Accounting (chapter 1)

Which of the following accounts has a debit balance? 1. Salaries Expense. 2. Service Revenue. 3. Deferred Revenue. 4. Accounts Payable.

. Salaries Expense.

Eagle Corp. operates Magnetic Resonance Imaging (MRI) clinics throughout the Northeast. At the end of the current period, the company reports the following amounts: Assets = $38,000; Liabilities = $21,000; Dividends = $1,800; Revenues = $11,600; Expenses = $7,800. 1. Calculate net income. 2. Calculate stockholders' equity at the end of the period.

1. 3,800 2. 17,000

The basic principle involved with expense recognition is: 1. All costs that are used to generate revenue are recorded in the period the revenue is recognized 2. The business is separated from its owners 3. The Business will continue to operate indefinitely unless there is evidence to the contrary 4. All transactions are recorded at the exchange price

1. All costs that are used to generate revenue are recorded in the period the revenue is recognized

A company collects $4,000 cash from customers for services previously provided on account. Record the transaction.

1. Cash 4000 2. Accounts receivable 4000

Liabilities normally carry a _______ balance and are shown in the ______________. 1. Credit; Balance sheet 2. Debit; Income statement 3. Debit; Balance sheet 4. Debit; Statement of stockholders' equity

1. Credit; Balance sheet

Match each type of adjusting entry with its definition. a. Accrued Revenue b. Accrued Expense c. Prepaid Expense d. Deferred Revenue 1.Receive cash in the current period that will be recorded as a revenue in a future period. 2. Record an expense in the current period that will be paid in cash in a future period. 3.Record a revenue in the current period that will be collected in cash in a future period. 4. Pay cash (or have an obligation to pay cash) in the current period that will be recorded as an expense in a future period.

1. Deferred Revenue 2. Accrued Expense 3. Accrued Revenue 4. Prepaid rent

A trial balance represents the: 1. List of all accounts and their balances at a particular date to ensure that debits equal credits. 2. Chronological record of all transactions affecting the company. 3. Source documents used to determine the effects of transactions on the company's accounts. 4. Process of transferring debit and credit information from the journal to the accounts in the general ledger.

1. List of all accounts and their balances at a particular date to ensure that debits equal credits.

When a company pays utilities of $1,800 in cash, the transaction is recorded as: 1.Debit Utilities Expense $1,800, credit Cash $1,800. 2.Debit Utilities Expense $1,800, credit Utilities Payable $1,800. 3.Debit Utilities Payable $1,800, credit Cash $1,800. 4.Debit Cash $1,800, credit Utilities Expense $1,800.

1.Debit Utilities Expense $1,800, credit Cash $1,800.

The closing entry for expenses includes: 1. A debit to Dividends and a credit to all expense accounts. 2. A debit to Retained Earnings and a credit to all expense accounts. 3. A debit to Revenues and a credit to all expense accounts. 4. A debit to Revenues and a credit to Retained Earnings.

2. A debit to Retained Earnings and a credit to all expense accounts.

The basic principle involved with expense recognition is: 1. The business is separate from its owners. 2. All costs that are used to generate revenue are recorded in the period the revenue is recognized. 3. All transactions are recorded at the exchange price. 4. The business will continue to operate indefinitely unless there is evidence to the contrary.

2. All costs that are used to generate revenue are recorded in the period the revenue is recognized.

Paying salaries to employees for the current period would have what effect on the accounting equation? 1.Assets decrease and liabilities decrease 2. Assets Decrease and stockholders equity decreases 3. Liabilities decrease and stockholders equity increases 4. Liabilities increase and stockholders equity decrease

2. Assets Decrease and stockholders equity decreases

Paying salaries to employees for the current period would have what effect on the accounting equation? 1. Assets decrease and liabilities decrease. 2. Assets decrease and stockholders' equity decreases. 3. Liabilities increase and stockholders' equity decreases. 4. Liabilities decrease and stockholders' equity increases.

2. Assets decrease and stockholders' equity decreases.

The closing process includes which of the following 1. Closing the balance of only the dividends account to zero. 2. Closing the balances of revenue, expense and dividend accounts to zero. 3. Closing the balances of only revenue and expense accounts to zero. 4. Closing the balance of the retained earnings account to zero.

2. Closing the balances of revenue, expense and dividend accounts to zero.

Deferred revenues refer to: 1. Cash being collected from the customer after the revenue is recorded. 2. Customers paying cash in advance of the good or service to be provided. 3. Revenue being recorded prior to cash collection from the customer. 4. Revenue being recorded at the same time the cash is collected from the customer.

2. Customers paying cash in advance of the good or service to be provided.

Which one of the following accounts would NOT have a balance after closing entries? 1. Supplies. 2. Dividends. 3. Prepaid Rent. 4. Deferred Revenue.

2. Dividends.

Frosty Inc. has the following balances on December 31 prior to closing entries: Revenues$41,600 Retained Earnings, Jan. 1 9,000 Cash 7,900 Expenses 24,000 Accounts Payable 2,100 Dividends 1,300 Supplies 19,500 Based upon the balances above, what net adjustment would be made to Retained Earnings due to closing entries? 1. Increase of $18,300 2. Increase of $16,300 3. Increase of $19,300 4. Increase of $17,300

2. Increase of $16,300 explanation: take the expenses and add the dividends then subtract retained earnings.

Posting transactions to T-accounts involves: 1. Analyzing source documents to determine the effects of transactions on the company's accounts. 2. Transferring debit and credit information from the journal to the accounts in the general ledger. 3. Preparing a chronological record of all transactions affecting the company. 4. Listing all accounts and their balances at a particular date to ensure that debits equal credits.

2. Transferring debit and credit information from the journal to the accounts in the general ledger.

The statement of stockholders' equity includes: 1. Net income from the income statement. 2. The amount of stock issued in the current period. 3. All of the other answers are correct. 4. Dividends declared to stockholders in the current period.

3. All of the other answers are correct.

Dividends represent: 1. Expenses of operating the company. 2. Amounts owed to creditors. 3. Cash payments to stockholders. 4. Resources of the company.

3. Cash payments to stockholders.

GAAP is an abbreviation for: 1. Generally authorized accounting producers 2. Generally accepted auditing practices 3. Generally Accepted accounting Principles 4. Generally applied Procedure

3. Generally Accepted Accounting Principles

With respect to current assets, liquidity refers to: 1. The accuracy of the balance being reported. 2. Whether cash was paid for the asset at the time of acquisition. 3. How quickly the asset can be converted to cash. 4. The magnitude of the asset's account balance.

3. How quickly the asset can be converted to cash.

Financial Accounting: 1. is primarily used to compute a companys tax obligations 2. Provides information primarily for the use of managers of the company 3. Provides information primarily for external decision makers 4. Provides information primarily for a companys employees

3. Provides information primarily for external decision makers

Which of the following items would not appear in an income statement? 1. Utilities Expense. 2. Delivery Expense. 3. Service Revenue. 4. Accounts Payable.

4. Accounts Payable.

Adjusting entries are primarily needed for: 1. Current value accounting. 2. Cash-basis accounting. 3. Manual accounting systems. 4. Accrual-basis accounting.

4. Accrual-basis accounting.

Receiving a utility bill for costs in the current period but delaying payment until the following period is an example of a(n): 1. Accrued revenue. 2. Prepaid expense. 3. Deferred revenue. 4. Accrued expense.

4. Accrued expense.

Revenues have what effect on the accounting equation? 1. No effect. 2. Increase liabilities. 3. Decrease assets. 4. Increase stockholders' equity.

4. Increase stockholders' equity.

Which transaction would not be recorded under cash-basis accounting? 1. Paying one year of rent in advance. 2. Providing services to customers for cash. 3. Paying salaries to employees. 4. Purchasing supplies on account.

4. Purchasing supplies on account.

An accrued expense occurs when: 1. An expense is recorded at the same time as the cash payment. 2. Cash is paid but an expense is never recorded. 3. Cash payment (or an obligation to pay cash) occurs before the expense recognition. 4. The expense is recognized before the payment of cash

4. The expense is recognized before the payment of cash

An accrued expense occurs when: 1. An expense is recorded at the same time as the cash payment. 2. Cash is paid but an expense is never recorded. 3. Cash payment (or an obligation to pay cash) occurs before the expense recognition. 4. The expense is recognized before the payment of cash.

4. The expense is recognized before the payment of cash.

Examples of adjusting entries could include all of the following except: Recording interest earned on bank account balances. Recording unpaid taxes. Recording the expiration of prepaid insurance. Recording the purchase of office supplies.

Recording the purchase of office supplies.

If a company provides services on account, which of the following is true? Multiple Choice Liabilities increase. Stockholders' equity increases. Expenses increase. Assets decrease.

Stockholders' equity increases.