Accounting Process

Which of the following should be reversed assuming prepayments are initially recorded in nominal accounts? a. Adjusting entry to record ending inventory b. Adjusting entry to record doubtful accounts c. Adjusting entry to record depreciation d. Adjusting entry to record portion of rental received in advance that is unearned at year - end

d. Adjusting entry to record portion of rental received in advance that is unearned at year - end

Closing entries are a. Made at the end of the accounting period b. Prepared after adjusting entries and financial statements have been prepared c. Prepared for the purpose of reducing all nominal accounting to zero d. All choices are correct about closing entries

d. All choices are correct about closing entries

A trial balance may prove that debits and credit are equal, except a. An amount could be entered in the wrong account b. A transaction could have been entered twice c. A transaction could have been omitted d. All of these may prove that debits and credits are equal

d. All of these may prove that debits and credits are equal

What is the adjusting entry for ending inventory? a. Debit ending inventory and credit beginning inventory b. Debit beginning inventory and credit ending inventory c. Debit ending inventory and credit income summary d. Debut income summary and credit ending inventory

d. Debut income summary and credit ending inventory

Which is not a possible combination of a journal entry? a. Increase in assets and increase in liability b. Decrease in equity and increase in liability c. Decrease in liability and decrease in asset d. Increase in asset and decrease in equity

d. Increase in asset and decrease in equity

The debit and credit analysis of a transaction normally takes place a. Before an entity is recorded in a journal b. When the entry is posted to the ledger c. When the trial balance is prepared d. At some other point in the accounting cycle

a. Before an entity is recorded in a journal

A general journal a. Chronologically lists transactions and other events in terms of debit and credit b. Contains one record for each asset, liability, equity, revenue, and expense c. List all increases and decreases in each account in one place d. Contains only adjusting entries and closing entries

a. Chronologically lists transactions and other events in terms of debit and credit

What is the adjusting entry for accrued income? a. Debit accrued income and credit income b. Debit income and credit accrued income c. Debit accrued income and credit accrued expenses c. No adjusting entry

a. Debit accrued income and credit income

What is the adjusting entry for prepaid expenses assuming the expense method is used? a. Debit prepaid expenses and credit expenses b. Debit expenses and credit prepaid expenses c. Debit prepaid expenses and credit accrued expense d. It is not necessary to adjust prepaid expenses

a. Debit prepaid expenses and credit expenses

Real accounts include all of the following, except a. Dividend paid b. Asset c. Liability d. Equity

a. Dividend paid

A subsidiary ledger is a a. Listing of the components of the account balances b. Backup system to protect against destruction of records c. Listing of accounts before closing entries d. Listing of accounts of a subsidiary

a. Listing of the components of the account balances

Adjusting entries effect a. One nominal account and one real account b. Two nominal accounts c. Two real accounts d. No particular combination of nominal and real accounts

a. One nominal account and one real account

An unadjusted trial balance a. Provides information helpful when making adjusting entries b. Proves that no errors have been made c. Usually contains the account balances that should appear in the income statement d. Is a summary taken directly from the general journal

a. Provides information helpful when making adjusting entries

Which is optional in the accounting cycle? a. Reversing entries b. Closing entries c. Adjusting entries d. Adjusted trial balance

a. Reversing entries

A journal entry that contains more than two accounts called a. Simple journal entry b. Compound journal entry c. Erroneous journal entry d. Adjusting entry

b. Compound journal entry

What is the adjusting entry for doubtful accounts? a. Debit doubtful accounts and credit accounts receivable b. Debit doubtful accounts and credit allowance for doubtful accounts c. Debit allowance for doubtful accounts and credit doubtful accounts d. Doubtful accounts do not require an adjusting entries

b. Debit doubtful accounts and credit allowance for doubtful accounts

What is the adjusting entry for accrued expenses? a. Debit accrued expenses and credit expense b. Debit expense and credit accrued expense c. Debit expense and credit income d. No nee to adjust accrued expense

b. Debit expense and credit accrued expense

What is the adjusting entry for unearned income if the income method is used? a. debit unearned income and credit income b. Debit income and credit unearned income c. Debit accrued income and credit unearned income d. No adjusting entry

b. Debit income and credit unearned income

The post - closing trial balance a. Provides a convenient listing of balances that can be used to prepare financial statements b. Does not include nominal accounts c. Is identical to the statement of financial position d. Proves that accounts have been closed properly

b. Does not include nominal accounts

Debit a. Increase assets and decrease expenses, liabilities, revenue, and equity b. Increase assets and expenses, and decrease liabilities, revenue, and equity c. Increase liabilities, revenue, and equity, and decrease assets and expenses d. Increase assets and equity, and decrease liabilities and revenue

