ACCT 2001

At December 31, 2017, before any year-end adjustments, Macarty Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be $1,500. $1,200. $2,700. $1,900.

$1,500.

Employees at the Waco Waffle House were paid on Friday, December 27 for the five days ending on December 27. The next payday is Friday, January 3. Employees work 5 days a week. The weekly payroll amounts to $3,800. The appropriate adjusting journal entry on December 31 would be to credit Salaries and Wages Payable for $3,800. $2,280. $1,520. $760.

$1,520.

At December 31, 2017, Shorts Company had retained earnings of $2,184,000. During 2017, the company issued stock for $98,000, and paid dividends of $34,000. Net income for 2017 was $402,000. How much was the retained earnings balance at the beginning of 2017? $1,816,000 $2,552,000 $2,454,000 $1,914,000

$1,816,000

If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during that same period? $20,000 increase $10,000 decrease $10,000 increase $15,000 decrease

$10,000 decrease

Saira's Maid Service began the year with total assets of $120,000 and stockholders' equity of $40,000. During the year the company earned $90,000 in net income and paid $20,000 in dividends. Total assets at the end of the year were $215,000. How much was stockholders' equity at the end of the year? $150,000 $130,000 $110,000 $135,000

$110,000

Current liabilities are $10,000, long-term liabilities are $20,000, common stock is $50,000, and retained earnings totals $70,000. How much is total stockholders' equity? $150,000 $140,000 $70,000 $120,000

$120,000

In 2017, Bombay Corporation had cash receipts of $21,000 and cash disbursements of $12,000. The company's ending cash balance at December 31, 2017 was $33,000. What was the beginning cash balance? $45,000 $42,000 $24,000 $30,000

$24,000

Which of the following does not properly reflect a financial ratio? $7,200 $0.60 per dollar 18.4% 7:1

$7,200

What journal entry is recorded as a result of issuing stock to investors for cash? A debit to Common Stock and a credit to Cash A debit to Cash and a credit to Retained Earnings A debit to Cash and a credit to Common Stock A credit to Cash and a debit to Retained Earnings

A debit to Cash and a credit to Common Stock

Which of the following is not one of the three primary business activities? Advertising Operating Financing Investing

Advertising

To which of the following questions will internal users want answers? What selling price for our product will maximize the company's net income? Which product line is most profitable? Is cash sufficient to pay dividends to stockholders? All of the answer choices are correct.

All of the answer choices are correct.

What does a general ledger of a company contain? Asset and liability accounts only Asset and stockholders' equity accounts only All the asset, liability, stockholders' equity, revenue, and expense accounts Revenue and expense accounts only

All the asset, liability, stockholders' equity, revenue, and expense accounts

An account is a part of the financial information system and is described by all except which one of the following? An account has a title. An account has a debit and credit side. An account is a source document. An account consists of three parts.

An account is a source document.

Which of the following events is not recorded in the accounting records? Equipment is purchased on account. An employee is terminated. A cash investment is made into the business. The owner withdraws cash for personal use.

An employee is terminated.

Which of the following is the correct sequence of events? None of the answer choices provides the correct sequence Analyze a transaction; post it to the ledger; record it in the journal Analyze a transaction; record it in the journal; post it to the ledger Record a transaction in the journal; analyze the transaction; post it to the ledger

Analyze a transaction; record it in the journal; post it to the ledger

Which accounts normally have debit balances? Assets, dividends, and expenses Assets, expenses, and retained earnings Assets, expenses, and revenues Assets, liabilities, and dividends

Assets, dividends, and expenses

Which of the following is not one of the primary types of the financing activities in the statement of cash flows? Borrowing money Issuing shares of stock Paying dividends Buying equipment

Buying equipment

Which of the following is the correct order for listing current assets on the balance sheet? Cash, short-term investments, accounts receivable, inventories, prepaid expenses Cash, accounts receivable, inventories, short-term investments, prepaid expenses Cash, accounts receivable, prepaid expenses, inventories, short-term investments Cash, short-term investments, inventories, prepaid expenses, accounts receivable

Cash, short-term investments, accounts receivable, inventories, prepaid expenses

Which of the following is not an external user of accounting data? Economic planners Labor unions Chief Financial Officer Customers

Chief Financial Officer

Which of the following is not a typical example of an accrued expense? Depreciation Wages Interest Taxes

Depreciation

Which is an indicator of profitability? Current ratio Earnings per share Debt to total assets ratio Free cash flow

Earnings per share

Which principle dictates that efforts (expenses) be matched with results (revenues)? Expense recognition principle. Historical cost principle. Periodicity principle. Revenue recognition principle.

