Multiple Choice: Accounting Systems Select the correct answer for each of the following:

1, Which of the following events would not be considered an accounting transaction to be entered into the accounting system?

a. Payment of fees to a marketing consultant.

b. Purchase of advertising for a new product.

c. Sales of a new product during the first month on the market.

d. Tabulation of the results of a customer satisfaction survey.

2. Which of the following events is recorded in the accounts?

a. Obtaining a building permit on land purchased two years ago for expansion purposes.

b. Paying the contractor for building the factory for which the permit was obtained.

c. Hiring workers for the new factory building.

d. Deciding to go to double production shifts at the new factory.

Which of the following is not true of an accounting system?

a. Information to be recorded in the system is taken from source documents.

b. Classification of transactions is necessary before they can be entered into the system’s accounts.

c. Ledger accounts are used to accumulate information about individual financial statement elements.

d. The number of ledger accounts used by a company will be the same as the number of accounts appearing in the annual financial statements.

4. Adjusting entries at the end of an accounting period might be recorded for all but:

a. An estimated additional liability.

b. An estimated expense.

c. An estimated increase in the fair value of equipment.

d. Revenue earned but not yet billed to customers.

The accounting cycle is:

a. The sequence of procedures used by a business to process economic information and to produce financial statements.

b. The length of time it takes to complete a set of financial statements after the books are closed.

c. A process that begins with adjusting entries and ends with the preparation of financial statements.

d. The length of time it takes to make payment after a bill is received from a supplier.