Clicker Questions

A company performs services for a customer and bills the customer $500 A. Accounts receivable increase by $500; revenues increase by $500 B. Accounts payable increase $500; revenues increase $500 C. Cash increases by $500; revenues increase $500

A

Assume a business bills a client $15,000 on June 30, 2017, for services rendered in June. The business collects $8,500 of the billings during July and the remainder in August. Under the accrual basis of accounting, when would the business record the revenue for the fees? A. June, $15,000; July, $0; August, $0 B. June, $0; July, $6,500; August, $8,500 C. June, $0; July, $8,500; August, $6,500 D. June, $8,500; July, $6,500; August, $0

A

Below is the company's Cash T-account Cash Beg. 1,000 6,000 3,000 End. 2,000 The $6,000 amount could represent which of the following? A. Collection from customers B. Purchase of supplies on account C. Ending balance of cash D. Payment for salaries

A

Dividends represent a return of the company's profits to its owners, the stockholders. A. True B. False

A

Kiski School Corporation borrows $75,000 from a bank. Kiski records this transaction with a: A. Credit to Notes Payable B. Debit to Investments C. Credit to Retained Earnings D. Credit to Interest Expense

A

Liabilities can be best described as: A. The amount owed to creditors B. The amount of services provided to customers during the year C. The amount of expenses over the past year D. The amount expected to be distributed by stockholders

A

Limited liability means the stockholders are not held personally responsible for the financial obligations of the corporation. A. True B. False

A

On November 1, 2016 Royce, Inc. receives $3,000 cash from McCulley Corporation for consulting services to be provided evenly over the period November 1, 2016, to April 30, 2017, at which time Royce credited $3,000 to Unearned Consulting Fees. The adjusting entry on December 31, 2016 (Royce's year-end) would include a A. Debit to Unearned Consulting Fess for $1,000 B. Debit to Unearned Consulting Fees for $3,000 C. Credit to Consulting Fees Earned for $3,000 D. Debit to Consulting Fees Earned for $1,000 E. Credit to Cash for $3,000

A

The accounting equation is in balance if there is a A. Decrease in assets and decrease in liabilities B. Increase in liabilities and increase in equity C. Decrease in assets and increase in equity D. Decrease in equity and increase in assets

A

The accounting equation is in balance if there is a (an) A. Decrease in assets and decrease in equity B. Increase in liabilities and increase in equity C. Decrease in assets and increase in liabilities D. Decrease in equity and increase in assets

A

Washington Inc. sold $300 of office supplies to a customer on account on September 12. On September 30, Washington collected the cash from that customer. What is the impact on Washington's accounting equation from the collection of cash? A. No net effect on the accounting equation B. Increase assets and liabilities C. Decrease assets and liabilities D. Decrease assets and increase liabilities

A

What is the best definition of an asset? A. Cash of a company in a bank B. Resources that benefit future operations

A

Which of the following is false regarding the balance sheet? A. The balance sheet summarizes the net changes in specific account balances over period in time B. The retained earnings balance on the balance sheet agrees with the ending retained earnings balance shown on the statement of changes in stockholders' equity C. The accounts on the balance sheet represent the basic accounting equation for a company D. The balance sheet reports the amount of assets, liabilities, and stockholders' equity of a company at a point in time

A

Which of the following items is not a specific account in a company's accounting records? A. Income B. Accounts Receivable C. Sales Revenue D. Service Fees

A

Which of the following transactions results in an increase in revenues? A. Sale of a service on credit B. Receipt of cash from bank loan C. Sale of land at cost for cash D. Collection of cash on account

A

Which accounts would appear in a year end balance sheet? Wages Expense $10,000 Salaries Payable $12,000 Fees Earned $1,700 Common Stock $2,400 Supplies $28,000 Service Revenue $4,300 Retained Earnings $1,100 Cash $15,000 A. five B. four C. three D. two

A (2,4,5,7,8)

A company received its utility bill for the current period of $500 and immediately paid it. Its journal entry to record this transaction includes a... A. Credit to Utility Expense B. Debit to Utility Expense C. Debit to Accounts Payable D. Debit to Cash

B

A customer purchased a bed and dresser on August 25 on account from a furniture store. The furniture was delivered on September 6. The customer paid for the furniture on October 10. When should the furniture store record the revenue for this transaction according to the revenue recognition principle? A. August B. September C. October D. Evenly in each of the three months E. One-third in August and two-thirds in September

