Question 1

The c_____________ v____________ of an asset is its original cost less accumulated depreciation.

Accepted Answer

carrying value

Question 2

In preparing its 2011 adjusting entries,the Philippoussis Company neglected to adjust the Office Supplies asset)account for the amount of supplies used up during the year.As a result of this error:

Accepted Answer

A) 2011 profit is understated,the balance of equity is understated,and assets are understated 
B) 2011 profit is overstated,the balance of equity is overstated,and assets are correctly stated 
C) 2011 profit is overstated,the balance of equity is overstated,and assets are overstated 
D) Liabilities are understated 
A) 2011 profit is understated,the balance of equity is understated,and assets are understated 
B) 2011 profit is overstated,the balance of equity is overstated,and assets are correctly stated 
C) 2011 profit is overstated,the balance of equity is overstated,and assets are overstated 
D) Liabilities are understated C

Question 3

Unearned income is classified as a l______________ in the balance sheet as,if the income is not earned,it may need to be repaid.

Accepted Answer

liability

Question 4

Harry Company uses cleaning supplies on a daily basis.Under the accrual basis of accounting these supplies would be an expense of the period in which they are:

Accepted Answer

A) Ordered 
B) Received 
C) Paid for 
D) Used 
A) Ordered 
B) Received 
C) Paid for 
D) Used

Question 5

The c____________ basis of accounting is not a generally accepted method of determining profit for businesses that have significant credit transactions.

Accepted Answer

The answer of The c____________ basis of accounting is not...

Question 6

Which of these is not an advantage of using a worksheet to assist in preparing the financial statements?

Accepted Answer

A) All the information is assembled in one place 
B) It aids in the preparation of interim financial statements for internal use 
C) Reports can be prepared before making closing entries 
D) It means that the ledger can be dispensed with 
A) All the information is assembled in one place 
B) It aids in the preparation of interim financial statements for internal use 
C) Reports can be prepared before making closing entries 
D) It means that the ledger can be dispensed with

Question 7

Tan Traders paid salaries of $130 000 during the year and owes $2 100 for three days work carried out before the 31 December 2011 which will not be paid until January 3 2012.After the adjusting entry for the year ended 31 December 2011:

Accepted Answer

A) Salaries in the income statement are $132 100 and accrued salaries in the balance sheet are $2 100 
B) Salaries in the income statement are $130 000 and accrued salaries in the balance sheet are $2 100 
C) Salaries in the income statement are $127 900 and accrued salaries in the balance sheet are $2 100 
D) Salaries in the income statement are $132 100 and accrued salaries in the balance sheet are $132 100 
A) Salaries in the income statement are $132 100 and accrued salaries in the balance sheet are $2 100 
B) Salaries in the income statement are $130 000 and accrued salaries in the balance sheet are $2 100 
C) Salaries in the income statement are $127 900 and accrued salaries in the balance sheet are $2 100 
D) Salaries in the income statement are $132 100 and accrued salaries in the balance sheet are $132 100

Question 8

Which statement relating to the Accumulated Depreciation account is correct?

Accepted Answer

A) It normally has a debit balance 
B) It reflects the portion of the cost of the asset that has been assigned as an expense since purchase 
C) It provides information on the market value of the asset 
D) It is classified as a liability in the balance sheet 
A) It normally has a debit balance 
B) It reflects the portion of the cost of the asset that has been assigned as an expense since purchase 
C) It provides information on the market value of the asset 
D) It is classified as a liability in the balance sheet

Question 9

The o_____________ cycle is the average time it takes for a firm to acquire and sell inventory and collect the cash from the sale.

Accepted Answer

The answer of The o_____________ cycle is the average time...

Question 10

X Co's employees carry out work to the value of $7 500.They are paid $4 500 immediately with the balance to be settled in the next accounting period.Under the accrual approach to profit measurement the amount of wages expense that will be recorded in the current period is:

Accepted Answer

A) Nil 
B) $4 500 
C) $3 000 
D) $7 500 
A) Nil 
B) $4 500 
C) $3 000 
D) $7 500

Question 11

Current assets may be listed in the balance sheet in the order of their liquidity.Liquidity is:

Accepted Answer

A) Another name for the operating cycle 
B) A measure of how many buyers there are for the asset 
C) Whether the asset is secured over a liability 
D) The average length of time it takes to convert an asset into cash 
A) Another name for the operating cycle 
B) A measure of how many buyers there are for the asset 
C) Whether the asset is secured over a liability 
D) The average length of time it takes to convert an asset into cash

Question 12

The primary basis for the classification of assets and liabilities in the balance sheet is:

Accepted Answer

A) Profitability 
B) Tangibility 
C) Liquidity 
D) Degree of risk 
A) Profitability 
B) Tangibility 
C) Liquidity 
D) Degree of risk

Question 13

The wages expense account for Gerry Mander,political consultants,showed the following entries for 2011.What was the portion of wages that was treated as an expense in 2010 but was not paid until 2011?
Wages Expense $$\begin{array} { | l | l | c | c | c | } 
\hline \text { Date } & \text { Particulars } & \text { Debit } & \text { Credit } & \text { Balance } \
\hline 2011 & & \$ & \$ & \$ \
\text { Jan 1 } & \text { Accrued expenses } & & 1200 & 1200 \mathrm { Cr } \
\text { Year } & \text { Various cash payments } & 51000 & & 49800 \mathrm { Dr } \
\text { Dec } & \text { Accrued expenses } & 2200 & & 52000 \mathrm { Dr } \
31 & & & & \
\hline
\end{array}$$

