Question 1

The adequacy of a company's disclosure is based on:

Accepted Answer

A) Laws established by Congress. 
B) IRS rules and FASB requirements. 
C) A combination of official rules,tradition,and professional judgment. 
D) The needs of stockholders and creditors. 
A) Laws established by Congress. 
B) IRS rules and FASB requirements. 
C) A combination of official rules,tradition,and professional judgment. 
D) The needs of stockholders and creditors.

Question 2

The net income percentage can be measured by dividing net income by total assets.

Accepted Answer

A) True 
 B)False

Question 3

A debit balance in the income summary account indicates:

Accepted Answer

A) An error was made. 
B) A Net Profit. 
C) A Net Loss. 
D) That revenues were greater than expenses. 
A) An error was made. 
B) A Net Profit. 
C) A Net Loss. 
D) That revenues were greater than expenses.

Question 4

Only two adjustments appear in the adjustments column of a worksheet for Wycliff Publications: one to record $800 depreciation of office equipment and the other to record the use of $560 of office supplies.If the Trial Balance column totals are $15,380,what are the totals of the Adjusted Trial Balance columns?

Accepted Answer

A) $16,740 
B) $15,140. 
C) $16,180. 
D) $15,860. 
A) $16,740 
B) $15,140. 
C) $16,180. 
D) $15,860.

Question 5

Adequate disclosure
(a)Briefly explain what is meant by the principle of adequate disclosure.
(b)How does professional judgment enter into the application of the principle of adequate disclosure?
(c)List 5 types of information that a publicly-held corporation generally would be required to provide according to the concept of adequate disclosure.

Accepted Answer

(a)The principle of adequate disclosure

Question 6

Return on equity measures:

Accepted Answer

A) Solvency. 
B) Profitability. 
C) Leverage. 
D) Both solvency and leverage. 
A) Solvency. 
B) Profitability. 
C) Leverage. 
D) Both solvency and leverage.

Question 7

An annual report

Accepted Answer

A) Must be audited by the IRS. 
B) Is delivered to stockholders and the public on the last day of the fiscal year. 
C) Includes comparative financial statements for several years. 
D) Must be filed with the SEC by all companies in the United States. 
A) Must be audited by the IRS. 
B) Is delivered to stockholders and the public on the last day of the fiscal year. 
C) Includes comparative financial statements for several years. 
D) Must be filed with the SEC by all companies in the United States.

Question 8

Inserting missing data into a worksheet
Certain data are given on the worksheet below,and certain missing data are indicated by the blank lines.Sufficient information is included to fill in the missing data.Each account has a debit or credit balance characteristically normal for that kind of account.Note that the dollar amounts have been reduced to figures of not more than three digits to simplify the arithmetic.
Insert the figures necessary to complete the worksheet in the blanks indicated by an underline.The lines cover both debit and credit columns; be sure to insert the missing figures in the correct column of the blank line.

Accepted Answer

The answer of Inserting missing data into a worksheet
Certain data...

Question 9

Preparation of interim financial statements:

Accepted Answer

A) Makes the preparation of year-end financial statements unnecessary. 
B) Requires the journalizing and posting of adjusting entries. 
C) Requires the journalizing and posting of closing entries. 
D) Is done monthly or quarterly or in-between the year-end financial statements. 
A) Makes the preparation of year-end financial statements unnecessary. 
B) Requires the journalizing and posting of adjusting entries. 
C) Requires the journalizing and posting of closing entries. 
D) Is done monthly or quarterly or in-between the year-end financial statements.

Question 10

The concept of adequate disclosure:

Accepted Answer

A) Demands a "good faith effort" by management. 
B) Grants users of the financial statements access to a company's accounting records. 
C) Does not apply to events occurring after the balance sheet date. 
D) Specifies which accounting methods must be used in a company's financial statements. 
A) Demands a "good faith effort" by management. 
B) Grants users of the financial statements access to a company's accounting records. 
C) Does not apply to events occurring after the balance sheet date. 
D) Specifies which accounting methods must be used in a company's financial statements.

Question 11

Which account will appear on an After-Closing Trial Balance?

Accepted Answer

A) Dividends. 
B) Prepaid Expenses. 
C) Retained Earnings,at the beginning of the period. 
D) Sales. 
A) Dividends. 
B) Prepaid Expenses. 
C) Retained Earnings,at the beginning of the period. 
D) Sales.

Question 12

If sales are $270,000,expenses are $220,000 and dividends are $30,000,Income Summary:

Accepted Answer

A) Will have a credit balance of $50,000. 
B) Will have a debit balance of $50,000. 
C) Will have a debit balance of $20,000. 
D) Will have a credit balance of $20,000. 
A) Will have a credit balance of $50,000. 
B) Will have a debit balance of $50,000. 
C) Will have a debit balance of $20,000. 
D) Will have a credit balance of $20,000.

Question 13

When a worksheet is prepared,which account would not be entered into the income statement columns?

Accepted Answer

A) Depreciation Expense. 
B) Unearned Revenue. 
C) Service Revenue. 
D) Insurance Expense. 
A) Depreciation Expense. 
B) Unearned Revenue. 
C) Service Revenue. 
D) Insurance Expense.

Question 14

If sales are $540,000,expenses are $440,000 and dividends are $50,000,Income Summary:

Accepted Answer

A) Will have a credit balance of $50,000. 
B) Will have a debit balance of $50,000. 
C) Will have a debit balance of $100,000. 
D) Will have a credit balance of $100,000. 
A) Will have a credit balance of $50,000. 
B) Will have a debit balance of $50,000. 
C) Will have a debit balance of $100,000. 
D) Will have a credit balance of $100,000.

Question 15

The return on equity ratio equals net income divided by common stock.

Accepted Answer

A) True 
 B)False

Question 16

The December 31,2014 worksheet for Fran's Fine Dining showed the following amounts related to the Supplies Expense account: (a).In the Trial Balance debit column: $745
(b))In the Adjustments debit column: $125
(c))In the Adjusted Trial Balance debit column: $870
What is the proper balance in the Supplies Expense account on January 1,2015,after all closing entries for 2014 have been posted,but before any 2015 transactions are recorded?

Accepted Answer

A) $870. 
B) $745. 
C) $0. 
D) $125. 
A) $870. 
B) $745. 
C) $0. 
D) $125.

Question 17

The Retained Earnings statement is based upon which of the following relationships?

Accepted Answer

A) Retained Earnings - Net Income - Dividends. 
B) Retained Earnings - Net Income + Dividends. 
C) Retained Earnings + Net Income + Dividends. 
D) Retained Earnings + Net Income - Dividends. 
A) Retained Earnings - Net Income - Dividends. 
B) Retained Earnings - Net Income + Dividends. 
C) Retained Earnings + Net Income + Dividends. 
D) Retained Earnings + Net Income - Dividends.

Question 18

After preparing the financial statements for the current year,the accountant for Exquisite Gems closed the Dividends account at year-end by debiting Income Summary and crediting the Dividends account.What is the effect of this entry on current-year net income and the balance in the Retained Earnings account at year-end?

Accepted Answer

A) Net income is overstated and the balance in the Retained Earnings account is correct. 
B) Net income is correct and the balance in the Retained Earnings account is overstated. 
C) Net income is understated and the balance in the Retained Earnings account is correct. 
D) Net income is understated and the balance in the Retained Earnings account is overstated. 
A) Net income is overstated and the balance in the Retained Earnings account is correct. 
B) Net income is correct and the balance in the Retained Earnings account is overstated. 
C) Net income is understated and the balance in the Retained Earnings account is correct. 
D) Net income is understated and the balance in the Retained Earnings account is overstated.

Question 19

If monthly financial statements are desired by management:

Accepted Answer

A) Journalizing and posting adjusting entries must be done each month. 
B) Journalizing and posting closing entries must be done each month. 
C) Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records. 
D) Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements. 
A) Journalizing and posting adjusting entries must be done each month. 
B) Journalizing and posting closing entries must be done each month. 
C) Monthly financial statements can be prepared from worksheets; adjustments and closing entries need not be entered in the accounting records. 
D) Adjusting and closing entries must be entered in the accounting records before preparation of interim financial statements.

Question 20

The following information is available:   What is the net income percentage? (round to the nearest number)

Accepted Answer

A) 5%. 
B) 15%. 
C) 20%. 
D) 25%. 
A) 5%. 
B) 15%. 
C) 20%. 
D) 25%.

Exam 5: The Accounting Cycle: Reporting Financial Results

The adequacy of a company's disclosure is based on:

The net income percentage can be measured by dividing net income by total assets.

A debit balance in the income summary account indicates:

Return on equity measures:

An annual report

Preparation of interim financial statements:

The concept of adequate disclosure:

Which account will appear on an After-Closing Trial Balance?

If sales are $270,000,expenses are $220,000 and dividends are $30,000,Income Summary:

When a worksheet is prepared,which account would not be entered into the income statement columns?

If sales are $540,000,expenses are $440,000 and dividends are $50,000,Income Summary:

The return on equity ratio equals net income divided by common stock.

The Retained Earnings statement is based upon which of the following relationships?

If monthly financial statements are desired by management:

The following information is available: What is the net income percentage? (round to the nearest number)

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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