B

A debit to an account balance always results in the balance increasing. A. True B. False

B

Adjusting entries: A. Usually are recorded at the beginning of the accounting period B. Always involve at least one income statement account and one balance sheet account. C. Adjust the balance of revenue and expense accounts to zero D. Often include the Cash account

B

Assume J&K Inc. performed advertising services for a bakery on account for $1,500. How would this transaction affect J&K Inc.? A. Increase both assets and liabilities by $1,500 B. Increase both assets and equity by $1,500 C. Increase both liabilities and equity by $1,500 D. Decrease liabilities by $1,500, and increase equity by $1,500

B

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

B

Following are transactions of Newco Inc. during the month of October: Issued 10,000 shares of common stock for $25,000 Purchased land for $50,000 signing a note payable for the full amount Received cash of $10,000 for services provided to customers during the month Purchased $500 of office supplies on account Purchased office equipment for $5,000 cash What was the total amount of Newco's liabilities following these five transactions? A. $25,000 B. $50,500 C. $60,000 D. $70,000

B

How much is net income? Wages Payable $11,000 Revenues $15,000 Accounts Receivable $16,000 Expenses $10,000 Cash $7,000 A. 6,000 B. 5,000 C. 22,000 D. 7,000

B

In November, a retailer hires three temporary employees for the holiday selling season that are scheduled to work only the month of December. Those employees work during December, and they are then paid their full salaries in January. In which month should the company record salaries expense? A. January B. December C. November D. Evenly over the three months

B

Preparing a budget for a business is considered... A. financial accounting B. managerial accounting

B

Product profitability reports for a business are considered... A. financial accounting B. managerial accounting

B

Retained earnings at the end of the year is calculated by: A. Common stock and dividends B. Beginning retained earnings, income, and dividends C. Stockholders' equity, incomes, and dividends D. Income and dividends

B

The Accounts Receivable account has a beginning balance of $20,000 and the company provides services of $20,000 on account during the month. The ending balance was $30,000. How much cash did the company receive from customers during the month? A. $5,000 B. $10,000 C. $20,000 D. $30,000

B

The economic entity concept requires... A. Tax records be kept separate from financial reporting records B. A company should maintain separate set of financial records for each business entity or subsidiary. C. Transactions that involve on exchange of value be kept together with those that do not D. A separate set of books be established for each segment of business

B

The process of transferring the debit and credit information from the journal to individual accounts in the general ledger is called journalizing. A. True B. False

B

The resources of a company are referred to as... A. Suppliers B. Assets C. Liabilities D. Creditors

B

The statement of changes in stockholders' equity is a financial statement that summarizes stockholders' equity at a point in time. A. True B. False

B

Use the following amounts to calculate net income: Revenues, $50,000; liabilities $10,000; expenses, $40,000; assets, $30,000; $dividends, 5000 A. $40,000 B. $10,000 C. $5,000 D. $0

B

What makes accounting a valuable discipline? A. It stores financial information in accounts B. Provides information to make decisions C. Records events and transactions D. Produces financial reports

B

When payment is received for services not yet rendered, no entry is recorded until that service has been rendered. A. True B. False

B

Which of the following groups is not along the external users for whom financial statements are prepared? A. Creditors B. Managers C. Regulators D. Investors E. Customers

B

Which of the following is a business event that is not considered a recordable transaction? A. A company pays an employee for work performed B. A customer places an order for a product C. A company receives a product previously D. A customer purchases a service

B

Which of the following is recorded with an adjusting entry associated with a prepaid expense? A. Debit a liability B. Credit an asset C. Credit an expense D. Debit an asset

B

Which of the following would be recorded as an expense under cash-basis accounting? A. The company uses utilities in the current period but does not pay cash B. The company purchases office supplies with cash and does not use the supplies C. The company provides services to customers for cash D. The company purchases equipment by borrowing from the bank

B

Which of the following would not be an objective of external users reading a company's financial statements? A. Understanding the current financial statements of the company B. Assessing the company's contribution to social politics C. Predicting the company's future financial performance D. Evaluating the company's ability to generate cash from business

B

Which situation indicates a loss within the Income Statement portion of the trial balance? A. Total credits exceed total debits B. Total debits exceed total credits C. Total debits equal total credits D. More debit accounts as compared to credit accounts