Accepted Answer

A) $49 800 
B) $51 000 
C) $1 200 
D) $2 200 
A) $49 800 
B) $51 000 
C) $1 200 
D) $2 200

Question 14

The current liability is:

Accepted Answer

A) Accrued Delivery Expenses 
B) Accounts Receivable 
C) Electricity Expense 
D) Long-term Loan 
A) Accrued Delivery Expenses 
B) Accounts Receivable 
C) Electricity Expense 
D) Long-term Loan

Question 15

At year-end it was forgotten to accrue an income item.This will result in an:

Accepted Answer

A) Understatement of assets and an overstatement of profit and equity 
B) Overstatement of liabilities and an understatement of profit and equity 
C) Overstatement of assets,profit,and equity 
D) Understatement of assets,profit,and equity 
A) Understatement of assets and an overstatement of profit and equity 
B) Overstatement of liabilities and an understatement of profit and equity 
C) Overstatement of assets,profit,and equity 
D) Understatement of assets,profit,and equity

Question 16

On the first day of the year Tan Traders purchased a forklift truck for $12 000 which is to be depreciated by 25% a year.At the end of the first year:

Accepted Answer

A) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $12 000 
B) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $15 000 
C) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $9 000 
D) Depreciation in the income statement is $0 and the carrying value of the forklift in the balance sheet is $12 000 
A) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $12 000 
B) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $15 000 
C) Depreciation in the income statement is $3 000 and the carrying value of the forklift in the balance sheet is $9 000 
D) Depreciation in the income statement is $0 and the carrying value of the forklift in the balance sheet is $12 000

Question 17

Obligations of the entity that do not require payment within one year of the balance sheet date are classified as:

Accepted Answer

A) Current liabilities 
B) Non-current assets 
C) Current assets 
D) Non-current liabilities 
A) Current liabilities 
B) Non-current assets 
C) Current assets 
D) Non-current liabilities

Question 18

If a company has earned income which has not been received in cash at the end of the accounting period an adjustment should be made which will:

Accepted Answer

A) Debit an asset account and credit an income account 
B) Debit an expense account and credit cash 
C) Debit an income account and credit an asset account 
D) Debit an asset account and credit an expense account 
A) Debit an asset account and credit an income account 
B) Debit an expense account and credit cash 
C) Debit an income account and credit an asset account 
D) Debit an asset account and credit an expense account

Question 19

Sampras Company purchased a machine for $30 000 on 1 January 2010 with an estimated life of 5 years and a residual value of zero.The straight-line method of depreciation is used.What is the carrying value of the machine on the 31 December 2011 in the balance sheet of Sampras Company?

Accepted Answer

A) $30 000 
B) $24 000 
C) $18 000 
D) $12 000 
A) $30 000 
B) $24 000 
C) $18 000 
D) $12 000

Question 20

The excess of current assets over current liabilities is known as:

Accepted Answer

A) Equity 
B) Working capital 
C) Intangible assets 
D) Net assets 
A) Equity 
B) Working capital 
C) Intangible assets 
D) Net assets

Exam 4: Adjusting the Accounts and Preparing Financial Statements

The c_____________ v____________ of an asset is its original cost less accumulated depreciation.

In preparing its 2011 adjusting entries,the Philippoussis Company neglected to adjust the Office Supplies asset)account for the amount of supplies used up during the year.As a result of this error:

Unearned income is classified as a l______________ in the balance sheet as,if the income is not earned,it may need to be repaid.

Harry Company uses cleaning supplies on a daily basis.Under the accrual basis of accounting these supplies would be an expense of the period in which they are:

The c____________ basis of accounting is not a generally accepted method of determining profit for businesses that have significant credit transactions.

Which of these is not an advantage of using a worksheet to assist in preparing the financial statements?

Tan Traders paid salaries of $130 000 during the year and owes $2 100 for three days work carried out before the 31 December 2011 which will not be paid until January 3 2012.After the adjusting entry for the year ended 31 December 2011:

Which statement relating to the Accumulated Depreciation account is correct?

The o_____________ cycle is the average time it takes for a firm to acquire and sell inventory and collect the cash from the sale.

X Co's employees carry out work to the value of $7 500.They are paid $4 500 immediately with the balance to be settled in the next accounting period.Under the accrual approach to profit measurement the amount of wages expense that will be recorded in the current period is:

Current assets may be listed in the balance sheet in the order of their liquidity.Liquidity is:

The primary basis for the classification of assets and liabilities in the balance sheet is:

The current liability is:

At year-end it was forgotten to accrue an income item.This will result in an:

On the first day of the year Tan Traders purchased a forklift truck for $12 000 which is to be depreciated by 25% a year.At the end of the first year:

Obligations of the entity that do not require payment within one year of the balance sheet date are classified as:

If a company has earned income which has not been received in cash at the end of the accounting period an adjustment should be made which will:

Sampras Company purchased a machine for $30 000 on 1 January 2010 with an estimated life of 5 years and a residual value of zero.The straight-line method of depreciation is used.What is the carrying value of the machine on the 31 December 2011 in the balance sheet of Sampras Company?

The excess of current assets over current liabilities is known as:

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Completing the Accounting Cycle

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Internal Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis,profitability Analysis and Capital Budgeting

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation,disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Liabilities

Analysis and Interpretation of Financial Statements

Filters

The c_ v of an asset is its original cost less accumulated depreciation.