The accrual basis of accounting

Question 23 options:

1)

Is generally accepted for external reporting because it gives more useful information

2)

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

Question 24 (1 point)

Which of the following errors would cause the balance sheet columns of a work sheet to be out of balance?

Question 24 options:

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.

Question 25 (1 point)

When closing the Withdrawals account

Question 25 options:

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 26 (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)

Question 26 options:

1)

Accrued expense

2)

Contra account

3)

Accrued revenue

4)

Prepaid expense

5)

Withdrawal

Question 27 (1 point)

An exchange between two parties of economic consideration such as goods, services, money, or rights to collect money is called

Question 27 options:

1)

the accounting equation.

2)

bookkeeping.

3)

a business transaction.

4)

an audit.

5)

a gift.

Question 28 (1 point)

Accumulated Depreciation, Equipment, Accounts Receivable, and Service Revenue would be sorted to which respective columns in completing a work sheet?

Question 28 options:

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.

3)

Income Statement-Debit; Statement of changes in equity or Balance Sheet-Debit; and Income Statement-Credit.

4)

Income Statement-Debit; Income Statement-Debit; and Statement of changes in equity or Balance Sheet-Credit.

5)

Statement of changes in equity or Balance Sheet-Credit; Income Statement-Debit; and Income Statement-Credit.

Question 29 (1 point)

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

Question 29 options:

1)

statement of financial position

2)

statement of cash flows

3)

balance sheet

4)

income statement

5)

statement of changes in equity

Question 30 (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

Question 30 options:

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

Question 31 (1 point)

The timeliness principle assumes that an organization's activities can be divided into specific time periods including

Question 31 options:

1)

One month

2)

Quarters

3)

Fiscal year

4)

Calendar year

5)

All of these

Question 32 (1 point)

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

Question 32 options:

1)

Debit Prepaid Insurance, $1,800; credit Cash, $1,800

2)

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 33 (1 point)

For a prepaid expense, the adjusting entry would

Question 33 options:

1)

Result in a debit to an expense account and a credit to an asset account

2)

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

4)

Result in a debit to a liability account and a credit to an asset account

5)

Decrease cash

Question 34 (1 point)

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

Question 34 options:

1)

Debit Office Supplies $105 and credit Office Supplies Expense $105

2)

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

Question 35 (1 point)

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?

Question 35 options:

1)

$1,000

2)

$11,000

3)

$12,000

4)

$15,000

5)

$19,000

Question 36 (1 point)

Generally accepted accounting principles are

Question 36 options:

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

4)

are only used by auditors

5)

are only used for reporting to Canada Revenue Agency

Question 37 (1 point)

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

Question 37 options:

1)

$325 debit

2)

$325 credit

3)

$425 debit

4)

$750 debit

5)

$750 credit

Question 38 (1 point)

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and withdrawals accounts for the upcoming year and to update the owner's capital account for the events of the year just finished are

Question 38 options:

1)

Adjusting entries

2)

Closing entries

3)

Final entries

4)

Work sheet entries

5)

None of these answers is correct.

Question 39 (1 point)

Which of the following statements is incorrect?

Question 39 options:

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.

4)

Property, plant, and equipment are long term assets.

5)

The cash basis of accounting is consistent with GAAP.

Question 40 (1 point)

Source documents

Question 40 options:

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 41 (1 point)

A business

Question 41 options:

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