Question 1

Using accrual accounting, expenses are recorded and reported only

Accepted Answer

A)  when they are incurred for the purpose of generating revenue, whether or not cash is paid. 
B)  when they are incurred and paid at the same time. 
C)  if they are paid before they are incurred. 
D)  if they are paid after they are incurred. 
A)  when they are incurred for the purpose of generating revenue, whether or not cash is paid. 
B)  when they are incurred and paid at the same time. 
C)  if they are paid before they are incurred. 
D)  if they are paid after they are incurred.

Question 2

Some accounts need to be adjusted because

Accepted Answer

A)  there are never enough accounts to record all the transactions. 
B)  they are not up to date at the time financial statements are prepared. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report. 
A)  there are never enough accounts to record all the transactions. 
B)  they are not up to date at the time financial statements are prepared. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report.

Question 3

On February 15, a local business receives an invoice for electricity used in the month of January and pays it on March 1. In which month should the business recognize the expense?

Accepted Answer

A)  February 
B)  January 
C)  March 
D)  No expense should be recorded. 
A)  February 
B)  January 
C)  March 
D)  No expense should be recorded.

Question 4

Griffin Inc. purchased supplies costing $4,250 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Accepted Answer

A)  debit Supplies Expense, $2,100; credit Supplies, $2,100. 
B)  debit Supplies Expense, $2,150; credit Supplies, $2,150. 
C)  debit Supplies, $4,250; credit Supplies Expense, $4,250. 
D)  debit Supplies, $2,100; credit Supplies Expense, $2,100. 
A)  debit Supplies Expense, $2,100; credit Supplies, $2,100. 
B)  debit Supplies Expense, $2,150; credit Supplies, $2,150. 
C)  debit Supplies, $4,250; credit Supplies Expense, $4,250. 
D)  debit Supplies, $2,100; credit Supplies Expense, $2,100.

Question 5

Closing entries are prepared before adjusting entries.

Accepted Answer

A) True 
 B)False

Question 6

When preparing the statement of financial position, the balance of Retained Earnings is taken from the Adjusted Trial Balance.

Accepted Answer

A) True 
 B)False

Question 7

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

Accepted Answer

A)  $25,000. 
B)  $125,000. 
C)  $26,000. 
D)  $2,167. 
A)  $25,000. 
B)  $125,000. 
C)  $26,000. 
D)  $2,167.

Question 8

An adjusting entry to a prepaid expense

Accepted Answer

A)  is not required in the future if prepaid costs are initially recorded as an asset. 
B)  reduces a company's liabilities. 
C)  is required to recognize costs that expire with time. 
A)  is not required in the future if prepaid costs are initially recorded as an asset. 
B)  reduces a company's liabilities. 
C)  is required to recognize costs that expire with time.

Question 9

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

Accepted Answer

A)  contra asset. 
B)  prepayment. 
C)  asset. 
D)  accrual. 
A)  contra asset. 
B)  prepayment. 
C)  asset. 
D)  accrual.

Question 10

The Dividends Declared account is closed to the Income Summary account at the end of each year.

Accepted Answer

A) True 
 B)False

Question 11

The Income Summary account is a permanent account.

Accepted Answer

A) True 
 B)False

Question 12

Under the cash basis of accounting, expense recognition generally does not follow revenue recognition.

Accepted Answer

A) True 
 B)False

Question 13

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

Accepted Answer

A) True 
 B)False

Question 14

A furniture factory's employees work overtime in February to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. The overtime salaries should be expensed in

Accepted Answer

A)  February. 
B)  March. 
C)  the period when the workers receive their cheques. 
D)  either February or March depending on when the pay period ends. 
A)  February. 
B)  March. 
C)  the period when the workers receive their cheques. 
D)  either February or March depending on when the pay period ends.

Question 15

Which of the following statements is true regarding depreciation?

Accepted Answer

A)  Depreciation is a valuation concept; that is, we allocate costs to reflect the actual change in the value of the asset. 
B)  Depreciation allocates the cost of a long-lived asset to the accounting periods over which it is used. 
C)  Depreciation expense will typically will be shown on the statement of financial position. 
D)  Accumulated depreciation has a normal debit balance. 
A)  Depreciation is a valuation concept; that is, we allocate costs to reflect the actual change in the value of the asset. 
B)  Depreciation allocates the cost of a long-lived asset to the accounting periods over which it is used. 
C)  Depreciation expense will typically will be shown on the statement of financial position. 
D)  Accumulated depreciation has a normal debit balance.