B

How many of the following items would affect operating cash flows reported in the statement of cash flows? (all transactions involve cash) 1. Decrease in wages payable of $12,000 during the year 2. Borrowed $50,000 from the bank 3. Increase in inventory of $10,000 4. Purchased a delivery truck for $12,000 5. Repaid an equipment loan of $10,000 6. Received $25,000 from issuing common stock A. one B. two C. three D. four

B (1,3)

How many of the following accounts would appear in a year-end income statement?: Accounts Payable $4,400 Salaries Expense $12,800 Cash $1,700 Common Stock $2,400 Service Revenue $8,300 Truck Expense $4,300 Retained Earnings $1,100 Utilities Expense $5,000 A. five B. four C. three D. two

B (2,5,6,8)

Following are transactions of Beverly Inc. , a new company: 1. Purchased office equipment for $500 cash 2. Purchased land for $20,000, signing a note payable for the full amount 3. Paid cash of $10,000 for repair services provided last month 4. Purchased $300 of office supplies on account 5. Issued 10,000 shares of common stock for $50,000 cash 6. Paid employees $25,000 for their first month's salaries How many of these transactions decreased Beverly's total assets? A. one B. two C. three D. four

B (3,6)

A company received a bill for newspaper advertising services, $400. The bill will be paid in 10 days. How would the transaction be recorded today? A. Debit Accounts Payable $500, credit Advertising Expense $400. B. Debit Advertising Expense $500, credit cash $500. C. Debit Advertising Expense $500, credit Accounts Payable $500. D. Debit Accounts Payable $500, credit Cash $500

C

A list of all account names used to record transactions of a company is referred to as the: A. Financial statements B. Income statements C. Chart of accounts D. Balance sheet

C

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

C

An alternative form of the accounting equation is: A. Net Income = Revenues - Expenses B. Assets = Liabilities - Stockholders' Equity C. Assets - Liabilities = Stockholders' Equity D. Stockholders' Equity = Assets + Liabilities

C

Assume the balance in Prepaid Insurance is $2,500 but it should be $1,500. The adjusting journal entry should include which of the following? A. Debit to Prepaid Insurance for $1,000 B. Credit to Insurance Expense for $1,000 C. Debit to Insurance Expense for $1,000 D. Debit to Insurance Expense for $1,500

C

At the end of the year, J&L services had total assets of $25,000 and equity of $10,000, what were their liabilities? A. $35,000 B. $25,000 C. $15,000 D. $10,000

C

Below is the company's Cash T-account Cash Beg. 1,000 5,000 2,000 End. 4,000 The $2,000 amount could represent which of the following? A. Purchase of supplies on account B. Ending balance of cash C. Payments on accounts payable D. Collection from customers

C

Elgin, Co. orders office supplies in September. Those supplies are received and used in October. The supplies are paid for in November. In which month should Elgin record supplies expense? A. September B. November C. October D. Evenly over the three months

C

Given the information below about Woodcrest Corporation, what was the amount of dividends the company paid in the current period? Beginning retained earnings $50,000 Ending retained earnings $100,000 Decrease in cash $50,000 Income $75,000 Change in stockholders' equity $15,000 A. $125,000 B. $50,000 C. $25,000 D. $15,000

C

On July 1, 2016, a two-year insurance policy was purchased for $30,000 with coverage to begin immediately. What is the amount of insurance expense for the year ended December 31, 2016? A, $2,500 B. $5,000 C. $7,500 D. $15,000 E. $30,000

C

Prepayments occur when: A. Sales are delayed pending credit approval B. Customers are unable to pay the full amount due when goods are delivered C. Cash payment (or obligation to pay cash) occurs before the expense recognition D. Cash payment occurs after the expense is incurred and liability is recorded

C

The amounts recorded when a company sells products or provides services to customers are referred to as: A. Assets B. Liabilities C. Revenues D. Expenses

C

The expense recognition principle guides A. where on the income statement expenses should be presented B. the ordering of current assets and current liabilities on the balance sheet C. when costs are recognized as expenses on the income statement D. when revenues are recognized on the income statement

