Accounting Chapter 3 and 4

Which of the following is considered a fiscal​ year?

12 months

The entries that transfer the​ revenue, expense, and dividends balances to the Retained Earnings account to prepare the​ company's books for the next period are called​ ________ entries.

closing

Which of the following entries is necessary to close the appropriate depreciation account at the end of the​ year?

debit Income Summary and credit Depreciation Expense

An account that is not closed at the end of the period is called​ a(n)

permanent account

The worksheet helps accountants to​

prepare the financial statements

Revenue is earned when

the business satisfies each performance obligation

Which of the following statements is true of accrual basis​ accounting?

Accrual basis accounting is required by Generally Accepted Accounting Principles​ (GAAP).

The entry to record depreciation includes a credit to the​ ________ account.

Accumulated Depreciation

Which of the following is a contra​ account?

Accumulated Depreciation

Regarding a classified balance​ sheet, which of the following statements is​ correct?

Assets are listed in the order of their liquidity.

Which financial statement is prepared​ last?

Balance sheet

A depreciable​ asset's cost minus accumulated depreciation is called​ _

Book value

Which of the following accounts would appear in the income statement debit column of the​ worksheet?

Depreciation Expense

The entry to record depreciation includes a debit to the​ ________ account.

Depreciation expense

Revenues and expenses may be transferred to the​ ________ account before their final transfer into the Retained Earnings account.

Income summary

Which of the following accounts will be closed by crediting the Income Summary​ account?

Service Revenue

Which of the following accounts would appear in the income statement credit column of the​ worksheet?

Service Revenue

Which of the following statements is true if the income statement debit column exceeds the income statement credit column of a​ worksheet?

The company incurred a net loss.

The current ratio measures a​ company's

ability to pay current liabilities from current assets

The process by which companies produce their financial statements for a specific period is called the​

accounting cycle

An adjusting entry that credits Salaries Payable is an example of​ a(n)

accrued expense

Employees earned $600 in salaries that will be paid May 2.

accrued expense

Work performed but not yet billed to customer, $500

accrued revenue

The sum of all the depreciation expense recorded to date for a depreciable asset is called​ __

accumulated depreciation

Which of the following​ account's balance is carried forward to the next accounting​ period?

accumulated depreciation

The financial statements are prepared from the​

adjusted trial balance

Closing entries are journalized and posted​ __

after preparing the financial statements

An adjusting entry is completed

at the end of the accounting period

The financial statement that reports​ assets, liabilities, and​ stockholders' equity as of the last day of the period is called the

balance sheet

What is the term used for the difference between the Equipment account and the Accumulated Depreciationminus Equipment ​account?

book value

Which of the following is the most liquid​ asset?

cash

Assets that are expected to be converted to​ cash, sold, or used up during the next 12​ months, or within the​ business's normal operating cycle if the cycle is longer than a​ year, are called​ ________ assets.

current

Salaries​ Payable, Accounts​ Payable, and Unearned Revenue are examples of​

current liabilities

Advance cash payments of future expenses are called​ _

deferred expense

Paid six months of rent

deferred expense

Purchased $300 of office supplies on account.

deferred expense

Purchased a computer for $1,000.

deferred expense

Received $1,200 from customer for six month service contract that began April 1.

deferred revenue

The liability created when a business collects cash from its customers before completing a service or delivering a product is called​

deferred revenue

The matching principle is also called the​

expense recognition principle

Which of the following accounts will be included in a postminusclosing trial​ balance?

interest payable

In an accounting​ cycle, which of the following steps takes place only at the end of the accounting​ period?

journalize adjusting entries

Which of the following would be considered a longminusterm ​asset?

land

The accounting principle that ensures all expenses are recorded during the period when they are incurred and offsets those expenses against the revenues of the period is called the​ ________ principle.

matching

Adjusting entries are needed to correctly measure the​

net income (loss) on the income statement

To which of the following accounts should the balance in the Income Summary account be​ closed?

retained earnings

Which of the following accounts will be closed by debiting the Income Summary​ account?

salaries expense

Which of the following accounting terms assumes that a​ business's activities can be divided into small segments and that financial statements can be prepared for specific​ periods, such as a​ month, quarter, or​ year?

time period concept

Which of the following is not a type of adjusting​ entry?

unearned expenses

Which of the following accounts will be included in a postminusclosing trial​ balance?

unearned revenue

An internal document that helps summarize data for the preparation of financial statements is called a

worksheet

Which of the following are temporary accounts that are closed at the end of the​ year?

​revenues, expenses, and dividends