Question 1

Under the cash-basis method of accounting, an expense is recorded at which of the following times?

Accepted Answer

A)  At the end of the accounting period 
B)  When the expense is incurred 
C)  When payment for the expense is made 
D)  At both A and B 
A)  At the end of the accounting period 
B)  When the expense is incurred 
C)  When payment for the expense is made 
D)  At both A and B

Question 2

of the following categories does not show up on an adjusted trial balance?

Accepted Answer

A)  Assets 
B)  Liabilities 
C)  Owners' Equity 
D)  None of the above 
A)  Assets 
B)  Liabilities 
C)  Owners' Equity 
D)  None of the above

Question 3

accrued expense is an expense that:

Accepted Answer

A)  the business has paid, but not yet incurred. 
B)  will be incurred and paid in the future. 
C)  the business has incurred, but not yet paid. 
D)  has been paid and incurred. 
A)  the business has paid, but not yet incurred. 
B)  will be incurred and paid in the future. 
C)  the business has incurred, but not yet paid. 
D)  has been paid and incurred.

Question 4

basic interim accounting period is one year.

Accepted Answer

A) True 
 B)False

Question 5

adjusting entry required for unearned revenue consists of a debit to a liability and a credit to revenue.

Accepted Answer

A) True 
 B)False

Question 6

Under which of the following methods of accounting is an expense recorded when it is incurred, regardless of when cash is paid?

Accepted Answer

A)  Cash 
B)  Accrual 
C)  Deferral 
D)  Receivable 
A)  Cash 
B)  Accrual 
C)  Deferral 
D)  Receivable

Question 7

Under which of the following methods of accounting is revenue recorded when it is earned, regardless of when cash is received?

Accepted Answer

A)  Deferral 
B)  Cash 
C)  Receivable 
D)  Accrual 
A)  Deferral 
B)  Cash 
C)  Receivable 
D)  Accrual

Question 8

"Matching" in accounting means to make an entry in the journal.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following are differences in the accrual method and cash-basis method of accounting?

Accepted Answer

A)  Accrual accounting is required by generally accepted accounting principles. 
B)  Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid. 
C)  Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received. 
D)  All of the above are true. 
A)  Accrual accounting is required by generally accepted accounting principles. 
B)  Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid. 
C)  Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received. 
D)  All of the above are true.

Question 10

What type of account is Salary payable and what is its normal balance?

Accepted Answer

A)  Expense, debit 
B)  Liability, credit 
C)  Asset, debit 
D)  Revenue, credit 
A)  Expense, debit 
B)  Liability, credit 
C)  Asset, debit 
D)  Revenue, credit

Question 11

Under the accrual method of accounting, service revenue is recorded at which of the following times?

Accepted Answer

A)  When the services are completed 
B)  When payment for the services is received 
C)  At the end of the accounting period 
D)  Both A and B 
A)  When the services are completed 
B)  When payment for the services is received 
C)  At the end of the accounting period 
D)  Both A and B

Question 12

credit to a(n) _________ account is required as part of an adjusting entry when an accrued expense was initially recorded as an expense.

Accepted Answer

A)  contra liability 
B)  unearned revenue 
C)  liability 
D)  revenue 
A)  contra liability 
B)  unearned revenue 
C)  liability 
D)  revenue

Question 13

of the following computes ending capital in a proprietorship?

Accepted Answer

A)  Income statement 
B)  Statement of owner's equity in a proprietorship 
C)  Adjusted trial balance 
D)  Balance sheet 
A)  Income statement 
B)  Statement of owner's equity in a proprietorship 
C)  Adjusted trial balance 
D)  Balance sheet

Question 14

Which of the following entries would be made as the result of the revenue principle?

Accepted Answer

A) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Accounts receivable } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Salary expense } & & 1,000 & \
\hline & \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
D)  Both A and B are correct. 
A) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Cash } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Accounts receivable } & & 1,000 & \
\hline & \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Salary expense } & & 1,000 & \
\hline & \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
D)  Both A and B are correct.

Question 15

owner's equity from the statement of owner's equity is included on the balance sheet for a proprietorship.

Accepted Answer

A) True 
 B)False

Question 16

All of the financial statements include which of the following elements?

Accepted Answer

A)  Date, or period, covered by the statement 
B)  Name of the company 
C)  Title of the statement 
D)  All of the above 
A)  Date, or period, covered by the statement 
B)  Name of the company 
C)  Title of the statement 
D)  All of the above

Question 17

A company had $5,645 of supplies on hand on January 1. On December 31, a physical count showed $3,000 of supplies remained. The adjusting entry would require a:

Accepted Answer

A)  debit to supplies expense of $3,000. 
B)  credit to supplies expense of $3,000. 
C)  debit to supplies expense of $2,645. 
D)  credit to supplies expense of $2,645. 
A)  debit to supplies expense of $3,000. 
B)  credit to supplies expense of $3,000. 
C)  debit to supplies expense of $2,645. 
D)  credit to supplies expense of $2,645.

Question 18

adjusting entry required for an accrued expense consists of a debit to a liability and a credit to revenue.

Accepted Answer

A) True 
 B)False

Question 19

matching principle guides accounting for expenses?identifying all expenses incurred during the period, measuring the expenses, and matching them against the revenues earned during that time period.

Accepted Answer

A) True 
 B)False

Question 20

adjusted trial balance columns on a work sheet contain the account balances after the adjusting entries are made.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

Under the cash-basis method of accounting, an expense is recorded at which of the following times?

of the following categories does not show up on an adjusted trial balance?

accrued expense is an expense that:

basic interim accounting period is one year.

adjusting entry required for unearned revenue consists of a debit to a liability and a credit to revenue.

Under which of the following methods of accounting is an expense recorded when it is incurred, regardless of when cash is paid?

Under which of the following methods of accounting is revenue recorded when it is earned, regardless of when cash is received?

"Matching" in accounting means to make an entry in the journal.

Which of the following are differences in the accrual method and cash-basis method of accounting?

What type of account is Salary payable and what is its normal balance?

Under the accrual method of accounting, service revenue is recorded at which of the following times?

credit to a(n) _________ account is required as part of an adjusting entry when an accrued expense was initially recorded as an expense.

of the following computes ending capital in a proprietorship?

Which of the following entries would be made as the result of the revenue principle?

owner's equity from the statement of owner's equity is included on the balance sheet for a proprietorship.

All of the financial statements include which of the following elements?

A company had $5,645 of supplies on hand on January 1. On December 31, a physical count showed $3,000 of supplies remained. The adjusting entry would require a:

adjusting entry required for an accrued expense consists of a debit to a liability and a credit to revenue.

matching principle guides accounting for expenses?identifying all expenses incurred during the period, measuring the expenses, and matching them against the revenues earned during that time period.

adjusted trial balance columns on a work sheet contain the account balances after the adjusting entries are made.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities, Payroll, and Long-Term Liabilities

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Appendix: Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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