C

The following transactions occurred during the month of October: 1. The company pays cash for rent in December of $5,000 2. The company uses $1,000 of supplies purchased in the previous period. 3. The company repays a loan to the bank of $20,000 (ignore any interest cost). For October, the amount of accrual-basis expense is _________________, and cash-basis expense is __________________. A. $1,000; $15,000 B. $1,000; $25,000 C. $1,000; $5,000 D. $21,000; $5,000

C

The full set of procedures used to accomplish the measurement/communication process of financial accounting is referred to as the: A. Accounting process B. Trial balance C. Accounting cycle D. Chart of accounts

C

The most important objective for financial accounting is to provide information useful for: A. Documenting business transactions B. Providing accountability C. Predicting cash flows D. Increasing future profits

C

The purchase of $5,000 of liability insurance policy for the next year on account will... A. Increase both expense and liabilities by $5,000 B. Increase assets and decrease stockholders' equity by $5,000 C. Increase both assets and liabilities by $5,000 D. Increase both assets and stockholder's equity

C

Those who lend money or deliver goods and services before being paid are called: A. Investors B. Borrowers C. Creditors D. Debtors

C

Transfer of ownership will not affect the continuity of a A. Corporation or partnership B. Sole proprietorship C. Corporation D. Partnership

C

What is the best definition of accounts receivable? A. An amount owed by the company to others B. Owner's investment in the business C. Amounts owed by customers to a company D. An account E. None of the above

C

When a company pays employees' salaries for the current period, how will the basic accounting equation be affected? A. Revenues decrease B. Expenses decrease C. Stockholders' equity decreases D. Liabilities decrease

C

Which financial statement best reveals to investors and creditors information about a company's indebtedness? A. Statement of cash flows B. Income Statement C. Balance Sheet D. Statement of stockholders' equity

C

Which of the following best describes revenue? A. Cash received from a customer B. Resources of a company C. Sales of goods and services to a customer D. Amounts to be received from customers.

C

Which of the following best explains the meaning of total stockholders' equity? A. The difference between total revenues and total expenses, less dividends for the year B. All revenues, dividends, and expenses over the life of the company C. The amount of capital invested by stockholders plus profits retained over the life of the company D. The amount of common stock less dividends over the life of the company

C

Which of the following best represents value created for stockholders during the current period? A. Stockholder's equity B. Retained earnings C. Earnings D. Total assets

C

Which of the following is correct? A. Prepaid expenses are decreased with a debit B. Unearned revenue liability is increased with a debit C. Accounts payable is increased with a credit D. Rent expense is increased with a credit

C

Which of the following is not possible when recording a transaction? A. Stockholders' equity increases and assets increase B. Assets increase and decrease C. Liabilities increase and assets decrease D. Equity decreases and assets decrease

C

Which of the following statements are true? I. Total debits should equal total credits II. Assets are always listed first in journal entries III. It is possible to have many debits or credits in one journal entry IV. Some journal entries will have debits only A. I only B. I and II C. I and III D. II, III, and IV

C

How many of the following transactions are operating activities? Repaid a loan of $20,000 to a bank Provide service to customers for $10,000 Paid employees wages of $3,500 Purchased a delivery truck for $12,000 Received $100,000 from issuing common stock Purchased $12,000 in supplies A. One B. Two C. Three D. Four

C (2,3,6)

Adjusting the accounts is the process of A. subtracting expenses from revenues to measure net income B. recording transactions as they occur during the period C. zeroing out account balances to prepare for the next period D. updating the accounts at the end of the period

D

An accrued expense occurs when: A. Cash payment (or an obligation to pay cash) occurs before the expense recognition B. An expense is recorded at the same time as the cash payment C. Cash is paid but an expense is never recorded D. Cash payment occurs after the expense is recognized and a liability is recorded

D

An increase to an asset account is shown with a __________, and an increase to a liability account is shown with a __________. A. Credit; Debit B. Credit; Credit C. Debit; Debit D. Debit; Credit

D

Assume that Perfect Clean Inc. performed cleaning services for a business on account for $200. How would this transaction affect Perfect Clean Inc? A. Decrease liabilities by $200, and increase equity by $200 B. Increase both assets and liabilities by $200 C. Increase only equity by $200 D. Increase both assets and equity by $200

D

Financial accounting does not deal with which of the following? A. Measuring a company's economic activity B. Preparing financial reports C. Communicating financial results with investors D. Providing information with internal users