Expense recognition principle.

What is the primary accounting standard-setting body in the United States? Financial Accounting Standards Board IFRS Securities and Exchange Commission Public Company Accounting Oversight Board (PCAOB)

Financial Accounting Standards Board

What are the accounting rules that have substantial authoritative support and are recognized as a general guide for financial reporting purposes in the U. S.? Generally accepted auditing principles Generally accepted accounting principles General accounting principles Generally accepted accounting standards

Generally accepted accounting principles

Where is the first place every transaction is recorded? In the journal In the basic accounting equation In the respective accounts In the ledger

In the journal

Which of the following is an example of a financing activity?Buying delivery equipment Buying inventory Selling goods on account Issuing shares of common stock

Issuing shares of common stock

Which of these statements about a journal is false? It contains only revenue and expense accounts. It provides a chronological record of transactions. It helps to locate errors because the debit and credit amounts for each entry can be readily compared. It discloses the complete effect of a transaction in one place.

It contains only revenue and expense accounts.

Which of the following is the correct sequence of events? Prepare a trial balance; journalize; post Journalize; post; prepare a trial balance Post; journalize; prepare a trial balance Prepare a trial balance; post; journalize

Journalize; post; prepare a trial balance

What type of account is unearned revenue? Asset Expense Revenue Liability

Liability

Which section of the annual report presents highlights of favorable or unfavorable trends and identifies significant events and uncertainties affecting a company's ability to pay near-term obligations, and a company's ability to fund operations and expansion? Financial statements Management discussion and analysis Notes to the financial statements Auditor's report

Management discussion and analysis

Verifiability is an ingredient of Faithful Representation; Relevance No; Yes No; No Yes; Yes Yes ;No

No; No

Which of the following is not classified as a current asset? Prepaid expenses Accounts receivable Patents Inventory

Patents

Which types of accounts will appear in the post-closing trial balance? Permanent accounts. Temporary accounts. Accounts shown in the income statement columns of a work sheet. None of these answer choices are correct.

Permanent accounts.

Which is not part of the recording process? Analyzing transactions Preparing a trial balance Entering transactions in a journal Posting transactions

Preparing a trial balance

Which account will have a zero balance after a company has journalized and posted closing entries? Service Revenue. Advertising Supplies. Prepaid Insurance. Accumulated Depreciation.

Service Revenue.

Which forms of business organization are considered to be separate accounting entities? Sole proprietorships and partnerships only Partnerships and corporations only Only corporations Sole proprietorships, corporations, and partnerships

Sole proprietorships, corporations, and partnerships

Which of the following did not result from the Sarbanes-Oxley Act? Top management must now certify the accuracy of financial information. Auditors cannot provide non-audit services to the same client. Penalties for fraudulent activity increased. Tax rates on corporations increased.

Tax rates on corporations increased.

Which statement is incorrect concerning the adjusted trial balance? An adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made. The company prepares the adjusted trial balance after it has journalized and posted the adjusting entries. The adjusted trial balance lists the account balances segregated by assets and liabilities. The adjusted trial balance provides the primary basis for the preparation of financial statements.

The adjusted trial balance lists the account balances segregated by assets and liabilities.

Which statement is correct? As long as a company consistently uses the cash-basis of accounting, generally accepted accounting principles allow its use. The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles. The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received. As long as management is ethical, there are no problems with using the cash basis of accounting.

The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.

Which of the following is not a characteristic of relevance? Verifiability Materiality Confirmatory value Predictive value

Verifiability

A trial balance will not balance if the purchase of supplies on account is debited to Supplies and credited to Cash. a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100. a correct journal entry is posted twice. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.

