Question 1

The adjusting entry for prepaid rent is

Accepted Answer

A)  debit Income Summary; credit Rent Expense. 
B)  debit Rent Expense; credit Income Summary. 
C)  debit Rent Income; credit Prepaid Rent. 
D)  debit Rent Expense; credit Prepaid Rent. 
A)  debit Income Summary; credit Rent Expense. 
B)  debit Rent Expense; credit Income Summary. 
C)  debit Rent Income; credit Prepaid Rent. 
D)  debit Rent Expense; credit Prepaid Rent.

Question 2

Select the one term that best fits each definition
-Using the lower of cost or market value to calculate the cost of ending merchandise inventory.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 3

Select the one term that best fits each definition
-Expenses incurred in one fiscal period but not paid until a later 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 4

The amount by which a plant asset depreciates is classified as a(n)

Accepted Answer

A)  asset. 
B)  liability. 
C)  revenue. 
D)  expense. 
A)  asset. 
B)  liability. 
C)  revenue. 
D)  expense.

Question 5

Select the one term that best fits each definition
-The interest rate charged to a bank's most creditworthy customers.

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 6

Select the one term that best fits each definition
-The spreading of the cost of an intangible asset over its useful life.

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 7

Loan interest rates are often based on bond interest rates.

Accepted Answer

A) True 
 B)False

Question 8

A portion of monthly payments on a note payable reduces the outstanding loan principal.

Accepted Answer

A) True 
 B)False

Question 9

GAAP requires that the cost of a plant asset be

Accepted Answer

A)  totally expensed in the first year of the plant asset's life. 
B)  expensed over ten years. 
C)  expensed over the plant asset's useful life. 
D)  expensed over the plant asset's legal life. 
A)  totally expensed in the first year of the plant asset's life. 
B)  expensed over ten years. 
C)  expensed over the plant asset's useful life. 
D)  expensed over the plant asset's legal life.

Question 10

An adjusting entry normally is reversed if the adjusting entry creates a balance in

Accepted Answer

A)  a revenue or expense account. 
B)  a revenue and liability account. 
C)  an expense and asset account. 
D)  an asset or liability account. 
A)  a revenue or expense account. 
B)  a revenue and liability account. 
C)  an expense and asset account. 
D)  an asset or liability account.

Question 11

Select the one term that best fits each definition
-The interest rate used to calculate periodic interest payments on a bond.

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 12

A merchandise inventory evaluated at the end of a fiscal period is known as a perpetual inventory.

Accepted Answer

A) True 
 B)False

Question 13

When using the perpetual inventory method,

Accepted Answer

A)  physical inventories are never taken. 
B)  day-to-day information about the quantity of merchandise on hand is not available. 
C)  it is not necessary to show the minimum balance on stock records. 
D)  a physical inventory should be taken at the end of the fiscal year. 
A)  physical inventories are never taken. 
B)  day-to-day information about the quantity of merchandise on hand is not available. 
C)  it is not necessary to show the minimum balance on stock records. 
D)  a physical inventory should be taken at the end of the fiscal year.

Question 14

Select the one term that best fits each definition
-All bonds representing the total amount 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 15

The entry to journalize an adjusting entry for interest income is

Accepted Answer

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

Exam 18: Acquiring Capital for Growth and Development

The adjusting entry for prepaid rent is

Select the one term that best fits each definition -Using the lower of cost or market value to calculate the cost of ending merchandise inventory.

Select the one term that best fits each definition -Expenses incurred in one fiscal period but not paid until a later fiscal period.

The amount by which a plant asset depreciates is classified as a(n)

Select the one term that best fits each definition -The interest rate charged to a bank's most creditworthy customers.

Select the one term that best fits each definition -The spreading of the cost of an intangible asset over its useful life.

Loan interest rates are often based on bond interest rates.

A portion of monthly payments on a note payable reduces the outstanding loan principal.

GAAP requires that the cost of a plant asset be

An adjusting entry normally is reversed if the adjusting entry creates a balance in

Select the one term that best fits each definition -The interest rate used to calculate periodic interest payments on a bond.

A merchandise inventory evaluated at the end of a fiscal period is known as a perpetual inventory.

When using the perpetual inventory method,

Select the one term that best fits each definition -All bonds representing the total amount of a loan.

The entry to journalize an adjusting entry for interest income is

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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