Financial Accounting: Chapter 3-4 Practice Exam

An accrued asset could also be called

an accrued revenue.

A deferred expense could also be called

an asset

A doctor performed surgery in March and did not receive cash from the patient until July. Under accrual accounting, the doctor recognizes revenue:

in march

Which account is credited in the adjusting entry to allocate the cost of equipment?

Accumulated Depreciation-Equipment

Which of the following accounts would have balances on a post closing trial balance?

Accumulated depreciation

Which of the following accounts would not have have a balance on the Post Closing Trial Balance?

Dividends

Which one of the following is an example of an deferred expense?

Equipment that has a useful life of ten years has been purchased.

Prepaid expenses will become _____ when their future benefits expire.

Expenses

Which of the following would be items that would be subtracted from balance per bank in a bank reconciliation:

Outstanding checks and a deposit of $1,100 that was recorded as $11,000 by the bank.

In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:

Outstanding checks.

Wolverine, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Insurance Expense $85,000 Wages and Salaries 240,000 Advertising 1,500 Depreciation Expense 13,000 Unearned Revenue 120,000 Equipment Rentals Revenues 56,000 Accum. Depreciation 25,000 Which of these accounts would be debited in the closing entries?

Repair Revenues and Equipment Rental Revenues only

The closing entry for the Salaries Expense account includes a debit to:

Retained Earnings and a credit to Salaries Expense

Adjusting entries:

adjust Unearned Revenue

An accrued liability could also be called

an accrued expense

Given the following activity for Caprock Company during the month of February, how much total expense would Caprock Company recognize on the February income statement using accrual accounting? Feb. 1 Caprock paid a total of $3,000 for 3 months of automobile insurance. The coverage on the insurance policy included the months of February, March, and April. Feb. 5 Caprock paid $5,000 to its landlord for February rent. Feb. 10 Caprock paid $4,000 on an accounts payable that had been recorded in January. Feb. 27 Caprock received the bill for the February utilities, and recorded $5,000 in accounts payable on that date. The bill will be paid in March.

$11,000

On September 1, Tucker Inc. received $30,000 from a customer who would like Tucker to provide services evenly over the next five months. Using the revenue recognition principle, how much would Tucker record as revenue for the year from this job?

$24,000

On September 1, 2017, Kian Co. recorded an Unearned Revenues account, a liability, for $66,000. This amount represents an amount that a customer paid in advance and the amount will be recognized in Service Fees evenly over a six-month period. The adjusting entry needed on December 31, 2017, would be:

A Debit to Unearned Revenue and a Credit to Service Fees for $44,000

During the month of October, Labrador, Inc. provided $300,000 of services for cash and $500,000 of services on account. Also during October, Labrador's customer paid $400,000 on their accounts. How much should Labrador report as revenues for October?

$800,000

Andy, Inc. was in the process of reconciling its bank balance with the company records and found an unadjusted book balance of $17,120, outstanding checks of $2,065, non-sufficient funds (NSF) checks of $508, deposits in transit of $1,650, bank service charges of $75, a customer note collected by the bank of $3,000 and interest on the note collected of $40. The adjusted book balance on the bank reconciliation should be? (Do not enter dollar signs.)

19,577

On October 31, 2016, Siri Studios, Inc. had a balance per their records of $15,015. In reconciling their October 31, 2016 bank statement, Siri found outstanding checks of $4,500, a deposit in transit of $8,300, NSF checks of $1,400, and bank service charges of $88. Additionally, the October 23rd deposit of $8,100 was incorrectly recorded as $1,800 in the records of Siri. The adjusted cash balance should be? (Do Not enter dollar signs.)

19,827

Movie 16 Theaters, Inc. has the following information for March 31, 2016: balance per the company records, $8,684; outstanding checks of $14,400, a deposit in transit of $5,220, bank service charge of $310, and NSF checks of $4,225. What is the adjusted cash balance? (Do Not enter dollar signs.)

4,149

Interest payable, income tax payable and salary payable are all examples of:

accrued liabilities

What type of account is Accounts Receivable and on which financial statement is it reported?

Account type Asset reported on the Balance Sheet

What type of account is Dividends and on which financial statement is it reported on?

Account type Contra Equity reported on the Statement of Retained Earnings

The entry to close expense account(s) includes a:

Credit to the expense accounts

When preparing the financial statements of a company:

Current assets are the most liquid assets.

Bagel Corp. billed a customer $125,000 for service performed during the month of September. The journal entry to reflect this billing would be:

Debit Account Receivable and Credit Service Revenue

On September 19, Beagle Corp. received payment of $40,000 for services provided to a customer in August. The September 19 journal entry would be:

Debit Cash and Credit Account Receivable

Big Daddy Auto Parts, Inc. has an office supplies account that had a January 1st balance of $13,450. During the year, Big Daddy Auto purchased $24,360 in office supplies. On December 31st, a count of the office supplies revealed that there were $7,500 remaining. On December 31st, Big Daddy's adjusting entry for office supplies should be:

Debit Office Supplies Expense and Credit Office Supplies Inventory for $30,310

In preparing a bank reconciliation, all of the following would be used to adjust the balance per books, EXCEPT:

Deposits in transit

On November 1, NASA rented some office space in Houston for twelve months paying $30,000 in advance for the 12-month rental. NASA adjusts accounts annually on December 31st for its financial report. The appropriate adjusting entry for NASA's office rent on December 31st would be:

Debit rent expense and credit PrePaid Rent for $5,000

On March 25, its first day of operations, Ladybug Inc. purchased $1,200 of office supplies on account. On March 31st, Ladybug had $800 of office supplies on hand. On April 5th Ladybug paid for the supplies it had purchased on account on March 25th. Under accrual accounting which of the following statements about recognizing supplies expense is correct?

Ladybug should recognize $400 of supplies expense in March.

Which of the following accounts are considered permanent accounts?

Land and Accounts Receivable.

On a classified balance sheet:

Notes Payable due in one year is a current liability.

After the closing entries are prepared and posted:

The Retained Earnings account will have the correct ending balance.

______ will be increased when a company receives cash before performing the services.

Unearned Service Revenue

Badger, Inc. has the following account balances related to its 2016 operations: Repair Revenues $840,000 Prepaid Expenses $85,000 Wages and Salaries 240,000 Dividends 1,500 Depreciation Expense 13,000 Unearned Revenue 120,000 Interest Revenue 6,000 Accum. Depreciation 25,000 Which of these accounts would be credited in the closing entries?

Wages and Salaries, Depreciation Expense, and Dividends only

A type of liability resulting from the receipt of cash before the recognition of revenue is

a deferred revenue

A deferred revenue could also be called

a liability

Accounts that relate to a limited period of time are called:

temporary accounts

With an accrual of revenue:

the cash is received after the revenue is recorded.

Under accrual accounting, revenue is recorded:

when the services are performed, regardless of when the cash is received.

The revenue principle deals with the following:

when to record revenue and the amount of revenue to record.