b. Increase assets and expenses, and decrease liabilities, revenue, and equity

Temporary accounts are known as a. Real accounts b. Nominal accounts c. Mixed accounts d. Contra - accounts

b. Nominal accounts

Accrual is best defined as adjusting entries where a. Cash flow precedes revenue or expense recognition b. Revenue or expense recognition precedes cash flow c. Cash flow and revenue or expense recognition simultaneously d. Revenue or expense are recognized in the absence of the cash flow evidence

b. Revenue or expense recognition precedes cash flow

An adjusting entry should never include a. A debit to revenue and a credit to liability b. A debit to expense and a credit to liability c. A debit to liability and a credit to asset d. A debit to asset and a credit to revenue

c. A debit to liability and a credit to asset

What is done first in the accounting process considering the following? a. Financial statement are prepared. b. Nominal accounts are closed. c. Adjusting entries are recorded. d. A post - closing trial balance are prepared.

c. Adjusting entries are recorded.

A reversing entry should never be made for an adjusting entry that a. Accrues unrecorded revenues b. Accrues expired costs from an asset account c. Adjusts expired costs from an asset account to an expense account d. Adjusts unexpired costs from expense account to asset account

c. Adjusts expired costs from an asset account to an expense account

Reversing entries apply to a. All adjusting entries b. All deferrals c. All accruals d. All closing entries

c. All accruals

Reversing entries a. Are normally prepared for accruals and prepayments b. Are necessary to achieve proper matching of revenue and expense c. Are desirable to exercise consistency and establish standardized procedure d. Must be made at year - end

c. Are desirable to exercise consistency and establish standardized procedure

What function do ledgers serve in the accounting process? a. Reporting b. Recording c. Classifying d. Summarizing

c. Classifying

What is the adjusting entry for depreciation? a. Debit depreciation and credit assets b. Debit asset and credit accumulated depreciation c. Debit depreciation and credit accumulated depreciation d. An adjusting entry is not required for depreciation

c. Debit depreciation and credit accumulated depreciation

what is the adjusting entry for prepaid expenses assuming the asset method is used? a. Debit prepaid expense and credit accrued expense b. Debit expenses and credit accrued expenses c. Debit expenses and credit prepaid expenses d. No adjusting entry

c. Debit expenses and credit prepaid expenses

What is the adjusting entry for unearned income if the liability method is used? a. Debit income and credit unearned income b. Debit accrued income and credit unearned income c. Debit unearned income and credit income d. No adjusting entry

c. Debit unearned income and credit income

Posting is the process of transferring information from a. Source to document to the journal b. Journal to the source document c. Journal to the general ledger d. General ledger to the journal

c. Journal to the general ledger

Which is done last in the accounting process considering the following? a. Journalize and post -closing entries b. Analyze transactions from source documents c. Prepare reversing entries d. Record the transactions in a journal

c. Prepare reversing entries

The normal balance of an account is on the a. Debit side b. Credit side c. Side represented by the increase in the account balance d. Side represented by the decrease in the account balance

c. Side represented by the increase in the account balance

The double entry accounting system means a. Each transaction is recorded with two journal entries b. Each item is recorded in a journal entry and then in a general ledger c. The dual effect of each transaction is recorded with a debit and a credit d. All of these are choices regarding double entry system

c. The dual effect of each transaction is recorded with a debit and a credit

Which of the following is not correct about an unadjusted trial balance? a. It proves that debit and crest of equal amounts are in the ledger b. It is the basis for any adjustments to the account balances c. It supplies a listing of open accounts and their balances d. It proves that debits and credits were properly entered in the ledger accounts

d. It proves that debits and credits were properly entered in the ledger accounts

The book of original entry is known as a. Subsidiary ledger b. Trial balance c. General ledger d. Journal

d. Journal

A general ledger is defined as a. A group of transactions b. A group of real accounts c. A group of nominal accounts d. The entire group of accounts

d. The entire group of accounts

Which statement is not true about accrual and deferral? a. An accrued expense is an amount not paid and currently matched with earning. b. A prepaid expense is an amount paid and not currently matched with earnings. c. An accrued income is an amount not collected and currently matched with expenses. d. A deferred income is an amount collected and currently matched with expense.

d. A deferred income is an amount collected and currently matched with expense.

A chart of account is a. A flowchart of all transactions b. And accounting manual c. A journal d. A list of all account titles in the general ledger

d. A list of all account titles in the general ledger