Question 1

Some examples of plant assets are

Accepted Answer

A)  prepaid insurance, computers, and equipment. 
B)  supplies, furniture, and cash. 
C)  delivery equipment, supplies, and computers. 
D)  none of these. 
A)  prepaid insurance, computers, and equipment. 
B)  supplies, furniture, and cash. 
C)  delivery equipment, supplies, and computers. 
D)  none of these.

Question 2

Select the one term that best fits each definition
-An entry made at the beginning of one fiscal period to reverse an adjusting entry made in the previous fiscal period.

Accepted Answer

A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry 
A)  accrual 
B)  accrued interest expense 
C)  accrued expenses 
D)  deferral 
E)  deferred expenses
F) deferred revenue
G) reversing entry

Question 3

Select the one term that best fits each definition
-A decrease in equity resulting from activity other than selling goods or services.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 4

Interest expense is a financing expense that is listed in the chart of accounts as an operating expense.

Accepted Answer

A) True 
 B)False

Question 5

Select the one term that best fits each definition
-All property not classified as real property.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 6

Select the one term that best fits each definition
-Assets pledged to a creditor to guarantee repayment of a loan.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 7

Generally, a business removes a plant asset from use and disposes of it

Accepted Answer

A)  when a profit can be made on the disposal. 
B)  when the asset is no longer usable. 
C)  when the asset is three years old. 
D)  at the end of each fiscal year. 
A)  when a profit can be made on the disposal. 
B)  when the asset is no longer usable. 
C)  when the asset is three years old. 
D)  at the end of each fiscal year.

Question 8

All of the following accounts would appear in the Other Revenue section of an income statement except

Accepted Answer

A)  Interest Income. 
B)  Rent Income. 
C)  Gain on Plant Assets. 
D)  Sales. 
A)  Interest Income. 
B)  Rent Income. 
C)  Gain on Plant Assets. 
D)  Sales.

Question 9

Select the one term that best fits each definition
-The payment of an operating expense necessary to earn revenue.

Accepted Answer

A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate 
A)  bond 
B)  bond issue 
C)  capital expenditure 
D)  collateral 
E)  cost of capital
F) debt financing
G) equity financing
H) financial leverage
I) interest expense
J) issue date
K) line of credit
L) non-operating expenses
M) par value
N) preferred stock
O) prime interest rate
P) revenue expenditure
Q) stated interest rate

Question 10

The statement of cash flows is prepared using the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 11

Accounts payable and short-term notes payable are examples of collateral.

Accepted Answer

A) True 
 B)False

Question 12

Select the one term that best fits each definition
-Land and anything attached to the land.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 13

Unlike a line of credit, the interest rate on a promissory note is fixed for the term of the note.

Accepted Answer

A) True 
 B)False

Question 14

After adjustments at the end of a fiscal period, the balance in Prepaid Rent represents the amount of rent expense for the current fiscal period.

Accepted Answer

A) True 
 B)False

Question 15

Select the one term that best fits each definition
-The ratio of the money earned on an investment relative to the amount of the investment.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 16

Dividends decrease the earnings retained by a corporation.

Accepted Answer

A) True 
 B)False

Question 17

Select the one term that best fits each definition
-An accounting form on which a business records information about each plant asset.

Accepted Answer

A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI) 
A)  accelerated depreciation 
B)  amortization 
C)  assessed value 
D)  declining-balance method of depreciation 
E)  double declining-balance method of depreciation
F) gain
G) gain on plant assets
H) intangible assets
I) loss
J) loss on plant assets
K) personal property
L) plant asset record
M) real property
N) return on investment (ROI)

Question 18

The entry to journalize the reversing entry for accrued interest expense is

Accepted Answer

A)  debit Income Summary; credit Interest Expense. 
B)  debit Interest Payable; credit Income Summary. 
C)  debit Interest Expense; credit Income Summary. 
D)  debit Interest Payable; credit Interest Expense. 
A)  debit Income Summary; credit Interest Expense. 
B)  debit Interest Payable; credit Income Summary. 
C)  debit Interest Expense; credit Income Summary. 
D)  debit Interest Payable; credit Interest Expense.

Question 19

Businesses frequently establish their fiscal year to end when inventory is at a minimum.

Accepted Answer

A) True 
 B)False

Question 20

A merchandise inventory that is smaller than needed may decrease net income.

Accepted Answer

A) True 
 B)False

Exam 18: Acquiring Capital for Growth and Development

Some examples of plant assets are

Select the one term that best fits each definition -An entry made at the beginning of one fiscal period to reverse an adjusting entry made in the previous fiscal period.

Select the one term that best fits each definition -A decrease in equity resulting from activity other than selling goods or services.

Interest expense is a financing expense that is listed in the chart of accounts as an operating expense.

Select the one term that best fits each definition -All property not classified as real property.

Select the one term that best fits each definition -Assets pledged to a creditor to guarantee repayment of a loan.

Generally, a business removes a plant asset from use and disposes of it

All of the following accounts would appear in the Other Revenue section of an income statement except

Select the one term that best fits each definition -The payment of an operating expense necessary to earn revenue.

The statement of cash flows is prepared using the accrual basis of accounting.

Accounts payable and short-term notes payable are examples of collateral.

Select the one term that best fits each definition -Land and anything attached to the land.

Unlike a line of credit, the interest rate on a promissory note is fixed for the term of the note.

After adjustments at the end of a fiscal period, the balance in Prepaid Rent represents the amount of rent expense for the current fiscal period.

Select the one term that best fits each definition -The ratio of the money earned on an investment relative to the amount of the investment.

Dividends decrease the earnings retained by a corporation.

Select the one term that best fits each definition -An accounting form on which a business records information about each plant asset.

The entry to journalize the reversing entry for accrued interest expense is

Businesses frequently establish their fiscal year to end when inventory is at a minimum.

A merchandise inventory that is smaller than needed may decrease net income.

The Accounting Equation

Debit and Credit Parts

Journalizing Transactions

Posting to a General Ledger

Cash Control Systems

Work Sheet and Adjusting Entries

Financial Statements for a Proprietorship

Closing Entries and Post-Closing

Accounting for Purchases and Cash Payments

Accounting for Sales and Cash Receipts

Using a General Journal

Preparing Payroll Records

Accounting for Payroll and Payroll Taxes

Uncollectible Accounts Receivable

Adjusting Entries and a Trial Balance

Financial Statements and Closing Entries

Financial Statement Analysis

Plant Assets and Intangible Assets

Accounting for Inventory

Accruals, Deferrals, and Reversing Entries

End-Of-Fiscal-Period Work for a Corporation

Accounting for Partnerships

Recording International and Internet Sales

Service Business Organized As a Proprietorship

Merchandising Business As a Corporation

Additional Accounting Procedures

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