Question 1

Entries that record an expense before the cash is paid are:

Accepted Answer

A) unearned revenues. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues. 
A) unearned revenues. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues.

Question 2

Under accrual basis accounting,revenue is recorded ONLY when cash is received.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Accounts receivable } & & 1000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1000 & \
\hline \text { Salary payable } & & 1000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent expense } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Prepaid rent } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Accounts receivable } & & 1000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1000 & \
\hline \text { Salary payable } & & 1000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent expense } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Prepaid rent } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$

Question 4

On the first day of January,Patricia borrowed $5000 on a one-year loan payable bearing interest at 7% per year.The loan specifies that principal and interest must be paid in full at the end of the one-year period.On 30 June,the adjusted trial balance will show Interest payable of:

Accepted Answer

A) $175 credit 
B) $350 debit 
C) $175 debit 
D) $350 credit 
A) $175 credit 
B) $350 debit 
C) $175 debit 
D) $350 credit

Question 5

Financial statements are prepared from a(n):

Accepted Answer

A) adjusted trial balance. 
B) unadjusted trial balance. 
C) general journal. 
D) general ledger. 
A) adjusted trial balance. 
B) unadjusted trial balance. 
C) general journal. 
D) general ledger.

Question 6

ABC Company signed a one-year $24,000 loan payable at 8% interest on 1 May 2016.How much interest expense must be accrued on 31 May 2016?

Accepted Answer

A) $1920 
B) $80 
C) $160 
D) $12,800 
A) $1920 
B) $80 
C) $160 
D) $12,800

Question 7

Under cash-basis accounting,an expense is recorded ONLY when cash is paid out.

Accepted Answer

A) True 
 B)False

Question 8

In cash-basis accounting,revenue is recognised when cash is received and expenses are recognised when they are paid.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following accounts would be used under the accrual method of accounting,but NOT under the cash-basis method of accounting?

Accepted Answer

A) Equipment 
B) Salary expense 
C) Cash 
D) Unearned revenue 
A) Equipment 
B) Salary expense 
C) Cash 
D) Unearned revenue

Question 10

Healthy Living,a diet magazine,collected $492,000 in subscription revenue on 31 May.Healthy Living earns a minimum of $369,000 from the buyers who are not the subscribers.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.What is the balance in the Unearned revenue account on 31 December?

Accepted Answer

A) $287,000 
B) $492,000 
C) $205,000 
D) $369,000 
A) $287,000 
B) $492,000 
C) $205,000 
D) $369,000

Question 11

In accounting,depreciation is the:

Accepted Answer

A) sale of an asset. 
B) estimation of an asset's current value. 
C) method of spreading the cost of an asset over its useful life. 
D) decline in market value of an asset. 
A) sale of an asset. 
B) estimation of an asset's current value. 
C) method of spreading the cost of an asset over its useful life. 
D) decline in market value of an asset.

Question 12

Which of the following accounts would NOT be included in the adjusting entries made at the end of an accounting period?

Accepted Answer

A) Prepaid insurance 
B) Accounts payable 
C) Cash 
D) Accounts receivable 
A) Prepaid insurance 
B) Accounts payable 
C) Cash 
D) Accounts receivable

Question 13

Qwerty Ltd prepaid $3600 on 1 November 2016 for a one-year insurance premium.On 1 January 2017 of the next year (after 31 December adjustments),the Prepaid insurance account will have a debit balance of:

Accepted Answer

A) $3900 
B) $3000 
C) $3600 
D) $3300 
A) $3900 
B) $3000 
C) $3600 
D) $3300

Question 14

Smith owns manufacturing equipment that was bought for $11 760.It has an estimated useful life of seven years.Smith should record depreciation expense of $90 per month.

Accepted Answer

A) True 
 B)False

Question 15

Accrual accounting records transactions ONLY when cash is received or paid.

Accepted Answer

A) True 
 B)False

Question 16

Al Shonky wants to improve his profit to support a bank loan application.How might he achieve this ethically?

Accepted Answer

A) recognise unearned revenue as profit before providing goods to customers 
B) omit depreciation for this year 
C) pay the electricity bill before the due date 
D) increase sales by opening his store an extra day each week 
A) recognise unearned revenue as profit before providing goods to customers 
B) omit depreciation for this year 
C) pay the electricity bill before the due date 
D) increase sales by opening his store an extra day each week

Question 17

The cash basis of accounting provides opportunities for manipulation of reported profits.