D

If a company has stockholders' equity of $5,000 at the end of the year which of the following statements must be true? A. Total revenues during the year equals $5,000 B. The company has issued $5,000 of common stock C. Net income for the year equals $5,000 D. The company's assets exceed liabilities by $5,000

D

If total assets increased $30,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of change in stockholders' equity for that period is: A. a $42,000 increase B. a $42,000 decrease C. a $18,000 decrease D. a $18,000 increase

D

If total assets increased $30,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction of the change in stockholder's equity for that period is... A. $42,000 increase B. $42,000 decrease C. $18,000 decrease D. $18,000 increase

D

In what order are the following financial statements prepared? 1) statement of changes in stockholders' equity, 2) income statements, and 3) balance sheet A. 1,2,3 B. 3,2,1 C. 2,3,1 D. 2,1,3

D

Lakemont Resources, Inc. purchase office paper on account for $350. Which journal entry records the payment on account of the office paper? A. Accounts Payable $350 Accounts Receivable $350 B. Cash $350 Accounts Payable $350 C. Office Supplies $350 Cash $350 D. Accounts Payable $350 Cash $350

D

Receiving cash from an account receivable... A. Increases revenue and decreases an asset B. Decreases a liability and increases an asset C. Increases an asset and increases revenue D. Increases one asset and decreases another asset

D

The adjusting entry required when amounts previously recorded as deferred revenues are earned by providing goods or services to customers includes: A. A debit to an asset B. A credit to a liability C. A credit to an asset D. A debit to a liability

D

The benefits of a statement of cash flows are to A. Determine ability to pay indebtedness and cash dividends B. Estimate future cash flows C. Evaluate asset management D. All of the above

D

The costs associated with producing revenues are referred to as: A. Dividends B. Assets C. Liabilities D. Expenses

D

The primary difference between accrual-basis and cash-basis accounting is A. Cash-basis accounting is allowed for financial reporting purposes but not accrual-basis accounting B. Accrual-basis accounting violates both the revenue recognition and matching principles C. Adjusting entries are only a necessary part of cash-basis accounting D. The timing of when revenues and expenses are recorded

D

Using the information below the stockholder's claims amount to? Assets $1,000,000 Liabilities $500,000 Net income $200,000 Retained Earnings $200,000 A. $1,000,000 B. $300,000 C. $250,000 D. $500,000

D

What is the primary purpose of financial accounting? A. Communicate business activities to internal management B. Determine the amount of tax liabilities owed to various government jurisdictions C. Measure the profitability of a company in order to assist employees in making decisions D. Measure business activities and communicate those measures to external users to make decisions

D

When a music concert promoter collects cash for advance ticket sales prior to the event, which of the following accounts is recorded? A. Accrued liability B. Accounts Receivable C. Prepaid Expense D. Unearned Revenue

D

Which of the following business events is not a transaction recorded in financial accounting? A. Purchasing a service B. Paying wages C. Receiving goods D. Signing an agreement with a supplier

D

Which of the following transactions changes only the mix of assets and does not affect liabilities or stockholders' equity? A. Borrowed $50,000 from a local bank B. Received $10,000 for fees earned C. Paid $10,000 for office wages D. Purchased equipment for $25,000 cash

D

Which of the following would increase assets and increase liabilities? A. Provide services to customers on account B. Pay dividends to stockholders C. Receive a utility bill but do not pay it immediately D. Purchase office supplies on account

D

Which sequence correctly summarizes the accounting process? A. Journalize transactions, prepare trial balance, post to the accounts B. Post to accounts, journalize transactions, prepare a trial balance C. Prepare a trial balance, journalize transactions, post to accounts D. Journalize transactions, post to accounts, prepare trial balance

D

Consider the following list of accounts: 1. Machinery 6. Prepaid Expense 2. Service Expense 7. Utilities Expense 3. Salaries Expense 8. Accounts Payable 4. Accounts Payable 9. Common Stock 5. Cash 10. Dividends How many of these accounts have a normal debit balance? A. four B. five C. six D. seven

D (1,2,3,5,6,7,10)

Accounting is a system of maintaining records of a company's operations and communicating that information to decision makers. A. True B. False

True

When a company inquires about the availability of inventory, a transaction has occurred. Yes or no?

no

When a company receives a product previously ordered a recordable accounting transaction has occurred. yes or no?

yes