Question 1

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Accepted Answer

A)  Accumulated Depreciation-Equipment 
B)  Prepaid Insurance 
C)  Owner's Withdrawals 
D)  Depreciation Expense 
A)  Accumulated Depreciation-Equipment 
B)  Prepaid Insurance 
C)  Owner's Withdrawals 
D)  Depreciation Expense

Question 2

Pierce & Company purchased equipment for $36,000. The equipment has an estimated useful life of eight years and will be worthless at the end of that time. In the partial balance sheet below, show exactly how the equipment should be disclosed after it has been used for five years. Also calculate total assets.

Accepted Answer

@#IMG-DLM& *$36,000

Question 3

Use this information to answer the following question. The trial balance for Sanchez Company appears as follows:
  If the estimated depreciation for office equipment were $200, the adjusting entry would contain a

Accepted Answer

A)  debit to Accumulated Depreciation-Office Equipment for $200. 
B)  credit to Office Equipment for $200. 
C)  credit to Accumulated Depreciation-Office Equipment for $200. 
D)  credit to Depreciation Expense-Office Equipment for $200. 
A)  debit to Accumulated Depreciation-Office Equipment for $200. 
B)  credit to Office Equipment for $200. 
C)  credit to Accumulated Depreciation-Office Equipment for $200. 
D)  credit to Depreciation Expense-Office Equipment for $200.

Question 4

What is the adjustment entry for that portion of revenue received in advance which has now been earned?

Accepted Answer

A)  Unearned Revenue - Debit; Cash - Credit 
B)  Unearned Revenue - Debit; Revenue from Services - Credit 
C)  Revenue from Services - Debit; Unearned Revenue - Credit 
D)  Cash - Debit; Unearned Revenue - Credit 
A)  Unearned Revenue - Debit; Cash - Credit 
B)  Unearned Revenue - Debit; Revenue from Services - Credit 
C)  Revenue from Services - Debit; Unearned Revenue - Credit 
D)  Cash - Debit; Unearned Revenue - Credit

Question 5

The dollar amount of Cash on the trial balance and on the adjusted trial balance should be identical.

Accepted Answer

A) True 
 B)False

Question 6

Accrual accounting is an application of the matching rule.

Accepted Answer

A) True 
 B)False

Question 7

Expenses that have been paid for and recorded are called accrued expenses.

Accepted Answer

A) True 
 B)False

Question 8

The carrying value of a depreciable asset equals

Accepted Answer

A)  original cost minus depreciation expense for the current period. 
B)  original cost minus accumulated depreciation. 
C)  the estimated cost to replace the asset. 
D)  the estimated amount that the asset could be sold for. 
A)  original cost minus depreciation expense for the current period. 
B)  original cost minus accumulated depreciation. 
C)  the estimated cost to replace the asset. 
D)  the estimated amount that the asset could be sold for.

Question 9

Assets become liabilities when they expire.

Accepted Answer

A) True 
 B)False

Question 10

Expenses can be described as expired costs.

Accepted Answer

A) True 
 B)False

Question 11

Accumulated depreciation is classified as a(n)

Accepted Answer

A)  contra-expense account. 
B)  expense account. 
C)  contra-asset account. 
D)  liability account. 
A)  contra-expense account. 
B)  expense account. 
C)  contra-asset account. 
D)  liability account.

Question 12

The matching rule is applied

Accepted Answer

A)  because it is required by the Internal Revenue Code. 
B)  by expensing certain items immediately and in their entirety. 
C)  to help make the bookkeeper's job easier. 
D)  to help produce an accurate measurement of a company's performance. 
A)  because it is required by the Internal Revenue Code. 
B)  by expensing certain items immediately and in their entirety. 
C)  to help make the bookkeeper's job easier. 
D)  to help produce an accurate measurement of a company's performance.

Question 13

On December 9, A issues a 60-day promissory note to B. The December 31 adjusting entry for A is

Accepted Answer

A)  Interest Payable - Debit; Cash - Credit 
B)  Interest Receivable - Debit; Interest Income - Credit 
C)  Interest Expense - Debit; Cash - Credit 
D)  Interest Expense - Debit; Interest Payable - Credit 
A)  Interest Payable - Debit; Cash - Credit 
B)  Interest Receivable - Debit; Interest Income - Credit 
C)  Interest Expense - Debit; Cash - Credit 
D)  Interest Expense - Debit; Interest Payable - Credit

Question 14

When expenses exceed revenues,

Accepted Answer

A)  a net income will result. 
B)  a net loss occurs. 
C)  owner's equity increases. 
D)  a liability is created. 
A)  a net income will result. 
B)  a net loss occurs. 
C)  owner's equity increases. 
D)  a liability is created.

Question 15

The manipulation of revenues and expenses to achieve a specific outcome is called

Accepted Answer

A)  earnings management. 
B)  the matching rule. 
C)  adjusting entries. 
D)  revenue recognition. 
A)  earnings management. 
B)  the matching rule. 
C)  adjusting entries. 
D)  revenue recognition.

Question 16

Revenue should be recognized, even when collectibility is not reasonably assured.

Accepted Answer

A) True 
 B)False

Question 17

When there is no direct connection between revenues and costs, the costs are systematically allocated among the periods benefited.

Accepted Answer

A) True 
 B)False

Question 18

In July, a company pays three years' insurance in advance. The December 31 adjusting entry is

Accepted Answer

A)  Insurance Expense - Debit; Prepaid Insurance - Credit 
B)  Prepaid Insurance - Debit; Insurance Expense - Credit 
C)  Insurance Expense - Debit; Cash - Credit 
D)  Prepaid Insurance - Debit; Cash - Credit 
A)  Insurance Expense - Debit; Prepaid Insurance - Credit 
B)  Prepaid Insurance - Debit; Insurance Expense - Credit 
C)  Insurance Expense - Debit; Cash - Credit 
D)  Prepaid Insurance - Debit; Cash - Credit

Question 19

A revenue for which the service has been performed but that has not been recorded is an accrued revenue.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is an example of an accrual?

Accepted Answer

A)  The purchase of office supplies 
B)  Wages expense incurred but not yet paid 
C)  Tuition revenue collected in advance 
D)  Payment of two years' insurance in advance 
A)  The purchase of office supplies 
B)  Wages expense incurred but not yet paid 
C)  Tuition revenue collected in advance 
D)  Payment of two years' insurance in advance

Exam 3: Measuring Business Income

Which of the following accounts would be found on the credit side of the adjusted trial balance?

Use this information to answer the following question. The trial balance for Sanchez Company appears as follows: If the estimated depreciation for office equipment were $200, the adjusting entry would contain a

What is the adjustment entry for that portion of revenue received in advance which has now been earned?

The dollar amount of Cash on the trial balance and on the adjusted trial balance should be identical.

Accrual accounting is an application of the matching rule.

Expenses that have been paid for and recorded are called accrued expenses.

The carrying value of a depreciable asset equals

Assets become liabilities when they expire.

Expenses can be described as expired costs.

Accumulated depreciation is classified as a(n)

The matching rule is applied

On December 9, A issues a 60-day promissory note to B. The December 31 adjusting entry for A is

When expenses exceed revenues,

The manipulation of revenues and expenses to achieve a specific outcome is called

Revenue should be recognized, even when collectibility is not reasonably assured.

When there is no direct connection between revenues and costs, the costs are systematically allocated among the periods benefited.

In July, a company pays three years' insurance in advance. The December 31 adjusting entry is

A revenue for which the service has been performed but that has not been recorded is an accrued revenue.

Which of the following is an example of an accrual?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-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

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