Question 1

Each year,a company's net income is carried forward from the income statement to what other financial statement?

Accepted Answer

The answer of Each year,a company's net income is carried...

Question 2

At the end of the accounting period,Snyder Co.recognized accrued salaries payable.

Accepted Answer

The answer of At the end of the accounting period,Snyder...

Question 3

What is the effect on the accounting equation of a cash payment to creditors?

Accepted Answer

The answer of What is the effect on the accounting...

Question 4

Significant interrelationships exist among a company's four financial statements for a given accounting period.

Accepted Answer

A) True 
 B)False

Question 5

In a company's annual report,the reader will find a company's income statement,statement of changes in stockholders' equity,balance sheet,and statement of cash flows.These financial statements can help the reader to answer specific questions.Identify which financial statement would be most useful in answering the following questions.If more than one financial statement can answer the question,please identify all applicable statements.
1)What was the amount of cash dividends paid to the stockholders during the most recent year?
2)What was the total amount of land owned by the company?
3)What was the total amount of cash borrowed by the company during the most recent year?
4)What were the types of claims that the company had against its assets?
5)What was the total amount of cash received by the issuance of common stock in the current year?
6)Was the company profitable during the most recent year?
7)How much cash was collected from accounts receivable during the current year?
8)What was the total revenue earned by the company during the most recent year?
9)What was the ending balance of retained earnings?
10)What was the amount of change in the cash balance during the current year?

Accepted Answer

The answer of In a company's annual report,the reader will...

Question 6

Temporary accounts are closed prior to the start of the next accounting cycle.In this closing process,the amount in each of these accounts is transferred to what account(s)?

Accepted Answer

The answer of Temporary accounts are closed prior to the...

Question 7

The term "realization" refers to which of the following?

Accepted Answer

A)  the closing of an account 
B)  the collection of cash from sale of goods or services 
C)  the earning of revenue 
D)  the correction of an error

Question 8

Describe the difference between an asset exchange transaction and a claims exchange transaction.

Accepted Answer

The answer of Describe the difference between an asset exchange...

Question 9

The amounts of cash flow that would be on the 2012 and 2013 statements of cash flows would be:

Accepted Answer

A)  $16,000/$16,000. 
B)  $-0-/$48,000. 
C)  $11,667/$11,667. 
D)  $48,000/$-0-

Question 10

Which of the following events involves an accrual?

Accepted Answer

A)  a cash payment received from a customer before services are provided 
B)  supplies purchased with cash but not yet used 
C)  interest earned but not received 
D)  A and C

Question 11

Grace's cash flow from operating activities was:

Accepted Answer

A)  $200. 
B)  $300. 
C)  $350. 
D)  $2,900.

Question 12

What does the account balance of Accounts Receivable represent?

Accepted Answer

The answer of What does the account balance of Accounts...

Question 13

What is the purpose of the statement of cash flows?

Accepted Answer

The answer of What is the purpose of the statement...

Question 14

Providing services to customers on account is an asset source transaction.

Accepted Answer

A) True 
 B)False

Question 15

Recognition of revenue may result in which of the following?

Accepted Answer

A)  a decrease in assets. 
B)  an increase in assets. 
C)  an increase in liabilities. 
D)  a decrease in expenses.

Question 16

Which of the following is an asset exchange transaction?

Accepted Answer

A)  Borrowed cash from a local bank. 
B)  Incurred expenses on account. 
C)  Recognized accrued salaries expense. 
D)  Paid cash to purchase land.

Question 17

The result of the matching process is reported on which financial statement?

Accepted Answer

A)  Balance Sheet 
B)  Income Statement 
C)  Statement of Changes in Stockholders' Equity 
D)  Statement of Cash Flows

Question 18

Which of the following transactions is a claims exchange transaction?

Accepted Answer

A)  Paid cash to retire notes payable. 
B)  Issued common stock for cash. 
C)  Purchased office equipment for cash. 
D)  Made adjusting entry to recognize the portion of unearned revenue that has been earned.

Question 19

The following events apply to San Antonio Company for 2012.
1)Issued stock for $14,000 cash.
2)On May 1,paid $6,000 for one year's rent in advance.
3)Purchased on account $500 of supplies to be used in the business.
4)Performed services of $8,000 and received cash from customers.
5)At December 31,an inventory of supplies showed that $60 of supplies were still unused.
6)At December 31,adjusted the records for the expired rent.
Required:
Draw an accounting equation and record the effects of the above events under the appropriate account headings.Calculate balance (ending total)for each account.
Accounting Equation
_____________________________________________________________
Event
No.
1)___________________________________________________________
2)___________________________________________________________
3)___________________________________________________________
4)___________________________________________________________
5)___________________________________________________________
6)___________________________________________________________

Accepted Answer

The answer of The following events apply to San Antonio...

Question 20

Which of the following transactions does not involve an accrual?

Accepted Answer

A)  recording revenue that has been earned but not yet received 
B)  recording interest expense incurred but not yet paid 
C)  recording salary expense incurred but not yet paid 
D)  recording the pre-payment of two year's worth of insurance

Exam 2: Understanding the Accounting Cycle