Question 16

Accumulated Depreciation is a(n)

Accepted Answer

A)  expense account. 
B)  shareholders' equity account. 
C)  liability account. 
D)  contra asset account. 
A)  expense account. 
B)  shareholders' equity account. 
C)  liability account. 
D)  contra asset account.

Question 17

Each Friday, Braleigh Ltd. pays its office personnel weekly salaries of $42,500 for a five-day work week.Instructions
a. Prepare the necessary adjusting entry at March 31, assuming March 31 falls on a Thursday.
b. Prepare the journal entry for the next payday, which is Friday, April 1.

Accepted Answer

The answer of Each Friday, Braleigh Ltd. pays its office...

Question 18

Accounting divides the economic life of a business entity into time periods.

Accepted Answer

A) True 
 B)False

Question 19

If a three-month, 6% bank loan for $5,000 is signed on October 1, the interest expense for the month of October is $25.

Accepted Answer

A) True 
 B)False

Question 20

Adjusting entries are

Accepted Answer

A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only. 
A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only.

Using accrual accounting, expenses are recorded and reported only

Some accounts need to be adjusted because

On February 15, a local business receives an invoice for electricity used in the month of January and pays it on March 1. In which month should the business recognize the expense?

Griffin Inc. purchased supplies costing $4,250 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Closing entries are prepared before adjusting entries.

When preparing the statement of financial position, the balance of Retained Earnings is taken from the Adjusted Trial Balance.

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

An adjusting entry to a prepaid expense

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

The Dividends Declared account is closed to the Income Summary account at the end of each year.

The Income Summary account is a permanent account.

Under the cash basis of accounting, expense recognition generally does not follow revenue recognition.

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

A furniture factory's employees work overtime in February to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. The overtime salaries should be expensed in

Which of the following statements is true regarding depreciation?

Accumulated Depreciation is a(n)

Each Friday, Braleigh Ltd. pays its office personnel weekly salaries of $42,500 for a five-day work week.Instructions a. Prepare the necessary adjusting entry at March 31, assuming March 31 falls on a Thursday. b. Prepare the journal entry for the next payday, which is Friday, April 1.

Accounting divides the economic life of a business entity into time periods.

If a three-month, 6% bank loan for $5,000 is signed on October 1, the interest expense for the month of October is $25.

Adjusting entries are

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 4: Accrual Accounting Concepts

Using accrual accounting, expenses are recorded and reported only

Some accounts need to be adjusted because

On February 15, a local business receives an invoice for electricity used in the month of January and pays it on March 1. In which month should the business recognize the expense?

Griffin Inc. purchased supplies costing $4,250 and debited Supplies for the full amount. At the end of the accounting period, a physical count of supplies revealed $2,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

Closing entries are prepared before adjusting entries.

When preparing the statement of financial position, the balance of Retained Earnings is taken from the Adjusted Trial Balance.

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

An adjusting entry to a prepaid expense

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is a(n)

The Dividends Declared account is closed to the Income Summary account at the end of each year.

The Income Summary account is a permanent account.

Under the cash basis of accounting, expense recognition generally does not follow revenue recognition.

A contra asset account is subtracted from a related asset account in the statement of financial position and has a normal credit balance.

A furniture factory's employees work overtime in February to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. The overtime salaries should be expensed in

Which of the following statements is true regarding depreciation?

Accumulated Depreciation is a(n)

Each Friday, Braleigh Ltd. pays its office personnel weekly salaries of $42,500 for a five-day work week.Instructions a. Prepare the necessary adjusting entry at March 31, assuming March 31 falls on a Thursday. b. Prepare the journal entry for the next payday, which is Friday, April 1.

Accounting divides the economic life of a business entity into time periods.

If a three-month, 6% bank loan for $5,000 is signed on October 1, the interest expense for the month of October is $25.

Adjusting entries are

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters