Question 1

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

Accepted Answer

A) True 
 B)False

Question 2

Payments of expenses that will benefit more than one accounting period are identified as:

Accepted Answer

A)  expenses. 
B)  revenues. 
C)  prepaid expenses. 
D)  liabilities. 
A)  expenses. 
B)  revenues. 
C)  prepaid expenses. 
D)  liabilities.

Question 3

A company using the cash basis of accounting reports net income for 2014 of $45,460. If the company had used the accrual basis of accounting it would have reported the following year-end balances:   Instructions:
Determine the company's net income under the accrual basis of accounting. Show your calculations. Use the column headings shown below.

Accepted Answer

The answer of A company using the cash basis of...

Question 4

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 5

Recognizing when an expense contributes to the production of revenue is critical.

Accepted Answer

A) True 
 B)False

Question 6

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Accepted Answer

A) True 
 B)False

Question 7

DeNova Real Estate signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is:

Accepted Answer

A)  $480. 
B)  $120. 
C)  $40. 
D)  $90. 
A)  $480. 
B)  $120. 
C)  $40. 
D)  $90.

Question 8

Which of the following are in accordance with IFRS?

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 9

Expense recognition is tied to revenue recognition.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

Why was Apple required to spread their iPhone revenues over a two year period?

Accepted Answer

A)  Because of its newness, their returns might exceed the normal level of returns. 
B)  Because they were required to provide software updates over that two year period. 
C)  Because that was the estimated life of the iPhone. 
D)  Because they needed to defer revenue recognition since they had a swap program available for future models. 
A)  Because of its newness, their returns might exceed the normal level of returns. 
B)  Because they were required to provide software updates over that two year period. 
C)  Because that was the estimated life of the iPhone. 
D)  Because they needed to defer revenue recognition since they had a swap program available for future models.

Question 13

Accounts receivable is a permanent account.

Accepted Answer

A) True 
 B)False

Question 14

On April 1, 2013, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48,000 for the calendar year ending December 31, 2013. Which accounting principle has been violated?

Accepted Answer

A)  Depreciation principle. 
B)  No principle has been violated. 
C)  Cash principle. 
D)  Expense recognition principle. 
A)  Depreciation principle. 
B)  No principle has been violated. 
C)  Cash principle. 
D)  Expense recognition principle.

Question 15

The preparation of adjusting entries is:

Accepted Answer

A)  straightforward because the accounts that need adjustment will be out of balance. 
B)  needed to ensure that the expense recognition principle is followed. 
C)  only required for accounts that do not have a normal balance. 
D)  optional when financial statements are prepared. 
A)  straightforward because the accounts that need adjustment will be out of balance. 
B)  needed to ensure that the expense recognition principle is followed. 
C)  only required for accounts that do not have a normal balance. 
D)  optional when financial statements are prepared.

Question 16

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would be unethical?

Accepted Answer

A)  Recording accrued salaries and wages expense. 
B)  Recording accrued interest revenue. 
C)  Recording backdated revenue. 
D)  Recording prepaid expense adjustments. 
A)  Recording accrued salaries and wages expense. 
B)  Recording accrued interest revenue. 
C)  Recording backdated revenue. 
D)  Recording prepaid expense adjustments.

Question 18

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

Accepted Answer

A) True 
 B)False

Question 19

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that:

Accepted Answer

A)  assets should be matched with liabilities. 
B)  efforts should be matched with accomplishments. 
C)  dividends should be matched with stockholder investments. 
D)  cash payments should be matched with cash receipts. 
A)  assets should be matched with liabilities. 
B)  efforts should be matched with accomplishments. 
C)  dividends should be matched with stockholder investments. 
D)  cash payments should be matched with cash receipts.

Question 20

Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP include all of the following except

Accepted Answer

A)  Cash-basis accounting is not in accordance with either IFRS or U.S. GAAP. 
B)  Both IFRS and U.S. GAAP allow revaluation of items such as land and buildings to fair value. 
C)  Both IFRS and U.S. GAAP divide the economic life of companies into artificial time periods. 
D)  The form and content of financial statements are very similar under IFRS and U.S. GAAP. 
A)  Cash-basis accounting is not in accordance with either IFRS or U.S. GAAP. 
B)  Both IFRS and U.S. GAAP allow revaluation of items such as land and buildings to fair value. 
C)  Both IFRS and U.S. GAAP divide the economic life of companies into artificial time periods. 
D)  The form and content of financial statements are very similar under IFRS and U.S. GAAP.

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

Payments of expenses that will benefit more than one accounting period are identified as:

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

Recognizing when an expense contributes to the production of revenue is critical.

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

DeNova Real Estate signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is:

Which of the following are in accordance with IFRS?

Expense recognition is tied to revenue recognition.

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

Prepaid expenses are:

Why was Apple required to spread their iPhone revenues over a two year period?

Accounts receivable is a permanent account.

On April 1, 2013, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48,000 for the calendar year ending December 31, 2013. Which accounting principle has been violated?

The preparation of adjusting entries is:

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

Which of the following would be unethical?

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that:

Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP include all of the following except

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

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Exam 4: Accrual Accounting Concepts

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

Payments of expenses that will benefit more than one accounting period are identified as:

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

Recognizing when an expense contributes to the production of revenue is critical.

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

DeNova Real Estate signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 6%. The amount of interest to be accrued at the end of September is:

Which of the following are in accordance with IFRS?

Expense recognition is tied to revenue recognition.

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

Prepaid expenses are:

Why was Apple required to spread their iPhone revenues over a two year period?

Accounts receivable is a permanent account.

On April 1, 2013, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $48,000 for the calendar year ending December 31, 2013. Which accounting principle has been violated?

The preparation of adjusting entries is:

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

Which of the following would be unethical?

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that:

Similarities between International Financial Reporting Standards (IFRS) and U.S. GAAP include all of the following except

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters