Final Exam

All transactions related to a particular item over a period of time are summarized in a(n): a.Account. b.Entry. c.Schedule. d.Chart.

a.Account.

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under cash-basis accounting? a.December 10. b.December 20. c.One-half on each date. d.Neither.

a.December 10.

A credit to Cash will: a.Decrease assets. b.Increase assets. c.Decrease liabilities. d.Decrease stockholders' equity.

a.Decrease assets.

After the closing entries are posted to the accounts, all temporary accounts: a.Have zero balances. b.Have balances equal to the amounts shown in the unadjusted trial balance. c.Have balances equal to the amounts shown in the adjusted trial balance. d.Are open.

a.Have zero balances.

The revenue recognition principle states that companies typically record revenue: a.In the period in which we provide goods and services to customers. b.In the period in which customers order goods and services. c.In the period in which we received cash from customers for goods and services. d.In the period in which goods and services are prepared to be sold to customers.

a.In the period in which we provide goods and services to customers.

Financial accounting provides information primarily to: a.Investors and creditors. b.Tax regulators. c.Government officials. d.Suppliers and customers.

a.Investors and creditors.

Amounts owed to creditors are reported as: a.Liabilities. b.Assets. c.Stockholders' equity. d.Revenues.

a.Liabilities.

Financial accounting information is essential to: a.Making good business decisions. b.Paying the appropriate amount of taxes. c.Marketing the company's products to customers. d.Quality of the work environment for employees.

a.Making good business decisions.

Which of the following describes the information reported in the income statement? a.Net income for the period is calculated by subtracting expenses from revenues. b.Total assets equal total liabilities plus stockholders' equity. c.Changes in stockholders' equity are shown through changes in common stock and retained earnings. d.All accounts and account balances are shown.

a.Net income for the period is calculated by subtracting expenses from revenues.

Purchasing land with cash would have what effect on the accounting equation? a.No effect. b.Total assets decrease. c.Total assets increase. d.Total liabilities increase.

a.No effect.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded? a.November 1. b.November 15. c.One-half on each date. d.Neither.

a.November 1.

Which of the following transactions decreases total assets? a.Pay dividends to stockholders. b.Receive cash from customers for sales in the current period. c.Purchase supplies on account. d.Receive a utility bill but do not pay it.

a.Pay dividends to stockholders.

Which of the following accounts is not listed in a post-closing trial balance? a.Service Revenue. b.Accounts Receivable. c.Equipment. d.Interest Payable.

a.Service Revenue.

Which of the following shows a chronological record of all transactions? a.The general journal. b.The trial balance. c.The chart of accounts. d.The general ledger.

a.The general journal.

Paying dividends to stockholders would be recorded with a: a.Credit to Dividends. b.Debit to Dividends. c.Debit to Salaries Expense. d.Credit to Common Stock.

b.Debit to Dividends.

Under cash-basis accounting, companies typically report expenses: a.In the same period in which an asset is purchased. b.In the same period in which cash is paid. c.In the same period as the revenue they help to generate. d.In the same period in which a divided is paid.

b.In the same period in which cash is paid.

Transactions are recorded using debits and credits in a(n): a.Annual report. b.Journal. c.Financial statement. d.Chart of accounts.

b.Journal.

Closing entries are: a.Optional. b.Made to transfer the balances of temporary accounts to retained earnings. c.Made to record events that occurred during the period but have not yet been recorded. d.Made to transfer the balances of permanent accounts to retained earnings.

b.Made to transfer the balances of temporary accounts to retained earnings.

Which single piece of information best explains most companies' stock price performance? a.Total number of employees. b.Net income. c.Total sales to customers. d.Geographic location.

b.Net income.

On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting? a.November 1. b.November 15. c.One-half on each date. d.Neither.

b.November 15.

The process of transferring debit and credit information from the general journal to the general ledger is known as: a.Processing. b.Posting. c.Charting. d.Journalizing.

b.Posting.

Which of the following transactions increases total assets? a.Collect cash from customer for services provided on account last month. b.Provide services to customers on account. c.Pay dividends to current stockholders. d.Purchase supplies for cash.

b.Provide services to customers on account.

Which of the following is an example of a prepaid expense? a.Utilities have been incurred but not yet paid. b.Rent has been purchased in advance. c.Service was provided to a customer but not yet billed. d.Interest is incurred through the passage of time.

b.Rent has been purchased in advance.

Which of the following describes the information reported in the balance sheet? a.Net income for the period is calculated by subtracting expenses from revenues. b.Total assets equal total liabilities plus stockholders' equity. c.Changes in stockholders' equity are shown through changes in common stock and retained earnings. d.All accounts and account balances are shown and all debits equal all credits.

b.Total assets equal total liabilities plus stockholders' equity.

Which of the following correctly describes a list of accounts and their balances, showing that debits equal credits? a.Journal. b.Trial balance. c.General ledger. d.Chart of accounts.

b.Trial balance.

On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting? a.December 10. bDecember 20. c.One-half on each date. d.Neither.

bDecember 20.

Expenses represent: a. Cash paid to investors. b. Cash paid for the purchase of the company's long-term resources. c. Costs of providing products or services to customers. d. Sales of products or services to customers.

c. Costs of providing products or services to customers.

The entry to close the expense accounts includes: a.A credit to Retained Earnings. b.A debit to all expense accounts. c.A debit to Retained Earnings. d.Answers a. and b. are correct.

c.A debit to Retained Earnings

Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n): a.Prepaid expense. b.Unearned revenue. c.Accrued expense. d.Accrued revenue.

c.Accrued expense.

A list of all account names used to record transactions of a company is referred to as a: a.Transaction. b.Financial statement. c.Chart of accounts. d.Journal.

c.Chart of accounts.

The adjusting entry to record supplies used during the period includes a: a.Debit to Supplies. b.Credit to Service Revenue c.Debit to Supplies Expense d.Credit to Cash

c.Debit to Supplies Expense

A debit to Salaries Expense will: a.Increase stockholders' equity. b.Decrease assets. c.Decrease stockholders' equity. d.Increase liabilities.

c.Decrease stockholders' equity.

Under cash-basis accounting, companies typically record revenue: a.In the period in which we provide goods and services to customers. b.In the period in which customers order goods and services. c.In the period in which we received cash from customers for goods and services. d.In the period in which goods and services are prepared to be sold to customers.

c.In the period in which we received cash from customers for goods and services.

Under accrual-basis accounting, companies typically report expenses: a.In the same period in which an asset is purchased. b.In the same period in which cash is paid. c.In the same period as the revenue they help to generate. d.In the same period in which a liability is paid.

c.In the same period as the revenue they help to generate.

Which of the following transactions decreases stockholders' equity? a.Repay amounts previously borrowed from the bank. b.Purchase office supplies on account. c.Pay salaries for the current period. d.Purchase supplies on account.

c.Pay salaries for the current period.

Which of the following accounts normally has a credit balance? a.Cash. b.Accounts Receivable. c.Service Revenue. d.Dividends.

c.Service Revenue.

Which of the following accounts normally has a debit balance? a.Common Stock. b.Accounts Payable. c.Supplies. d.Service Revenue.

c.Supplies.

Financial statements are prepared from which of the following trial balances? a.Unadjusted trial balance. b.Financial trial balance. c.Post-closing trial balance. d.Adjusted trial balance.

d.Adjusted trial balance.

The adjusting entry to record interest earned during the period includes a: a.Credit to Cash. b.Debit to Cash. c.Debit to Interest Expense. d.Credit to Interest Revenue.

d.Credit to Interest Revenue.

Providing services to customers for cash would be recorded with a: a.Debit to Service Expense. b.Credit to Cash. c.Debit to Accounts Receivable. d.Credit to Service Revenue.

d.Credit to Service Revenue.

The purchase of supplies on account would be recorded with a: a.Debit to Cash. b.Debit to Supplies Payable. c.Credit to Supplies Expense. d.Debit to Supplies.

d.Debit to Supplies.

After transactions are recorded in the journal, they are posted to the: a.Chart of accounts. b.Trial balance. c.Financial statements. d.General ledger.

d.General ledger.

Which of the following is an example of an accrued revenue? a.Prepaying insurance coverage for the next 12 months. b.Delaying the payment of interest on an outstanding loan until next year. c.Receiving cash in advance of a service to be provided to a customer. d.Providing services to a customer without having yet collected the cash.

d.Providing services to a customer without having yet collected the cash.

Which of the following transactions increases total liabilities? a.Pay for rent in the current period. b.Purchase equipment with cash. c.Pay dividends to stockholders. d.Purchase office supplies on account.

d.Purchase office supplies on account.