Question 1

Which of the following errors will cause a trial balance to be out of balance?

Accepted Answer

A)  Posting a debit to Land as a debit to Machinery 
B)  Placing a debit balance amount into the credit balance column of the ledger 
C)  Omitting an entire transaction 
D)  Incorrectly recording the purchase of land for cash as a debit to Cash and a credit to Land 
A)  Posting a debit to Land as a debit to Machinery 
B)  Placing a debit balance amount into the credit balance column of the ledger 
C)  Omitting an entire transaction 
D)  Incorrectly recording the purchase of land for cash as a debit to Cash and a credit to Land

Question 2

Accounts Receivable and Accounts Payable are used when there is a time delay between a transaction and its related cash flow.

Accepted Answer

A) True 
 B)False

Question 3

Unearned revenues are recorded by companies that

Accepted Answer

A)  receive money in advance of the performance of a service. 
B)  pay money at the time the performance of a service is complete. 
C)  receive money at the time the performance of a service is complete. 
D)  pay money in advance of the performance of a service. 
A)  receive money in advance of the performance of a service. 
B)  pay money at the time the performance of a service is complete. 
C)  receive money at the time the performance of a service is complete. 
D)  pay money in advance of the performance of a service.

Question 4

Which of the following is an illustration of the classification issue?

Accepted Answer

A)  At what amount should an old machine be shown on the balance sheet? 
B)  At what point should the purchase of art supplies be recorded? 
C)  Should tools be recorded as an asset or as an expense? 
D)  At what point should a bill be paid for the purchase of an item? 
A)  At what amount should an old machine be shown on the balance sheet? 
B)  At what point should the purchase of art supplies be recorded? 
C)  Should tools be recorded as an asset or as an expense? 
D)  At what point should a bill be paid for the purchase of an item?

Question 5

If office equipment is sold at cost in exchange for a promissory note,

Accepted Answer

A)  total liabilities increase. 
B)  total liabilities and stockholders' equity decrease. 
C)  total assets decrease. 
D)  total assets remain the same. 
A)  total liabilities increase. 
B)  total liabilities and stockholders' equity decrease. 
C)  total assets decrease. 
D)  total assets remain the same.

Question 6

Which of the following statements is false about a journal entry?

Accepted Answer

A)  It may have more than one debit or credit entry. 
B)  Credits are always indented. 
C)  Accounts that are increased are always listed first. 
D)  A space should be skipped between journal entries. 
A)  It may have more than one debit or credit entry. 
B)  Credits are always indented. 
C)  Accounts that are increased are always listed first. 
D)  A space should be skipped between journal entries.

Question 7

Which of the following accounts will not affect stockholders' equity?

Accepted Answer

A)  Advertising Expense 
B)  Dividends 
C)  Land 
D)  Sales 
A)  Advertising Expense 
B)  Dividends 
C)  Land 
D)  Sales

Question 8

Which of the following is a business event that is considered a recordable transaction?

Accepted Answer

A)  A company hires a new employee. 
B)  A customer purchases merchandise. 
C)  A company orders a product from a supplier. 
D)  An employee sends a purchase requisition to the purchasing department. 
A)  A company hires a new employee. 
B)  A customer purchases merchandise. 
C)  A company orders a product from a supplier. 
D)  An employee sends a purchase requisition to the purchasing department.

Question 9

When the columns of the trial balance equal each other,it means that no errors have occurred in recording and posting the transactions.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts probably would be listed before the others in a chart of accounts?

Accepted Answer

A)  Insurance Expense 
B)  Dividends 
C)  Notes Payable 
D)  Accumulated Depreciation, Buildings 
A)  Insurance Expense 
B)  Dividends 
C)  Notes Payable 
D)  Accumulated Depreciation, Buildings

Question 11

Which of the following accounts will eventually be followed with an outflow of cash?

Accepted Answer

A)  Design Revenue 
B)  Notes Receivable 
C)  Accounts Payable 
D)  Prepaid Rent 
A)  Design Revenue 
B)  Notes Receivable 
C)  Accounts Payable 
D)  Prepaid Rent

Question 12

A $4,000 machine is purchased by paying $1,000 cash and issuing a promissory note for the remainder.The journal entry should include a

Accepted Answer

A)  credit to Machinery. 
B)  credit to Notes Payable. 
C)  credit to Notes Receivable. 
D)  debit to Cash. 
A)  credit to Machinery. 
B)  credit to Notes Payable. 
C)  credit to Notes Receivable. 
D)  debit to Cash.

Question 13

The classification issue involves the assignment of accounts to business transactions.

Accepted Answer

A) True 
 B)False

Question 14

When a business records revenue before it has been earned,it has violated the measurement issue of

Accepted Answer

A)  recognition. 
B)  evaluation. 
C)  classification. 
D)  valuation. 
A)  recognition. 
B)  evaluation. 
C)  classification. 
D)  valuation.

Question 15

When a business erroneously records expenses as assets,it has violated the measurement issue of

Accepted Answer

A)  communication. 
B)  classification. 
C)  valuation. 
D)  recognition. 
A)  communication. 
B)  classification. 
C)  valuation. 
D)  recognition.

Question 16

From the following alphabetical list of account balances,all of which are normal,for Aloha Corporation on September 30,2010,prepare a trial balance in proper form (the amount of Dividends must be computed).
 $\begin{array}{lr}
\text { Accounts Payable } & \$ 780 \
\text { Accounts Receivable } & 460 \
\text { Cash } & 400 \
\text { Common Stock } & 800 \
\text { Dividends } & ?\
\text { Equipment } & 1,380 \
\text { Prepaid Advertising } & 20 \
\text { Retained Earnings } & 400 \
\text { Revenue Earned } & 1,000 \
\text { Wages Expense } & 60 \
\text { Wages Payable } & 20
\end{array}$

Accepted Answer

None

Question 17

When a company receives a product previously ordered,a recordable transaction has occurred.

Accepted Answer

A) True 
 B)False

Question 18

A contract is an example of a source document.

Accepted Answer

A) True 
 B)False

Question 19

When a company receives an order,a transaction has occurred.

Accepted Answer

A) True 
 B)False

Question 20

When collection is made on Accounts Receivable,

Accepted Answer

A)  stockholders' equity increases. 
B)  total assets decrease. 
C)  total assets remain the same. 
D)  total assets increase. 
A)  stockholders' equity increases. 
B)  total assets decrease. 
C)  total assets remain the same. 
D)  total assets increase.

Exam 2: Analyzing Business Transactions

Which of the following errors will cause a trial balance to be out of balance?

Accounts Receivable and Accounts Payable are used when there is a time delay between a transaction and its related cash flow.

Unearned revenues are recorded by companies that

Which of the following is an illustration of the classification issue?

If office equipment is sold at cost in exchange for a promissory note,

Which of the following statements is false about a journal entry?

Which of the following accounts will not affect stockholders' equity?

Which of the following is a business event that is considered a recordable transaction?

When the columns of the trial balance equal each other,it means that no errors have occurred in recording and posting the transactions.

Which of the following accounts probably would be listed before the others in a chart of accounts?

Which of the following accounts will eventually be followed with an outflow of cash?

A $4,000 machine is purchased by paying $1,000 cash and issuing a promissory note for the remainder.The journal entry should include a

The classification issue involves the assignment of accounts to business transactions.

When a business records revenue before it has been earned,it has violated the measurement issue of

When a business erroneously records expenses as assets,it has violated the measurement issue of

When a company receives a product previously ordered,a recordable transaction has occurred.

A contract is an example of a source document.

When a company receives an order,a transaction has occurred.

When collection is made on Accounts Receivable,

Uses of Accounting Information and the Financial Statements

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

Filters