sure to include the ending balances after adjustment.
Assume that on June 1, 2016, Tasty Sausage Corp.received $9,000 in advance to provide sausages over the next three months.The June 30 adjustment is: $\begin{array}{|l|c|c|c|c|c|c|}
\hline & {\text { Assets = }} &&& {\text { Liabilities + Stockholder's Equity }} \
\hline & \text { Cash } & \begin{array}{c}
\text { Office } \
\text { Equipment }
\end{array} & \begin{array}{c}
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array}{c}
\text { Unearned } \
\text { Revenue }
\end{array} & \begin{array}{c}
\text { Common } \
\text { Stock }
\end{array} & \begin{array}{c}
\text { Retained } \
\text { Earnings }
\end{array} \
\hline \text { Beg. Bal. } & 9,000 & & & 9,000 & & \
\hline \text { Adjustment } & & & & & & \
\hline \text { End. Bal. } & & & & & & \
\hline
\end{array}$

Accepted Answer

The answer of Identify the type of adjustment necessary (the...

Question 4

The liabilities that are due to be paid usually within a year or less are called:

Accepted Answer

A)  long-term liabilities. 
B)  deferred liabilities. 
C)  current liabilities. 
D)  contingent liabilities. 
A)  long-term liabilities. 
B)  deferred liabilities. 
C)  current liabilities. 
D)  contingent liabilities.

Question 5

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Accepted Answer

A)  A decrease in inventory 
B)  A decrease in accounts payable 
C)  Preferred dividends declared and paid 
D)  A decrease in accounts receivable 
A)  A decrease in inventory 
B)  A decrease in accounts payable 
C)  Preferred dividends declared and paid 
D)  A decrease in accounts receivable

Question 6

Which of the following accounts would require an adjustment when making an adjusting entry for a deferral?

Accepted Answer

A)  Accrued interest 
B)  Unearned rent 
C)  Salary expense 
D)  Notes receivable 
A)  Accrued interest 
B)  Unearned rent 
C)  Salary expense 
D)  Notes receivable

Question 7

Describe the end-of-the-period adjustment process.Why is it necessary?

Accepted Answer

Using the accrual basis of accounting re

Question 8

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

Accepted Answer

A) True 
 B)False

Question 9

While calculating the carrying value of a building, its accumulated depreciation is:

Accepted Answer

A)  not taken into consideration. 
B)  subtracted from the building's cost. 
C)  added to the building's cost. 
D)  subtracted from the fair market value of the building. 
A)  not taken into consideration. 
B)  subtracted from the building's cost. 
C)  added to the building's cost. 
D)  subtracted from the fair market value of the building.

Question 10

On June 1, Unidevo, Inc.purchased $2,300 worth of supplies on account.Prior to the purchase, the balance in the supplies account was $350.On December 31, the fiscal year-end for Unidevo, it is determined that $500 of supplies still remain.What is the balance in the supplies account after adjustment?

Accepted Answer

A)  $0 
B)  $1,800 
C)  $500 
D)  $2,300 
A)  $0 
B)  $1,800 
C)  $500 
D)  $2,300

Question 11

The balance in the office supplies account on May 1 was $6,380, supplies purchased during June were $4,740, and the supplies on hand at May 31 were $2,360.The amount to be used for the appropriate adjusting entry is:

Accepted Answer

A)  $8,740. 
B)  $4,740. 
C)  $8,760. 
D)  $13,480. 
A)  $8,740. 
B)  $4,740. 
C)  $8,760. 
D)  $13,480.

Question 12

Physical assets of a long-term nature are referred to as fixed assets.

Accepted Answer

A) True 
 B)False

Question 13

A company's stockholders' equity is bifurcated into:

Accepted Answer

A)  current assets and long-term assets. 
B)  common stock and long-term assets. 
C)  retained earnings and long-term assets. 
D)  common stock and retained earnings. 
A)  current assets and long-term assets. 
B)  common stock and long-term assets. 
C)  retained earnings and long-term assets. 
D)  common stock and retained earnings.

Question 14

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected?

Accepted Answer

A)  Cash Flow from Operating Activities 
B)  Cash Flow from Investing Activities 
C)  Cash Flow from Financing Activities 
D)  There is no effect on the statement of cash flows. 
A)  Cash Flow from Operating Activities 
B)  Cash Flow from Investing Activities 
C)  Cash Flow from Financing Activities 
D)  There is no effect on the statement of cash flows.