The final step in the accounting cycle is to prepare a post-closing trial balance. closing entries. financial statements. adjusting entries.

a post-closing trial balance.

The closing entry process consists of closing all asset and liability accounts. out the Retained Earnings account. all permanent accounts. all temporary accounts.

all temporary accounts.

Cash received before services are performed which is recorded as a debit to a Cash account and a credit to a liability account is called an accrued revenue. an unearned revenue. an unrecorded revenue. none of these answer choices are correct.

an unearned revenue.

If a company receives cash from a customer before performing services for the customer, then assets increase and stockholders' equity increases. assets increase and liabilities decrease. assets increase and liabilities increase. assets decrease and liabilities increase.

assets increase and liabilities increase.

If an expense is paid with cash assets will decrease. retained earnings will increase. liabilities will increase. expenses will decrease.

assets will decrease.

The segment of the annual report that presents an opinion regarding the fairness of the presentation of the financial position and results of operations is/are the financial statements. auditor's opinion. income statement. balance sheet.

auditor's opinion.

Genesis Company buys equipment for $900 on credit. This transaction will immediately affect the income statement only. balance sheet only. income statement and retained earnings statement only. income statement, retained earnings statement, and balance sheet.

balance sheet only.

The correct order of presentation in a classified balance sheet for the following current assets is cash, inventories, accounts receivable, prepaid insurance. accounts receivable, cash, prepaid insurance, inventories. inventories, cash, accounts receivable, prepaid insurance. cash, accounts receivable, inventories, prepaid insurance.

cash, accounts receivable, inventories, prepaid insurance.

Adjustments for prepaid expenses decrease revenues and increase assets. decrease expenses and increase assets. decrease assets and increase expenses. decrease assets and increase revenues.

decrease assets and increase expenses.

Each of the following is a major type (or category) of adjusting entry except accrued revenues. earned expenses. accrued expenses. prepaid expenses. Save for Later

earned expenses.

Accounts with normal debit balances include assets and liabilities. liabilities and expenses. stockholders' equity and revenues. expenses and assets.

expenses and assets.

The payment of dividends is an example of a(n) operating activity. financing activity. investing activity. delivery activity.

financing activity.

A revenue account is increased by debits. is decreased by credits. has a normal balance of a debit. is increased by credits.

is increased by credits.

If cash is received in advance from a customer assets will decrease. liabilities will increase. stockholders' equity will decrease. retained earnings will increase.

liabilities will increase.

A company can change to a new method of accounting if management can justify that the new method results in terms of more meaningful financial information. a higher net income. a lower net income for tax purposes. less likelihood of clerical errors.

more meaningful financial information.

During the adjusting process two transactions were missed. The first is for unearned rent revenue of which $450 was earned during the period, the second was for accrued interest payable of which $275 is owed for the period. As a result of these omissions liabilities are overstated by $725. revenue is overstated by $725. net income is understated by $175. assets are overstated by $725.

net income is understated by $175.

All of the following are required steps in the accounting cycle except: preparing an adjusted trial balance. journalizing and posting closing entries. preparing a post-closing trial balance. preparing a worksheet.

preparing a worksheet.

With the adjusted trial balance in hand, you see that the debit totals of the real accounts is $18,250 and the credit totals of the real accounts is $14,550. The debit total of the nominal or temporary accounts is $3,475 while the credit total of the nominal or temporary accounts is $7,175. From this you know that there is an error in the adjusted trial balance. net loss is $3,700 for the fiscal period. net income is $3,700 for the fiscal period. retained earnings will increase by $3,700 through the closing process.

retained earnings will increase by $3,700 through the closing process.

The generally accepted accounting principle which dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied is the periodicity assumption. expense recognition principle. revenue recognition principle. accrued revenues principle.

revenue recognition principle.

a complete journal entry does not show the date of the transaction. the new balance in the accounts affected by the transaction. a brief explanation of the transaction. the accounts and amounts to be debited and credited.

the new balance in the accounts affected by the transaction.

Posting normally occurs before journalizing. transfers ledger transaction data to the journal. is an optional step in the recording process. transfers journal entries to ledger accounts.

transfers journal entries to ledger accounts.