Deck 2: A Further Look at Financial Statements

Question 1

The procedure of transferring journal entries to ledger accounts is called:

A) journalizing.
B) ledgering.
C) recording.
D) posting.

Answer 1

D

Question 2

A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Thursday is:

A) debit Salaries Payable, $16,000; credit Cash $16,000.
B) debit Salaries Expense, $16,000; credit Cash $16,000.
C) debit Salaries Expense, $16,000; credit Accounts Payable $16,000.
D) debit Salaries Expense, $16,000; credit Salaries Payable $16,000.

Answer 2

D

Question 3

For which of the following types of adjusting entries are liabilities overstated and revenues understated before the adjusting entry is made?

A) Unearned Revenues.
B) Accrued Revenues.
C) Prepaid Expenses.
D) Accrued Expenses.

Answer 3

A

Question 4

Cannus Company signed a $6,000 ninety day note payable on November 1 that bears interest at a rate of 7%. The total interest to be accrued on this note at December 31 is:

A) $35.
B) $70
C) $420.
D) $105.

Question 5

A post-closing trial balance contains:

A) real and nominal accounts.
B) permanent and temporary accounts.
C) balance sheet or permanent accounts.
D) balance sheet and retained earnings statement accounts.

Question 6

The book value of a depreciable asset is defined as the asset's:

A) cost less accumulated depreciation.
B) current fair value.
C) replacement cost.
D) cost.

Question 7

What type of relationship exists with an unearned revenue adjusting entry?

A) Receivable/revenue.
B) Liability/revenue.
C) Asset/revenue.
D) Expense/liability.

Question 8

A credit will reduce , but increase .

A) accounts receivable; accounts payable
B) expenses; accounts receivable
C) accounts payable; common stock
D) common stock; prepaid insurance

Question 9

An accrued expense account represents expenses that have:

A) been used and paid.
B) been paid but not used.
C) not been used or paid.
D) been used but not paid.

Question 10

Transactions are initially recorded in the:

A) ledger.
B) trial balance.
C) journal.
D) balance sheet.

Question 11

The Accumulated Depreciation account is a(n):

A) contra asset.
B) liability.
C) asset.
D) operating expense.