1. The concept of adequate disclosure A. does not apply to information which is immaterial. B. grants users of the financial statements access to a company's accounting records. C. does not apply to events occurring after the Statement of Financial Position date. D. specifies which accounting methods must be used in a company's financial statements. 2. At the end of October, Flagship Marina received a bill for fuel used in October. Payment is not due until November 30. This transaction A. should not be recorded in the accounting records until November. B. causes a decrease in assets and in equity in November, when the bill is paid. C. should be recorded as an expense of October, regardless of the payment date. D. is recorded as a liability in October, but is not considered an expense until paid. 3. Double-entry accounting is characterized by which of the following? A. Every transaction affects both an asset account and either a liability account or an equity account. B. The number of ledger accounts with debit balances is equal to the number with credit balances. C. The total dollar amount of debit entries posted to the ledger is equal to the dollar amount of the credit entries. D. The number of debit entries posted to the ledger equals the number of credit entries. 4. During the last month of its fiscal year, Echo Lake Resort accepted numerous deposits from customers. By the end of the month many, but not all, of these guests had completed their stays. The entry to record this event is an example of an adjusting entry A. to apportion a recorded cost. B. to apportion unearned revenue. C. to record unrecorded expenses. D. to record unearned revenue. 5. Clinton prepares monthly financial statements. Which of the following violates the matching principle? A. A portion of the salary payments made this month are not recognized as expense because some of the work was done by employees last month. B. The premium on a six-month insurance policy is charged immediately to expense. C. Expenses for the period exceed revenues. D. The cost of advertising done during the month is charged to expense even though no payment is due for 60 days. 6. Brett Tarek, a manager at D & J Landscaping Limited, needs information regarding the amount of accounts payable currently owed by the company. This information would most easily be found in the A. General ledger. B. General journal. C. Income Statement. D. Notes to the financial statements. 7. Which of the following is not considered as an end-of-period adjusting entry? A. The entry to record the portion of unexpired insurance which has become expense during the period. B. An entry to record revenue which has been earned but has not yet been billed to customers. C. The entry to record depreciation expense. D. An entry to record repayment of a bank loan and to recognize related interest expense. 8. A credit is used to record an increase in all of the following accounts except A. Accounts Payable. B. Service Revenue. C. Unearned Revenue. D. Wages Expense. 9. Identify the statement below that is incorrect. A. The normal balance of accounts receivable is a debit. B. The normal balance of unearned revenues is a credit. C. The normal balance of an expense account is a credit. D. The normal balance of the share capital account is a credit. 10. A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this collection of cash? A. Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800. B. Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800. C. Debit Cash, $1,800; credit Accounts Receivable, $1,800. D. Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800
