Accounting Exam 1
Which of the following describes how assets are listed on the balance sheet?
In the order they will be used up or turned into cash
Webby Corporation reported the following amounts on its income statement: service revenues, $32,500; utilities expense, $300; net income, $1,600; and income tax expense, $900. If the only other amount reported on the income statement was for selling expenses, what amount would it be?
$29,700
A company was recently formed with $50,000 cash contributed to the company by stockholders. The company then borrowed $20,000 from a bank and bought $10,000 of supplies on account. The company also purchased $50,000 of equipment by paying $20,000 in in cash and issuing a note for the remainder. What is the amount of total assets to be reported on the balance sheet?
$70,000
Which of the following trial balances is used as a source for preparing the income statement
Adjusted trial balance
Which of the following statements would be considered true regarding debits and credits?
All of the above
Which of the following statements would be considered true regarding the balance sheet?
All of the above
The T-account is used to summarize which of the following
All of the above describe how T-accounts are used by accountants
Which of the following is the entry to be recorded by a law firm when it receives a payment from a client that will be earned when services are provided in the future?
Debit cash, credit unearned revenue
Company A has owned a building for several years. Which of the following statements regarding depreciation is false from an accounting perspective?
Depreciation expense for the year will equal accumulated depreciation
Which of the following is true?
FASB creates GAAP
Which of the following regarding the GAAP is true?
GAAP is the abbreviation for generally accepted accounting princip.es
Which of the following items is not a specific account in a company's accounting records?
Net income
When expenses exceed revenues in a give period,
Stockholders' Equity will be decreased
Which account is least likely to be debited when revenue is recorded?
accounts payable
Which of the following accounts would not appear in a closing journal entry?
accumulated depreciation
Which of the following statements describe transactions that would be recorded in the accounting system?
an exchange of an asset for a promise to pay (not a promise)
An adjusting journal entry to recognize accrued salaries payable would cause which of the following?
an increase in expenses and liabilities and a decrease in stockholders' equity
Which of the following would not be a goal of external users reading a company's financial statements?
assessing the company's contribution to social and environmental policies
Which of the following is not one of the four basic financial statements
audit report
Which account is least likely to appear in an adjusting journal entry?
cash
Which of the following is not an asset?
contributed capital
Assume a company receives a bill for $10,000 for advertising done during the current year. If this bill is not yet recorded at the end of the year, what will the adjusting journal entry include?
debit to advertising expense of $10,000
Assume the balance in prepaid insurance is $2,500 but it should be $1,500. The adjusted journal entry should include which of the following
debit to insurance expense for $1,000
If a publicly traded company is trying to maximize its perceived value to decision makers external to the corporation, the company is most likely to report too small a value for which of the following on its balance sheet
liabilities
If a company incorrectly records a payment as an asset, rather than as an expense, how will this error affect net income in the current period
net income will be too high
Which of the following accounts normally has a debit balance?
rent expense
Which of the following regarding retained earnings is false?
retained earnings is an asset on the balance sheet
an adjusted trial balance
shows the ending balances resulting from the adjusting journal entries in a debit-and-credo format
Which of the following is false regarding the balance sheet
the balance sheet summarizes the net changes in specific account balances over a period of time
Which of the following is not one of the items required to be shown in the heading of a financial statement?
the financial statement preparer's name
Which of the following is true regarding the income statement
the income statement is sometimes called the statement of operations
Total assets on a balance sheet prepared on any date must agree with which of the following?
the sum of total liabilities and and contributed capital and retained earnings
Which of the following statements regarding the statement of cash flows is false?
the total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" (net income or net loss) reported on the income statement
Which of the following is not required by the Sarbanes-Oxley Act?
top managers of public companies must be members of the American Institute of Certified Public Accountants
On december 31, an adjustment is made to reduce unearned revenue and report (earned) revenue. How many accounts will be included in this adjusting journal entry?
two
when a concert promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts is recorded?
unearned revenue
The duality of effects can best be described as follows
when a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result
The expense recognition principle "matching" controls
when costs are recognized as expenses on the income statement
When should a company report the cost on an insurance policy as an expense?
when the company receives the benefits from the policy over its period of coverage
When should companies that sell gift cards to customers report revenue
when the gift card is used by the customer
