Question 2 (1 point) For a prepaid expense, the adjusting entry would 1) Result in a debit to an expense account and a credit to an asset account O2) Cause a prepaid expense to be overstated and liabilities to be understated 3) Result in a credit to an expense account and a debit to an asset account O 4) Result in a debit to a liability accountand a credit to an asset account 5) Decrease cash Which of the following statements is correct? 1) Prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities. 2) Accrued expenses and accrued revenues involve assets and liabilities that have not yet been recorded. 3) Adjusting entries are used to record both accrued expenses and accrued revenues 4) Prepaid expenses, depreciation, and unearned revenues require adjusting entries to record the effects of the passage of time. 5) All of these The financial statement that shows the beginning balance of equity, the changes in equity that resulted from new investments by the owner, Profit (or net loss), withdrawals, and the ending balance of equity is the 1) statement of financial position 2) statement of cash flows 3) balance sheet O 4) income statement 5) statement of changes in equity Which of the following statements is true? 1) Journalizing consists of analyzing and recording transactions in T-accounts. 2) Preparing a post-closing trial balance helps to prove the accuracy of the adjusting and closing procedures. 3) The information on the work sheet can be used in place of preparing financial statements. 4) By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 5) All of these statements are true. balance sheet 1) Measures a company's ability to pay its bills on time 2) Organizes assets and liabilities into important subgroups 3) Presents revenues, expenses and profit 4) Shows operating, investing, and financing activities 5) Shows the effect of profit and withdrawals on owner's capital The timeliness principle assumes that an organization's activities can be divided into specific time periods including 1) One month 2) Quarters 3) Fiscal year 4) Calendar year 5) All of these Which of the following statements is incorrect? 1) An adjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 2) Interim financial reports can be based on one-month or three-month accounting periods. 3) The fiscal year is any 12 consecutive months used by a business as its annual accounting period. O 4) Property, plant, and equipment are long term assets. 5) The cash basis of accounting is consistent with GAAP, 1) Entering an asset amount in the Income Statement Debit column. 2) Entering a liability amount in the Income Statement Credit column. 3) Entering an expense amount in the Balance Sheet Debit column. 4) Entering a revenue amount in the Balance Sheet Debit column. 5) Entering a liability amount in the Balance Sheet Credit column. After all appropriate closing entries to the following accounts have been made, what will be the balance in the Jeff Corvette, Capital account? Service fees revenue Various expenses Jeff Corvette, capital Jeff Corvette, withdrawals $140,000 60,000 80,000 15,000 1) $65,000 2) $80,000 3) $130,000 4) $145,000 5) $280.000 Ingh - Attempt 1 wa Mwiny If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Services Revenue, the end- of-period adjusting entry to record the portion of these fees that has been earned is 1) Debit Cash and credit Legal Service Revenue 2) Debit Cash and credit Unearned Legal Service Revenue 3) Debit Unearned Legal Service Revenue and credit Legal Service Revenue 4) Debit Legal Service Revenue and credit Unearned Legal Service Revenue 5) Some other entry Question 17 (1 point) Accounts that are used to describe revenues, expenses, and owner's withdrawals, and are closed at the end of the reporting period, are 01) Financial accounts O2) Temporary accounts O3) Closing accounts 4) Permanent accounts 5) Summary accounts Question 18 (1 point) Which of the following does not require an adjusting entry at year-end? 1) Accrued interest on notes payable 2) Supplies used during the period 3) Cash invested by owner 4) Accrued wages 5) Expired portion of prepaid insurance Under which one of the following situations can a company recognize revenue under Generally Accepted Accounting Principles? 1) A customer signs a contract to purchase goods to be delivered in two weeks. 2) A company completes production of a customer order to be delivered in two weeks. 3) A company ships the goods for which it received a deposit two weeks ago. O 4) A company receives a cash deposit from a customer to deliver goods in two weeks. 5) A company purchased raw materials to complete production of a customer order Question 20 (1 point) The expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called W 1) Accumulated depreciation 2) The cash basis of accounting 3) The matching principle 4) Depreciation 5) Allowance for depreciation Accumulated Depreciation, Equipment, Accounts Receivable, and Service Revenue would be sorted to which respective columns in completing a work sheet? 1) Statement of changes in equity or Balance Sheet-Credit; Statement of changes in equity or Balance Sheet-Debit; and Income Statement-Credit. 2) Statement of changes in equity or Balance Sheet-Debit: Statement of changes in equity or Balance Sheet-Credit; and Income Statement-Credit. 03) Income Statement-Debit; Statement of changes in equity or Balance Sheet- Debit; and Income Statement-Credit. O 4 Income Statement-Debit; Income Statement-Debit; and Statement of changes in equity or Balance Sheet-Credit. Statement of changes in equity or Balance Sheet-Credit: Income Statement- Debit; and Income Statement-Credit. 05) On January 1, 2020, Peach Company purchased a five-year insurance policy for $5,000. If the cost was debited to Prepaid Insurance, the adjusting entry at the end of 2020 is 01) Debit Prepaid Insurance, $1,800; credit Cash, $1,800 O2) Debit Prepaid Insurance, $1,000; credit Insurance Expense, $1,000 3) Debit Prepaid Insurance, $360; credit Insurance Expense, $360 4) Debit Insurance Expense, $360: credit Prepaid Insurance, $360 5) Debit Insurance Expense, $1,000, credit Prepaid Insurance $1,000 Question 23 (1 point) onomic consideration such as An exchange between two parties of economic consideration such as goods, services, money, or rights to collect money is called 1) the accounting equation. 2) bookkeeping. 