Accepted Answer

A) True 
 B)False

Question 18

If a company fails to make an adjusting entry for accrued revenues,the profit will be overstated.

Accepted Answer

A) True 
 B)False

Question 19

Entries that record cash collected before the revenues are earned are:

Accepted Answer

A) accrued revenues. 
B) unearned revenues. 
C) accrued expenses. 
D) prepaid expenses. 
A) accrued revenues. 
B) unearned revenues. 
C) accrued expenses. 
D) prepaid expenses.

Question 20

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Service revenue } & & 1000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Accounts receivable } & & 1000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Service revenue } & & 1000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 1000 & \
\hline \text { Cash } & & 1000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1000 & \
\hline \text { Accounts receivable } & & 1000 \
\hline
\end{array}$$

Entries that record an expense before the cash is paid are:

Under accrual basis accounting,revenue is recorded ONLY when cash is received.

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

On the first day of January,Patricia borrowed $5000 on a one-year loan payable bearing interest at 7% per year.The loan specifies that principal and interest must be paid in full at the end of the one-year period.On 30 June,the adjusted trial balance will show Interest payable of:

Financial statements are prepared from a(n):

ABC Company signed a one-year $24,000 loan payable at 8% interest on 1 May 2016.How much interest expense must be accrued on 31 May 2016?

Under cash-basis accounting,an expense is recorded ONLY when cash is paid out.

In cash-basis accounting,revenue is recognised when cash is received and expenses are recognised when they are paid.

Which of the following accounts would be used under the accrual method of accounting,but NOT under the cash-basis method of accounting?

In accounting,depreciation is the:

Which of the following accounts would NOT be included in the adjusting entries made at the end of an accounting period?

Qwerty Ltd prepaid $3600 on 1 November 2016 for a one-year insurance premium.On 1 January 2017 of the next year (after 31 December adjustments),the Prepaid insurance account will have a debit balance of:

Smith owns manufacturing equipment that was bought for $11 760.It has an estimated useful life of seven years.Smith should record depreciation expense of $90 per month.

Accrual accounting records transactions ONLY when cash is received or paid.

Al Shonky wants to improve his profit to support a bank loan application.How might he achieve this ethically?

The cash basis of accounting provides opportunities for manipulation of reported profits.

If a company fails to make an adjusting entry for accrued revenues,the profit will be overstated.

Entries that record cash collected before the revenues are earned are:

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

The Role of Accounting in Decision Making

Recording Business Transactions

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters

Exam 3: The Adjusting Process

Entries that record an expense before the cash is paid are:

Under accrual basis accounting,revenue is recorded ONLY when cash is received.

Which of the following entries would be recorded if a company is using the cash-basis method of accounting?

On the first day of January,Patricia borrowed $5000 on a one-year loan payable bearing interest at 7% per year.The loan specifies that principal and interest must be paid in full at the end of the one-year period.On 30 June,the adjusted trial balance will show Interest payable of:

Financial statements are prepared from a(n):

ABC Company signed a one-year $24,000 loan payable at 8% interest on 1 May 2016.How much interest expense must be accrued on 31 May 2016?

Under cash-basis accounting,an expense is recorded ONLY when cash is paid out.

In cash-basis accounting,revenue is recognised when cash is received and expenses are recognised when they are paid.

Which of the following accounts would be used under the accrual method of accounting,but NOT under the cash-basis method of accounting?

In accounting,depreciation is the:

Which of the following accounts would NOT be included in the adjusting entries made at the end of an accounting period?

Qwerty Ltd prepaid $3600 on 1 November 2016 for a one-year insurance premium.On 1 January 2017 of the next year (after 31 December adjustments),the Prepaid insurance account will have a debit balance of:

Smith owns manufacturing equipment that was bought for $11 760.It has an estimated useful life of seven years.Smith should record depreciation expense of $90 per month.

Accrual accounting records transactions ONLY when cash is received or paid.

Al Shonky wants to improve his profit to support a bank loan application.How might he achieve this ethically?

The cash basis of accounting provides opportunities for manipulation of reported profits.

If a company fails to make an adjusting entry for accrued revenues,the profit will be overstated.

Entries that record cash collected before the revenues are earned are:

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

The Role of Accounting in Decision Making

Recording Business Transactions

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters