Question 1

If a company is using the accrual method of accounting,when is revenue recorded?

Accepted Answer

A)  When cash is received, 30 days after the completion of the services 
B)  When cash is received, before the completion of the services 
C)  When cash is received, even though services may be rendered at a later date 
D)  When services are rendered, even though cash may be received at a later date 
A)  When cash is received, 30 days after the completion of the services 
B)  When cash is received, before the completion of the services 
C)  When cash is received, even though services may be rendered at a later date 
D)  When services are rendered, even though cash may be received at a later date D

Question 2

The Accumulated depreciation account is:

Accepted Answer

A)  an expense account. 
B)  a contra account to the asset being depreciated. 
C)  a record of the sum of all the depreciation recorded. 
D)  both a record of the sum of all the depreciation recorded and a contra account to the asset being depreciated. 
A)  an expense account. 
B)  a contra account to the asset being depreciated. 
C)  a record of the sum of all the depreciation recorded. 
D)  both a record of the sum of all the depreciation recorded and a contra account to the asset being depreciated. D

Question 3

Patricia Event Planning Service collects fees from their customers in advance.On 1 January 2016,the balance of her Unearned revenue account had a balance of $5000 (Cr.).During January and February,she collected $3000 and $700 as advance fees.During the two-month period,she rendered services of $7500 .What is the balance in Unearned revenue at the end of February?

Accepted Answer

A)  Debit balance of $1200 
B)  Credit balance of $1200 
C)  Debit balance of $5000 
D)  Credit balance of $5000 
A)  Debit balance of $1200 
B)  Credit balance of $1200 
C)  Debit balance of $5000 
D)  Credit balance of $5000 B

Question 4

To accrue revenue means that the cash receipt is recorded before the revenue is earned.

Accepted Answer

A) True 
 B)False

Question 5

Overstating expenses could be an unethical strategy used to improve the profit result.

Accepted Answer

A) True 
 B)False

Question 6

Profit from the income statement is reported in the assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Every time supplies are used during the accounting period,the asset 'supplies' should be reduced and the 'supplies expense' should be increased.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A business acquired equipment for $135,000 on 1 January 2017.The equipment will be depreciated over five years of its useful life using the straight-line depreciation method.The business records depreciation once a year on 31 December.Which of the following is the adjusting entry required to record depreciation on equipment for the year 2017? (Assume the salvage value of the acquired equipment to be zero.)

Accepted Answer

A)  Debit $27,000 to Depreciation expense and credit $135,000 to Accumulated depreciation. 
B)  Debit $27,000 to Depreciation expense and credit $27,000 to Equipment. 
C)  Debit $27,000 to Depreciation expense and credit $27,000 to Accumulated depreciation. 
D)  Debit $135,000 to Equipment and credit $135,000 to Cash. 
A)  Debit $27,000 to Depreciation expense and credit $135,000 to Accumulated depreciation. 
B)  Debit $27,000 to Depreciation expense and credit $27,000 to Equipment. 
C)  Debit $27,000 to Depreciation expense and credit $27,000 to Accumulated depreciation. 
D)  Debit $135,000 to Equipment and credit $135,000 to Cash.

Question 14

In the case of Unearned revenue,the adjusting entry at the end of the period includes a debit to Service revenue.

Accepted Answer

A) True 
 B)False

Question 15

If supplies have been used up during the accounting period,the correct adjusting entry would be:

Accepted Answer

A)  reduce the asset 'supplies' and reduce the 'supplies expense'. 
B)  reduce the asset 'supplies' and increase the 'supplies expense'. 
C)  increase the asset 'supplies' and reduce the 'supplies expense'. 
D)  increase the asset 'supplies' and increase 'supplies expense'. 
A)  reduce the asset 'supplies' and reduce the 'supplies expense'. 
B)  reduce the asset 'supplies' and increase the 'supplies expense'. 
C)  increase the asset 'supplies' and reduce the 'supplies expense'. 
D)  increase the asset 'supplies' and increase 'supplies expense'.

Question 16

Which of the following situations would result in an increase in profit under the accrual method of accounting,but would NOT result in an increase in profit under the cash-basis method of accounting?

Accepted Answer

A)  Use of supplies purchased earlier 
B)  Receipt of cash for services that were performed earlier on credit 
C)  Performance of services on credit 
D)  Purchase of supplies for cash 
A)  Use of supplies purchased earlier 
B)  Receipt of cash for services that were performed earlier on credit 
C)  Performance of services on credit 
D)  Purchase of supplies for cash

Question 17

The following information is available for Able Company's Office supplies account.
$$\begin{array} { | l | l | } 
\hline \text { Beginning balance } & \$ 1600 \
\hline \text { Office supplies expensed } & 7000 \
\hline \text { Ending balance } & 4000 \
\hline
\end{array}$$
From the above information,calculate the amount of office supplies purchased.

Accepted Answer

A)  $9400 
B)  $1600 
C)  $4000 
D)  $7000 
A)  $9400 
B)  $1600 
C)  $4000 
D)  $7000

Question 18

In the case of a prepaid expense,the adjusting entry required at the end of a period consists of a credit to Prepaid expense.

Accepted Answer

A) True 
 B)False

Question 19

Entries that record cash paid out before the expense is incurred are:

Accepted Answer

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

Question 20

Henry Tax Planning Service bought production equipment for $9600 on 1 January 2017.It has an estimated useful life of five years and zero residual value.Henry uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month.As of 30 June 2017,the book value of this equipment shown on Henry's balance sheet will be:

Accepted Answer

A)  $10,560 
B)  $9600 
C)  $9760 
D)  $8640 
A)  $10,560 
B)  $9600 
C)  $9760 
D)  $8640

If a company is using the accrual method of accounting,when is revenue recorded?

The Accumulated depreciation account is:

To accrue revenue means that the cash receipt is recorded before the revenue is earned.

Overstating expenses could be an unethical strategy used to improve the profit result.

Profit from the income statement is reported in the assets section of the balance sheet.

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

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.

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

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:

Every time supplies are used during the accounting period,the asset 'supplies' should be reduced and the 'supplies expense' should be increased.

Financial statements are prepared from a(n):

In the case of Unearned revenue,the adjusting entry at the end of the period includes a debit to Service revenue.

If supplies have been used up during the accounting period,the correct adjusting entry would be:

Which of the following situations would result in an increase in profit under the accrual method of accounting,but would NOT result in an increase in profit under the cash-basis method of accounting?

The following information is available for Able Company's Office supplies account. Beginning balance \ 1600 Office supplies expensed 7000 Ending balance 4000 From the above information,calculate the amount of office supplies purchased.

In the case of a prepaid expense,the adjusting entry required at the end of a period consists of a credit to Prepaid expense.

Entries that record cash paid out before the expense is incurred are:

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

Introduction to Managerial Accounting and the Master Budget

Job Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Filters

Exam 3: The Adjusting Process

If a company is using the accrual method of accounting,when is revenue recorded?

The Accumulated depreciation account is:

To accrue revenue means that the cash receipt is recorded before the revenue is earned.

Overstating expenses could be an unethical strategy used to improve the profit result.

Profit from the income statement is reported in the assets section of the balance sheet.

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

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.

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

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:

Every time supplies are used during the accounting period,the asset 'supplies' should be reduced and the 'supplies expense' should be increased.

Financial statements are prepared from a(n):

In the case of Unearned revenue,the adjusting entry at the end of the period includes a debit to Service revenue.

If supplies have been used up during the accounting period,the correct adjusting entry would be:

Which of the following situations would result in an increase in profit under the accrual method of accounting,but would NOT result in an increase in profit under the cash-basis method of accounting?

The following information is available for Able Company's Office supplies account. Beginning balance \ 1600 Office supplies expensed 7000 Ending balance 4000 From the above information,calculate the amount of office supplies purchased.

In the case of a prepaid expense,the adjusting entry required at the end of a period consists of a credit to Prepaid expense.

Entries that record cash paid out before the expense is incurred are:

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

Introduction to Managerial Accounting and the Master Budget

Job Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Filters