Question 15

Current assets are assets that are expected to be converted to cash, sold or used up within 6 months.

Accepted Answer

A) True 
 B)False

Question 16

Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of common stock.How does this transaction affect Eagle Eye's accounts?

Accepted Answer

A)  Increase in stock expense and decrease cash by $6,000 each 
B)  Increase common stock and increase cash by $6,000 each 
C)  Increase common stock and increase revenue by $6,000 each 
D)  Increase common stock and decrease retained earnings by $6,000 each 
A)  Increase in stock expense and decrease cash by $6,000 each 
B)  Increase common stock and increase cash by $6,000 each 
C)  Increase common stock and increase revenue by $6,000 each 
D)  Increase common stock and decrease retained earnings by $6,000 each

Question 17

The matching concept requires expenses to be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 18

The accrual basis of accounting requires revenue to be recorded when the service is performed.

Accepted Answer

A) True 
 B)False

Question 19

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following should be shown on a statement of cash flows under the financing activity section?

Accepted Answer

A)  The purchase of a long-term investment in the common stock of another company 
B)  The payment of cash to retire a long-term note 
C)  The proceeds from the sale of a building 
D)  The issuance of a long-term note to acquire land 
A)  The purchase of a long-term investment in the common stock of another company 
B)  The payment of cash to retire a long-term note 
C)  The proceeds from the sale of a building 
D)  The issuance of a long-term note to acquire land

Accrued expenses are ordinarily reported on the balance sheet as:

On April 1, Smart, Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

The liabilities that are due to be paid usually within a year or less are called:

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Which of the following accounts would require an adjustment when making an adjusting entry for a deferral?

Describe the end-of-the-period adjustment process.Why is it necessary?

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

While calculating the carrying value of a building, its accumulated depreciation is:

On June 1, Unidevo, Inc.purchased $2,300 worth of supplies on account.Prior to the purchase, the balance in the supplies account was $350.On December 31, the fiscal year-end for Unidevo, it is determined that $500 of supplies still remain.What is the balance in the supplies account after adjustment?

The balance in the office supplies account on May 1 was $6,380, supplies purchased during June were $4,740, and the supplies on hand at May 31 were $2,360.The amount to be used for the appropriate adjusting entry is:

Physical assets of a long-term nature are referred to as fixed assets.

A company's stockholders' equity is bifurcated into:

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected?

Current assets are assets that are expected to be converted to cash, sold or used up within 6 months.

Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of common stock.How does this transaction affect Eagle Eye's accounts?

The matching concept requires expenses to be recorded in the same period that the related revenue is recorded.

The accrual basis of accounting requires revenue to be recorded when the service is performed.

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Which of the following should be shown on a statement of cash flows under the financing activity section?

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 3: Basic Accounting Systems: Accrual Basis

Accrued expenses are ordinarily reported on the balance sheet as:

On April 1, Smart, Inc.paid $7,200 for an insurance premium on a three-year insurance policy.How does this transaction affect Smart's accounts?

The liabilities that are due to be paid usually within a year or less are called:

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

Which of the following accounts would require an adjustment when making an adjusting entry for a deferral?

Describe the end-of-the-period adjustment process.Why is it necessary?

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

While calculating the carrying value of a building, its accumulated depreciation is:

The balance in the office supplies account on May 1 was $6,380, supplies purchased during June were $4,740, and the supplies on hand at May 31 were $2,360.The amount to be used for the appropriate adjusting entry is:

Physical assets of a long-term nature are referred to as fixed assets.

A company's stockholders' equity is bifurcated into:

When an adjusting entry is made to record insurance expense and reduce the prepaid insurance account, which section of the statement of cash flows is affected?

Current assets are assets that are expected to be converted to cash, sold or used up within 6 months.

Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of common stock.How does this transaction affect Eagle Eye's accounts?

The matching concept requires expenses to be recorded in the same period that the related revenue is recorded.

The accrual basis of accounting requires revenue to be recorded when the service is performed.

An adjusting entry would adjust revenue so that it is reported when earned and not when cash is received.

Which of the following should be shown on a statement of cash flows under the financing activity section?

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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