MGMT 200 2/10

If a company records expense for wages incurred in the prior month with a debit to Wages Expense and a credit to Cash, how will this error affect income for the current period? A. Income will be too low B. Income will be correct. C. Income will be too high. D. Not possible to determine.

A. Income will be too low

Once the adjusted trial balance is complete, financial statements are prepared. A. True B. False

A. True

Which of the following current liabilities does not involve the future payment of cash? A. Interest Payable. B. Deferred Revenue. C. Accounts Payable. D. Salaries Payable.

B. Deferred Revenue.

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect total assets for the current period? A. Total assets will be too low. B. Total assets will be correct. C. Total assets will be too high. D. Not possible to determine.

B. Total assets will be correct.

An advantage of a classified balance sheet is that it is easy to see: A. If the company is likely to be profitable in future periods. B. If the company is profitable in the current period. C. If current assets are large enough to pay current liabilities. D. If dividends have been paid to stockholders.

C. If current assets are large enough to pay current liabilities.

If a company records cash received for services to be provided in the future with a debit to Cash and a credit to Service Revenue, how will this error affect income for the current period? A. Income will be too low B. Income will be correct. C. Income will be too high. D. Not possible to determine

C. Income will be too high.

Which of the following best describes the information reported in the income statement? A. The portion of profits paid in cash to stockholders. B. The current resources available to pay current obligations. C. The amount earned from customers compared to the cost of doing so. D. The extent to which cash inflows exceed cash outflows

C. The amount earned from customers compared to the cost of doing so.

In the statement of changes in stockholders' equity, Retained Earnings had a beginning balance of $25,000. During the period, the company reports a net income of $10,000 and a dividend of $4,000. The ending balance in the Retained Earnings account is: A. $10,000. B. $35,000. C. $39,000. D. $31,000.

D. $31,000.

Which financial statement provides information for a point in time only? A. Statement of cash flows. B. Income statement. C. Statement of stockholders' equity. D. Balance sheet.

D. Balance sheet.

Consider the adjustment process at the end of the accounting period. 1. Record the adjusting entries in the journal. 2. Prepare an adjusted trial balance to check the equality of the debits and credits. 3. Determine the accounts requiring adjustment, using the unadjusted trial balance. 4. Post the adjusting entries to the general ledger. Place the items in the proper order. A. 1, 4, 3, 2. B. 1, 2, 4, 3. C. 3, 4, 2, 1. D. 3, 1, 4, 2.

D. 3, 1, 4, 2.

A classified balance sheet ______. A. Shows only current assets and current liabilities B. Shows changes in assets, liabilities, revenues and expenses C. Contains confidential information D. Shows subtotals for current assets and current liabilities

D. Shows subtotals for current assets and current liabilities