Accounting 2301 Exam 2

________ companies sell goods that have been obtained from other companies.

Merchandising or Retail

___________ cash must be reported separately on the balance sheet because it is legally or contractually required to be set aside for a specific purpose.

Restricted

Which of the following account balances will typically be reduced as a result of adjusting entries? Cash Supplies Prepaid Rent Interest Payable Deferred Revenue

Supplies Prepaid Rent Deferred Revenue

Which of the following transactions constitute an accrual adjustment involving an expense account?

Taxes incurred but not yet paid to the government as of the end of the accounting period. AND Wages incurred but not yet paid to employees as of the end of the accounting period.

True or false: When a company sells different types of products, the income statement will report the Cost of Goods Sold for all of the products in one line item.

True

Which line items are found on a multi-step but not a single-step income statement. (Check all that apply) a) Gross Profit b) Cost of Goods Sold c) Net Sales d) Net Income e) Income from Operations

a) Gross Profit e) Income from Operations

Deposits in transit occur when you make a deposit ________. a) after the banks normal business hours b) infrequently c) using an EFT d) and the check bounces (NSF)

a) after the banks normal busines hours

Boopsie Agin, the company's bookkeeper, recorded the purchase of merchandise on account with a debit to Cost of Goods Sold and a credit to Cash. As a result, ______. (Check all that apply) a) stockholders' equity is understated b) liabilities are understated c) assets are overstated d) stockholder's equity is overstated e) liabilities are overstated f) assets are understated

a) stockholders' equity is understated b) liabilities are understated f) assets are understated

Internal controls for cash is important because _______. (Check all that apply.) a) of the large volume of cash transactions b) it is the largest asset of all companies c) the risk of cash-handling errors is significant d) cash is portable and is "owned" by whomever possesses it e) of the high risk of theft

a, c, d, & e

Which report is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance? post-closing trial balance unadjusted trial balance adjusted trail balance closing entries

adjusted trial balance

The adjusting entry to record the amortization of a long-term asset that lacks physical substance includes a debit to ________ ________ and a credit to ________ __________.

amortization expense, accumulated amortization

In an accrual adjustment for expenses incurred but not yet paid, a liability is: A) increased because cash will be paid in the future due to the expense incurred B) decreased because cash is paid for the expense incurred C) increased because cash was paid in advance of when the expense is incurred D) decreased because cash is received as the expense is incurred

A) increased because cash will be paid in the future due to the expense incurred

A(n) _______ system involves the processing of purchases and payments made on account. a) imprest b) voucher c) cash receipts d) accounts payable e) reconciliation

b

Which of these are cash equivalents? (Check all that apply) a) Notes receivable that mature in 5 months b) Money market funds c) Investments within 3 months to maturity d) US Treasure bonds that mature in 1 year

b) Money market funds c) Investments within 3 months to maturity

Which of the following are found on the income statement of a merchandiser (Check all that apply) a) Deferred Revenue b) Sales Revenue c) Accounts Receivable d) Inventory e) Cost of Goods Sold f) Cash g) Gross Profit

b) Sales Revenue e) Cost of Goods Sold g) Gross Profit

If a company recorded an adjusting entry by debiting Interest Expense for $500 and Interest Payable for $50 in error, then the ______. a) unadjusted trial balance's debits will not equal its credits. b) adjusted trial balance's debits will not equal its credits. c) both the adjusted trial balance's and unadjusted balance's debits will equal its credits.

b) adjusted trial balance's debits will not equal its credits.

Place the steps in the adjustment process at the end of the accounting period in the correct order. a) Record the adjusting entry in the journal b) Analyze the accounts to determine the amount of the adjustment c) Summarize the adjusting entries in the accounts

b, a, then c

Which of the following adjusting entries will cause assets and stockholders' equity to increase? Adjusting for services provided .... a) and collected. b) that were collected in advance. c) but not yet collected.

c

Identify the entries needed for the closing process. (Select all that apply.) a) Debit Dividends and credit Retained Earnings. b) Credit each revenue, debit each expense, and record the difference in Retained Earnings. c) Credit Dividends and debit Retained Earnings. d) Debit each revenue, credit each expense, and record the difference in Retained Earnings.

c & d

Outstanding checks have already been _________. a) deducted from the bank balance but not the cash per your books b) added to your cash balance per your books and not to the bank balance c) deducted from your cash balance per your books but not the bank balance d) added to the bank balance and not to your cash balance per your books

c) deducted from your cash balance per your books but not the bank balance

Which of the following is true regarding depreciation of equipment? (Choose all that apply) a) Accumulated Depreciation is decreased as the equipment is used causing the carrying value to increase. b) Depreciation directly decreases the Equipment account causing the carrying value to decrease. c) Depreciation is reported in Accumulated Depreciation which is netted against the related Equipment account on the balance sheet. d) Accumulated Depreciation is increased as the equipment is used causing the carrying value to decrease on the balance sheet. e) Accumulated Depreciation is a contra-account that reports the amount of usefulness used as of the balance sheet date.

c, d, and e

Deferred Revenue is credited when __________.

cash is collected in advance of the revenue

Closing journal entries are recorded ______. a) before the adjusted trial balance is prepared. b) after the post-closing trial balance is prepared. c) before the unadjusted trial balance is prepared. d) after the financial statements have been prepared.

d

The Accounts Receivable account should be _______ when adjusting at the end of the period for any revenues from fulfilling obligations to buyers which has not yet been collected or recorded.

debited

A _______ deposit is initiated by an EFT instructing a bank to transfer pay due employees into the employees' bank accounts.

direct

Adjustments help to ensure that all _ are recorded in the period in which they are incurred?

expenses