2 3) a business transaction. 4) an audit. 5) a gift. The Unadjusted Trial Balance columns of the work sheet show the balance in the Office Supplies account at $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns is 1) $325 debit 2) $325 credit 3) $425 debit 4) $750 debit 5) $750 credit Question 25 (1 point) The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner's capital account is the 1) Income Summary account O2) Closing account 3) Balance column account 4) Contra account 5) Temporary account What is double-entry accounting? O 1) An accounting system that disregards the accounting equation, A=L+E 2) An accounting system that records the effects of transactions and other events in at least two accounts with equal debits and credits 3) An accounting system in which each transaction affects and is recorded in two or more accounts with unequal debits and equal credits 4) An accounting system in which the sum of the debit account balances never equals the sum of the credit account balances 5) an accounting system in which errors never occur When closing the Withdrawals account 1) The income summary account should be debited 2) The income summary account should be credited 3) The owners' capital account should be credited 4) The owners' capital account should be debited 5) Liability account should be credited Question 28 (1 point) Source documents 1) do not provide objective evidence about transaction 2) are a source of accounting information. 3) can only be in electronic form 4) are only used for audit purposes 5) are acceptable as a substitute for financial statements Question 29 (1 point) Reversing entries are O 1) Optional 5 2) Linked to accrued assets and liabilities that were created by adjusting at the end of the previous accounting period 3) Used to simplify a company's record keeping 2 4) Dated the first day of the next accounting period 5) All of these 5 Before recording adjusting entries, the Office Supplies account had a $359 debit balance while a physical count of the supplies showed $105 of unused supplies on hand. Thus, the required adjusting entry is W 1) Debit Office Supplies $105 and credit Office Supplies Expense $105 O2) Debit Office Supplies Expense $254 and credit Office Supplies $254 3) Debit Office Supplies Expense $105 and credit Office Supplies $105 4) Debit Office Supplies $254 and credit Office Supplies Expense $254 5) Some other entry The FastForward Company balance sheet shows cash $5,000, accounts receivable $7,000, office equipment $3,000, and accounts payable $4,000. What is the amount of equity? 1) $1,000 2) $11,000 O 3) $12,000 4) $15,000 5) $19.000 Question 32 (1 point) On May 1, 2020. Bee Advertising Company received $2,500 from Julie Cee for advertising services to be completed by April 30, 2021. Assume the receipt was recorded as unearned revenue and that at December 31, 2020, $1,000 of the fees had been earned. The adjusting entry prepared by Bee on December 31, 2020, should include 1) A debit to Unearned Revenue for $500 2) A credit to Unearned Revenue for $500 3) A credit to Revenue for $1,000 4) A debit to Revenue for $1.000 5) A debit to Revenue for $500 Which of the following statements is correct? 1) When an insurance premium is paid in advance, the payment is normally recorded in a liability account called Prepaid Insurance. O2) Goods and services are commonly sold to customers on the basis of oral or implied promises of future payment, called promissory notes. 3) Increases and decreases in cash are always recorded in the equity account. 4) An account called Land is commonly used to record increases and decreases in the land and buildings owned by a business. 5) None of these statements are correct. The Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the year? 1) $2,700 2) $2,900 3) $3,300 4) $3,500 5) $3.700 Question 35 (1 point) A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is 1) recorded as a debit to an unearned revenue account 2) recorded as a debit to a prepaid expense account 3) recorded as a credit to an unearned revenue account 4) recorded as a credit to a prepaid expense account 5) not recorded in the accounting records int) Of the following errors, which one by itself will cause the trial balance to be out of balance? 1) A $200 salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense 2) A $100 receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable A $75 receipt from a customer in payment of his account posted as a 575 debit to Cash and a $75 credit to Cash 4) A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash O 3 5) All of these errors will cause the trial balance to be out of balance Question 37 (1 point) Question 37 (1 point) If Girard Don, the owner of Girard's Software proprietorship, uses cash of the business to purchase a personal computer, the business should record this use of cash with an entry to 1) debit Salary Expense and credit cash. 2) debit Girard Don, Salary and credit cash. 3) debit cash and credit Girard Don, withdrawals 4) debit Girard Don, capital and credit cash 5) debit Girard Don, withdrawals and credit cash Question 38 (1 point) Generally accepted accounting principles are 1) not used in the real world 2) are required to make financial statement information relevant and faithfully represented 3) are only used for internal reporting 04) are only used by auditors 5) are only used for reporting to Canada Revenue Agency Question 39 (1 point) An account the balance of which is subtracted from the balance of a related account so that more complete information than simply the net amount is provided is a(n) 1) Accrued expense 2) Contra account 3) Accrued revenue 4) Prepaid expense 5) Withdrawal The accrual basis of accounting 1) Is generally accepted for external reporting because it gives more useful information O2) is not acceptable because it gives incomplete information about cash flows 3) Recognizes revenues when received 4) Recognizes expenses when paid 5) Eliminates the need for adjusting entries 15 A business 1) is one or more individuals selling products or services for profit 2) can only have one legal form of organization 3) can have adequate financial records without a formal accounting system 4) has to issue shares before it opens 5) is one or more individuals selling products or services for profit and has to issue shares before it open