Financial Accounting: SPRING17-C-8-ACT301-1

Module 3: Mastery Exercise

Questions 1-10 of 10 | Page 1 of 1

Question 1 (1 point)

According to some U.S. companies, what gives foreign firms a competitive advantage in the capital market?

a	The foreign companies dont have standards similar to GAAP.
b	The foreign companies dont have strict ethical codes.
c	The Sarbanes-Oxley Act which requires more stringent internal controls on U.S. firms.
d	The foreign companies dont have to be audited.

Question 2 (1 point)

A company usually determines the amount of supplies used during a period by _____.

a	adding the supplies on hand to the balance of the Supplies account
b	summing the amount of supplies purchased during the period
c	taking the difference between the supplies purchased and the supplies paid for during the period
d	taking the difference between the balance of the Supplies account and the cost of supplies on hand

Question 3 (1 point)

The primary difference between prepaid and accrued expenses is that prepaid expenses have _____.

a	been incurred and accrued expenses have not
b	not been paid and accrued expenses have
c	been recorded and accrued expenses have not
d	not been recorded and accrued expenses have

Question 4 (1 point)

Which types of accounts will appear in the post-closing trial balance?

a	permanent accounts
b	temporary accounts
c	accounts shown in the income statement columns of a work sheet
d	none of these answer choices are correct

Question 5 (1 point)

Closing entries ______.

a	are prepared before the financial statements
b	reduce the number of permanent accounts
c	cause the revenue and expense accounts to have zero balances
d	summarize the activity in every account

Question 6 (1 point)

Why was Apple required to spread their iPhone revenues over a two year period?

a	because of its newness, their returns might exceed the normal level of returns
b	because they were required to provide software updates over that two year period
c	because that was the estimated life of the iPhone
d	Because they needed to defer revenue recognition since they had a swap program available for future models

Question 7 (1 point)

If a company fails to adjust for accrued revenues _____.

a	liabilities will be understated and revenues will be understated
b	liabilities will be overstated and revenues will be understated
c	assets will be overstated and revenues will be understated
d	assets will be understated and revenues will be understated

Question 8 (1 point)

Adjustments would not be necessary if financial statements were prepared to reflect net income from _____.

a	monthly operations
b	fiscal year operations
c	interim operations
d	lifetime operations

Question 9 (1 point)

An accounting time period that is one year in length is called _____.

a	a fiscal year
b	an interim period
c	the time period assumption
d	a reporting period

Question 10 (1 point)

Which account will have a zero balance after closing entries have been journalized and posted?

a	service revenue
b	supplies
c	prepaid insurance
d	accumulated depreciation