AC 210 quiz 5

Closing entries:

cause the revenue and expense accounts to have zero balances

The sales revenue account has a credit balance of $367,200 at year end. After closing entries are made, the account will:

have a zero balance

Accounting information serves a valuation function when it is used by:

investors to estimate the value of the business

Which of the following is done first at the end of each accounting period?

Prepare adjusting journal entries

An adjusting journal entry to recognize accrued salaries payable would cause which of the following?

An increase in expenses and liabilities and a decrease in stockholders' equity

According to the Sarbanes-Oxley Act (SOX), who are the external auditors hired by and required to report to?

Audit commitee

Which of the following statements about an adjusted trial balance is true?

Debits should equal credits both before and after adjustments are made

An error is indicated if the following account has a balance appearing on the post-closing trial balance:

Depreciation expense

Which of the following statement is true?

Retained earnings are closed with a debit

Which of the following is false?

The four financial statements are the only terms required in the annual report sent to the SEC; all other items are optional.

Fraud investigators identify the fraud triangle of three things that have to exist for accounting fraud to occur. Which of the following is not one of the three elements of the fraud triangle?

The lack of a business Code of Ethics.

Which of the following is true?

The management team is ultimately and finally responsible for the internal controls of the company.

Which of the statements is true?

The statement of stockholders' equity reports the same information as the statement of retained earnings, but also provides information about changes in contributed capital.

Which of the following is not a difference between GAAP and IFRS?

The system of analyzing, recording, and summarizing transactions.

Which of the following is the primary (main) objective of the external audit of a company's financial statements?

To provide credibility that the financial statements are fairly presented.

Which of the following is true?

When auditors conclude that a company's financial statements conform to GAAP, the audit report is said to be unqualified.

Accounting information serves a management function when it is used by:

executives to make a business decision