Question 1

The statement of shareholders' equity discloses the changes in the temporary shareholders' equity accounts.

Accepted Answer

A) True 
 B)False

Question 2

Accruals occur when cash flows:

Accepted Answer

A) Occur before expense recognition. 
B) Occur after revenue or expense recognition. 
C) Are uncertain. 
D) May be substituted for goods or services. 
A) Occur before expense recognition. 
B) Occur after revenue or expense recognition. 
C) Are uncertain. 
D) May be substituted for goods or services.

Question 3

Below is a list of accounts in no particular order. Assume that all accounts have normal balances.

Required:

In column A, indicate whether a debit will:

1. Increase the account balance, or
2. Decrease the account balance.

In column B, classify each account according to the following scheme. For contra accounts, indicate the classification of the account to which it relates.

1. A current asset in the balance sheet.
2. A noncurrent asset in the balance sheet.
3. A current liability in the balance sheet.
4. A long-term liability in the balance sheet.
5. A permanent equity account in the balance sheet.
6. A revenue account in the income statement.
7. An expense account shown in the income statement.
8. Account does not appear in either the balance sheet or the income statement.
 
-Retained earnings

Accepted Answer

The answer of Below is a list of accounts in...

Question 4

Paid rent for the next three months.

Accepted Answer

The answer of Paid rent for the next three months....

Question 5

Examples of internal transactions include all of the following except:

Accepted Answer

A) Writing off an uncollectible account. 
B) Recording the expiration of prepaid insurance. 
C) Recording unpaid wages. 
D) Paying wages to company employees. 
A) Writing off an uncollectible account. 
B) Recording the expiration of prepaid insurance. 
C) Recording unpaid wages. 
D) Paying wages to company employees.

Question 6

Raintree Corporation maintains its records on a cash basis. At the end of each year the company's accountant obtains the necessary information to prepare accrual basis financial statements. The following cash flows occurred during the year ended December 31, 2013:   Selected balance sheet information:   Additional information:
1. On June 30, 2012, Raintree lent a customer $50,000. Interest at 6% is payable annually on each June 30. Principal is due in 2016.
2. The annual insurance payment is made in advance on March 31.
3. Annual rent on the company's facilities is paid in advance on September 30.
Required:
1. Prepare an accrual basis income statement for 2013 (ignore income taxes).
2. Determine the following balance sheet amounts on December 31, 2013:
a. Interest receivable
b. Prepaid insurance
c. Prepaid rent

Accepted Answer

The answer of Raintree Corporation maintains its records on a...

Question 7

An example of a contra account is:

Accepted Answer

A) Depreciation expense. 
B) Accounts receivable. 
C) Sales revenue. 
D) Accumulated depreciation. 
A) Depreciation expense. 
B) Accounts receivable. 
C) Sales revenue. 
D) Accumulated depreciation.

Question 8

Permanent accounts would not include:

Accepted Answer

A) Cost of goods sold. 
B) Inventory. 
C) Current liabilities. 
D) Accumulated depreciation. 
A) Cost of goods sold. 
B) Inventory. 
C) Current liabilities. 
D) Accumulated depreciation.

Question 9

In its first year of operations Acme Corp. had income before tax of $400,000. Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%. What is the balance in income tax payable at the end of the year?

Accepted Answer

A) $160,000 credit. 
B) $150,000 credit. 
C) $10,000 credit. 
D) $10,000 debit. 
A) $160,000 credit. 
B) $150,000 credit. 
C) $10,000 credit. 
D) $10,000 debit.

Question 10

Prepare journal entries to record the following transactions of Daisy King Ice Cream Company. If an entry is not required, state "No Entry."
1. Started business by issuing 10,000 shares of capital stock for $20,000.
2. Signed a franchise agreement to pay royalties of 5% of sales.
3. Leased a building for three years at $500 per month and paid six months' rent in advance.
4. Purchased equipment for $5,400, paying $1,000 down and signing a two-year, 10% note for the balance.
5. Purchased $1,800 of supplies on account.
6. Recorded cash sales of $800 for the first week.
7. Paid weekly wages, $320.
8. Paid for supplies purchased in item (5).
9. Paid royalties due on first week's sales.
10. Recorded depreciation on equipment, $50.

Accepted Answer

The answer of Prepare journal entries to record the following...

Question 11

Closed the income summary account, assuming there was a net income for the period.

Accepted Answer

The answer of Closed the income summary account, assuming there...

