Question 1

Amos Real Estate signed a four-month note payable in the amount of $16,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of September is:

Accepted Answer

A)  $480. 
B)  $120. 
C)  $1,440. 
D)  $160.

Question 2

Given the following adjusted trial balance:  Net income for the year is:

Accepted Answer

A)  $49. 
B)  $135. 
C)  $162. 
D)  $248.

Question 3

The accounting cycle begins with the journalizing of the transactions.

Accepted Answer

A) True 
 B)False

Question 4

La More Company had the following transactions during 2013: 
-Sales of $4,500 on account
-Collected $2,000 for services to be performed in 2014
-Paid $1,875 cash in salaries for 2013
-Purchased airline tickets for $250 in December for a trip to take place in 2014
What is La More's 2013 net income using accrual accounting?

Accepted Answer

A)  $2,875 
B)  $4,875 
C)  $4,625 
D)  $2,625

Question 5

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

Accepted Answer

A) True 
 B)False

Question 6

An adjusting entry always involves two balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 7

The balance sheets of Palle' Company include the following:  Instructions:
Calculate the following for 2014:
1. Cash received for interest.
2. Cash paid for supplies.
3. Cash paid for salaries and wages.
4. Cash received for service revenue.

Accepted Answer

The answer of The balance sheets of Palle' Company include...

Question 8

At December 31, 2014, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $2,800. It was determined that $1,200 of the Prepaid Insurance had expired. The adjusted balance for Prepaid Insurance for the year would be:

Accepted Answer

A)  $1,200. 
B)  $1,600. 
C)  $3,800. 
D)  $2,800.

Question 9

Which of the following accounts will reflect the account's beginning balance on the adjusted trial balance?

Accepted Answer

A)  Prepaid rent 
B)  Retained earnings 
C)  Prepaid insurance 
D)  Unearned revenue

Question 10

Net income is recorded on the worksheet under the:

Accepted Answer

A)  debit column of the adjusted trial balance and the credit column of retained earnings. 
B)  debit column of the income statement and the credit column of the balance sheet. 
C)  credit column of the adjusted trial balance and the debit column of retained earnings. 
D)  credit column of the income statement and the debit column of the balance sheet.

Question 11

According to some U.S. companies what gives foreign firms a competitive advantage in the capital market?

Accepted Answer

A)  The foreign companies don't have standards similar to GAAP. 
B)  The foreign companies don't have strict ethical codes. 
C)  The Sarbanes-Oxley Act which requires more stringent internal controls on U.S. firms. 
D)  The foreign companies don't have to be audited.

Question 12

The following is selected information from C Corporation for the fiscal year ending October 31, 2014.  Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2014?

Accepted Answer

A)  $102,000 
B)  $86,000 
C)  $76,000 
D)  $110,000

Question 13

Which account will have a zero balance after closing entries have been journalized and posted?

Accepted Answer

A)  Service revenue. 
B)  Supplies. 
C)  Prepaid Insurance. 
D)  Accumulated Depreciation.

Question 14

On January 1, 2013, Leardon Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation is:

Accepted Answer

A)  $800 debit. 
B)  $9,600 credit. 
C)  $10,400 credit. 
D)  $53,200 debit.

Question 15

Match between columns
                        Premises: A cost allocation process
Events recorded only in periods the company receives or pays cash
Revenues earned but not yet received
Revenue is recognized when the performance obligation is satisfied.
Expenses paid before they are incurred
Cost less accumulated depreciation
Expenses incurred but not yet paid
Includes only permanent—balance sheet—accounts
Efforts are related to accomplishments
The economic life of a business can be divided into artificial time periods

Accepted Answer

The Answer of Prepaid expenses and Accrued expenses and Revenue is...

Question 16

When closing entries are prepared, each income statement account is closed directly to retained earnings.

Accepted Answer

A) True 
 B)False

Question 17

Employees at Biquell Corporation are paid $9,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salaries and wages expense should be recorded two days later on January 2?

Accepted Answer

A)  $9,000 
B)  $5,400 
C)  None, expense recognition requires the weekly salary to be accrued on December 31. 
D)  $3,600

Question 18

If a company fails to make an adjusting entry to record supplies expense, then:

Accepted Answer

A)  stockholders' equity will be understated. 
B)  expense will be understated. 
C)  assets will be understated. 
D)  net income will be understated.

Question 19

The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is:

Accepted Answer

A)  debit Prepaid Rent, $5,000; credit Rent Expense $5,000. 
B)  debit Prepaid Rent, $10,000; credit Rent Expense, $10,000. 
C)  debit Rent Expense, $15,000; credit Prepaid Rent, $15,000. 
D)  debit Rent Expense, $5,000; credit Prepaid Rent, $5,000.

Question 20

The income statement is an important financial statement used by individuals who are interested in the operations of a business enterprise. Explain how the periodicity assumption and the revenue recognition and expense recognition principles provide guidance to accountants in preparing an income statement.

Accepted Answer

The answer of The income statement is an important financial...

Exam 4: Accrual Accounting Concepts

Amos Real Estate signed a four-month note payable in the amount of $16,000 on September 1. The note requires interest at an annual rate of 9%. The amount of interest to be accrued at the end of September is:

Given the following adjusted trial balance: Net income for the year is:

The accounting cycle begins with the journalizing of the transactions.

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

An adjusting entry always involves two balance sheet accounts.

The balance sheets of Palle' Company include the following: Instructions: Calculate the following for 2014: 1. Cash received for interest. 2. Cash paid for supplies. 3. Cash paid for salaries and wages. 4. Cash received for service revenue.

At December 31, 2014, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $2,800. It was determined that $1,200 of the Prepaid Insurance had expired. The adjusted balance for Prepaid Insurance for the year would be:

Which of the following accounts will reflect the account's beginning balance on the adjusted trial balance?

Net income is recorded on the worksheet under the:

According to some U.S. companies what gives foreign firms a competitive advantage in the capital market?

The following is selected information from C Corporation for the fiscal year ending October 31, 2014. Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2014?

Which account will have a zero balance after closing entries have been journalized and posted?

On January 1, 2013, Leardon Inc. purchased equipment for $60,000. The company is depreciating the equipment at the rate of $800 per month. At January 31, 2014, the balance in Accumulated Depreciation is:

Match the items below by entering the appropriate code letter in the space provided.

When closing entries are prepared, each income statement account is closed directly to retained earnings.

Employees at Biquell Corporation are paid $9,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salaries and wages expense should be recorded two days later on January 2?

If a company fails to make an adjusting entry to record supplies expense, then:

The balance in the prepaid rent account before adjustment at the end of the year is $15,000 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: