ACC201: Quiz 1-3

A

A credit to a liability account A) indicates an increase in the amount owed to creditors. B) indicates a decrease in the amount owed to creditors. C) is an error. D) must be accompanied by a debit to an asset account.

C

Accrual-basis accounting is allowed under A) GAAP but not IFRS. B) IFRS but not GAAP. C) both IFRS and GAAP. D) neither IFRS nor GAAP.

C

Accrued expenses are A) paid and recorded in an asset account before they are used or consumed. B) paid and recorded in an asset account after they are used or consumed. C) incurred but not yet paid or recorded. D) incurred and already paid or recorded.

D

An accountant has debited an asset account for $1,300 and credited a liability account for $600. Which of the following would be an incorrect way to complete the recording of the transaction? A) Credit an asset account for $700. B) Credit another liability account for $700. C) Credit an owner's equity account for $700. D) Debit an owner's equity account for $700.

B

As of December 31, 2016, Cancon Company has assets of $42,000 and owner's equity of $22,000. What are the liabilities for Cancon Company as of December 31, 2016? A) $22,000. B) $20,000. C) $42,000. D) $64,000.

A

At October 1, 2016, Medina Co. had an accounts payable balance of $50,000. During the month, the company made purchases on account of $35,000 and made payments on account of $48,000. At October 31, 2016, the accounts payable balance is A) $37,000. B) $33,000. C) $63,000. D) $133,000.

C. $250,000 × 3/8 = $93,750

Boneta City College sold season tickets for the 2016 football season for $250,000. A total of 8 games will be played during September, October and November. In September, three games were played. The adjusting journal entry at September 30 A) is not required. No adjusting entries will be made until the end of the season in November. B) will include a debit to Cash and a credit to Ticket Revenue for $62,500. C) will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $93,750. D) will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for $83,333.

C $250,000 × [(8 − 2 − 3)/8] = $93,750

Boneta City College sold season tickets for the 2016 football season for $250,000. A total of 8 games will be played during September, October and November. In September, two games were played. In October, three games were played. The balance in Unearned Ticket Revenue at October 31 is A) $0. B) $50,000. C) $93,750. D) $156,250.

B

Debits A) decrease both assets and liabilities. B) decrease liabilities and increase assets. C) increase both assets and liabilities. D) increase liabilities and decrease assets

C

Depreciation expense for a period is the A) original cost of an asset - accumulated depreciation. B) book value of the asset ÷ useful life. C) portion of an asset's cost that expired during the period. D) market value of the asset ÷ useful life.

C

Eli's Electronic Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $400,000 in electronic repair revenues, $300,000 in expenses, and Eli withdrew $50,000. Eli's Owner's Capital balance at the end of the year was A) $200,000. B) $100,000. C) $150,000. D) $350,000.

C

If an adjusting entry is not made for an accrued revenue, A) assets will be overstated. B) expenses will be understated. C) owner's equity will be understated. D) revenues will be overstated.

A

If total liabilities decreased by $30,000 and owner's equity decreased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period? A) $45,000 decrease B) $15,000 decrease C) $15,000 increase D) $45,000 increase

A

In recording business transactions, evidence that an accounting transaction has taken place is obtained from A) business documents. B) the Internal Revenue Service. C) the public relations department. D) the SEC.

C

Management could determine the amounts due from customers by examining which ledger account? A) Service Revenue B) Accounts Payable C) Accounts Receivable D) Supplies

B

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns. A) annual, annual B) monthly, annual C) quarterly, monthly D) monthly, monthly

C

Mellon Company purchases $1,500 of equipment from Office Equipment Inc. for cash. The effect on the components of the basic accounting equation of Mellon Company is A) an increase in assets and liabilities. B) a decrease in assets and liabilities. C) no change in total assets. D) an increase in assets and a decrease in liabilities.

B

On January 2, 2016, Tucson Co. purchased a general liability insurance policy for $3,600 for coverage for the calendar year. The entire $3,600 was charged to Insurance Expense on January 2, 2016. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2016, will be: A) Insurance Expense......3,300 Prepaid Insurance......3,300 B)Prepaid Insurance.........3,300 Insurance expense........3,300 C)Insurance Expense.......300 Prepaid Insurance......300 D)Prepaid Insurance.........300 Insurance Expense......300

B

Owner's capital at the end of the period is equal to A) owner's capital at the beginning of the period plus net income minus liabilities. B) owner's capital at the beginning of the period plus net income minus drawings. C) net income. D) assets plus liabilities.

C

Revenue recognition fraud is A) a major issue in the U.S. but not worldwide. B) a major issue internationally, but not in the U.S. C) a major issue in the U.S. and worldwide. D) not a major issue anywhere.

A

The United States and the international standard-setting environment are primarily driven by meeting the needs of A) investors and creditors. B) tax authorities. C) central government planners. D) academic researchers.

D

The common characteristic possessed by all assets is A) long life. B) great monetary value. C) tangible nature. D) future economic benefit.

A

The concern about international companies adopting SOX-type standards centers on A) cost-benefit analysis. B) ethics issues. C) the governing authorities. D) comparability.

A

The double-entry accounting system is the basis of accounting systems A) worldwide. B) worldwide, except for the U.S. C) in the U.S. only D) neither internationally nor in the U.S.

A

The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the A) journal, and transfer the information to the ledger accounts. B) ledger, and transfer the information to the journal. C) book of accounts, and transfer the information to the journal. D) book of original entry, and transfer the information to the journal.

B

The usual sequence of steps in the transaction recording process is: A) journal--> analyze--> ledger. B) analyze --> journal--> ledger. C) journal--> ledger--> analyze. D) ledger--> journal--> analyze.

A

When journalizing, the reference column is A) left blank. B) used to reference the source document. C) used to reference the journal page. D) used to reference the financial statements.

C

Which of the following would not be considered internal users of accounting data for a company? A) The president of a company. B) The controller of a company. C) Creditors of a company. D) Salesmen of the company.

D

Which one of the following is not a justification for adjusting entries? A) Adjusting entries are necessary to ensure that the revenue recognition principle is followed. B) Adjusting entries are necessary to ensure that the expense recognition principle is followed. C) Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. D) Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

D

Which one of the following is not an external user of accounting information? A) Regulatory agencies. B) Customers. C) Investors. D) All of these answers choices are external users.