Question 12

Compared to the accrual basis of accounting, the cash basis of accounting produces a higher amount of income by the net decrease during the accounting period of:

Accepted Answer

A) Option a 
B) Option b 
C) Option c 
D) Option d 
A) Option a 
B) Option b 
C) Option c 
D) Option d

Question 13

Sold inventory for cash.

Accepted Answer

The answer of Sold inventory for cash....

Question 14

Purchased inventory on account.

Accepted Answer

The answer of Purchased inventory on account....

Question 15

Prepare a classified balance sheet for China Tea Company as of December 31, 2013.

Accepted Answer

The answer of Prepare a classified balance sheet for China...

Question 16

The Hamada Company sales for 2013 totaled $150,000 and purchases totaled $95,000. Selected January 1, 2013, balances were: accounts receivable, $18,000; inventory, $14,000; and accounts payable, $12,000. December 31, 2013, balances were: accounts receivable, $16,000; inventory, $15,000; and accounts payable, $13,000. Net cash flows from these activities were:

Accepted Answer

A) $45,000. 
B) $55,000. 
C) $58,000. 
D) $74,000. 
A) $45,000. 
B) $55,000. 
C) $58,000. 
D) $74,000.

Question 17

When converting an income statement from a cash basis to an accrual basis, cash received for services:

Accepted Answer

A) Exceed service revenue. 
B) May exceed or be less than service revenue. 
C) Is less than service revenue. 
D) Equals service revenue. 
A) Exceed service revenue. 
B) May exceed or be less than service revenue. 
C) Is less than service revenue. 
D) Equals service revenue.

Question 18

Presented below is income statement information of the Nebraska Corporation for the year ended December 31, 2013.   Required:
Prepare the necessary closing entries at December 31, 2013.

Accepted Answer

The answer of Presented below is income statement information of...

Question 19

Incurring an expense for advertising on account would be recorded by:

Accepted Answer

A) Debiting liabilities. 
B) Crediting assets. 
C) Debiting an expense. 
D) Debiting assets. 
A) Debiting liabilities. 
B) Crediting assets. 
C) Debiting an expense. 
D) Debiting assets.

Question 20

The income statement summarizes the operating activity of a firm at a particular point in time.

Accepted Answer

A) True 
 B)False

The statement of shareholders' equity discloses the changes in the temporary shareholders' equity accounts.

Accruals occur when cash flows:

Paid rent for the next three months.

Examples of internal transactions include all of the following except:

An example of a contra account is:

Permanent accounts would not include:

In its first year of operations Acme Corp. had income before tax of $400,000. Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%. What is the balance in income tax payable at the end of the year?

Closed the income summary account, assuming there was a net income for the period.

Compared to the accrual basis of accounting, the cash basis of accounting produces a higher amount of income by the net decrease during the accounting period of:

Sold inventory for cash.

Purchased inventory on account.

Prepare a classified balance sheet for China Tea Company as of December 31, 2013.

When converting an income statement from a cash basis to an accrual basis, cash received for services:

Presented below is income statement information of the Nebraska Corporation for the year ended December 31, 2013. Required: Prepare the necessary closing entries at December 31, 2013.

Incurring an expense for advertising on account would be recorded by:

The income statement summarizes the operating activity of a firm at a particular point in time.

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 2: Review of the Accounting Process

The statement of shareholders' equity discloses the changes in the temporary shareholders' equity accounts.

Accruals occur when cash flows:

Paid rent for the next three months.

Examples of internal transactions include all of the following except:

An example of a contra account is:

Permanent accounts would not include:

In its first year of operations Acme Corp. had income before tax of $400,000. Acme made income tax payments totaling $150,000 during the year and has an income tax rate of 40%. What is the balance in income tax payable at the end of the year?

Closed the income summary account, assuming there was a net income for the period.

Compared to the accrual basis of accounting, the cash basis of accounting produces a higher amount of income by the net decrease during the accounting period of:

Sold inventory for cash.

Purchased inventory on account.

Prepare a classified balance sheet for China Tea Company as of December 31, 2013.

When converting an income statement from a cash basis to an accrual basis, cash received for services:

Presented below is income statement information of the Nebraska Corporation for the year ended December 31, 2013. Required: Prepare the necessary closing entries at December 31, 2013.

Incurring an expense for advertising on account would be recorded by:

The income statement summarizes the operating activity of a firm at a particular point in time.

Environment and Theoretical Structure of Financial Accounting

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Income Measurement and Profitability Analysis

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, Plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity Key

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters