Question 1

If a company is paid in full for services provided this month,how will the basic accounting equation be affected?

Accepted Answer

A)  Liabilities will decrease.
B)  Stockholders' equity will increase as revenue is recorded.
C)  Liabilities will increase.
D)  Assets will decrease.E) A) and C)
F) None of the above

Question 2

Revenues

Accepted Answer

A)  decrease assets.
B)  increase stockholders' equity.
C)  increase liabilities.
D)  decrease expenses.E) A) and B)
F) A) and C)

Question 3

Which of the following errors would most likely lead to an overstatement of net income in the current year?

Accepted Answer

A)  Recording revenue when the cash is collected next year although it is earned in the current year.
B)  Recording an expense when paid next year although it is incurred this year.
C)  Failing to adjust the Unearned Rent Revenue account for the portion of rent earned this year.
D)  Recording revenue earned in the current year when cash is collected this year.E) A) and B)
F) B) and C)

Question 4

Which of the following is not true about the unadjusted trial balance?

Accepted Answer

A)  An unadjusted trial balance may only include a preliminary amount for income tax expense.
B)  An unadjusted trial balance might balance even if there is a mistake.
C)  An unadjusted trial balance does not yet include end-of-the-accounting period adjustments.
D)  An unadjusted trial balance is part of the financial statements issued to external decision makers.E) C) and D)
F) A) and B)

Question 5

Unearned Revenue is reported on the Balance Sheet as a liability.

Accepted Answer

A) True 
 B)False

Question 6

Which account is least likely to be credited when an expense is recorded?

Accepted Answer

A)  Cash.
B)  Accounts Payable.
C)  Prepaid Expenses.
D)  Accounts Receivable.E) B) and C)
F) A) and D)

Question 7

Which of the following accounts has a normal credit balance?

Accepted Answer

A)  Cash
B)  Notes receivable
C)  Wage expense
D)  Unearned revenueE) B) and C)
F) All of the above

Question 8

The period of time from buying goods and services to collecting cash from customers is called the accounting cycle.

Accepted Answer

A) True 
 B)False

Question 9

A customer purchased $1,500 of services on credit two months ago and has just paid the bill.The receipt of the payment from the customer is recorded as a

Accepted Answer

A)  debit to Cash and a credit to Accounts Receivable.
B)  debit to Cash and a credit to Accounts Payable.
C)  debit to Cash and a credit to Revenue.
D)  debit to Purchases and a credit to Cash.E) A) and B)
F) A) and C)

Question 10

During June,the Grass is Greener Company mows 100 lawns a week;the company was paid in advance during May by those customers.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Accepted Answer

A)  The income statement shows the effects of the transactions in May.
B)  The income statement shows the effects of the transactions in June.
C)  The balance sheet shows no effect from the transactions in May.
D)  The transactions have no effect on the balance sheet.E) B) and D)
F) A) and D)

Question 11

Which of the following journal entries would decrease stockholders' equity?

Accepted Answer

A)  Debiting Prepaid Insurance and crediting Cash.
B)  Debiting Unearned Revenue and crediting Revenue.
C)  Debiting Supplies and crediting Accounts Payable.
D)  Debiting Insurance Expense and crediting Cash.E) A) and B)
F) A) and C)

Question 12

Indicate whether a debit (dr)or credit (cr)would be used to increase each of the following accounts.
_____ prepaid expenses.
_____ rental revenue.
_____ salaries and wages expense.
_____ service revenue.
_____ property and equipment.
_____ wages expense.
_____ retained earnings.
_____ supplies expense.

Accepted Answer

dr,cr,dr,c...

Question 13

At September 30,Balance Corporation reported the following unadjusted amounts for its accounts,each of which is considered to be a "normal" balance.That is,an account that normally has a debit balance actually does have a debit balance.Prepare an unadjusted trial balance.

Accepted Answer

The answer of At September 30,Balance Corporation reported the following...

Question 14

In January,the Huntington Beach Resort (HBR) accepts your reservation and receives your $2,000 payment for a week of sun and fun in California during spring break.The $2,000 would be recorded by HBR during January as a:

Accepted Answer

A)  debit to Cash and a credit to Unearned Revenue.
B)  debit to Accounts Payable and a credit to Service Revenue.
C)  debit to Cash and a credit to Service Revenue.
D)  debit to Service Revenue and a credit to Cash.E) None of the above
F) B) and C)

Question 15

Which of the following is the correct sequence of steps in the accounting cycle?

Accepted Answer

A)  Journal entries,T-accounts,financial statements,unadjusted trial balance.
B)  T-account,journal entries,unadjusted trial balance,financial statements.
C)  Journal entries,T-accounts,unadjusted trial balance,financial statements.
D)  Financial statements,journal entries,T-accounts,unadjusted trial balance.E) B) and D)
F) C) and D)

Question 16

In January,the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March.The $32,000 would be recorded during January as a:

Accepted Answer

A)  debit to Cash and a credit to Unearned Revenue.
B)  debit to Accounts Payable and a credit to Service Revenue.
C)  debit to Accounts Receivable and a credit to Service Revenue.
D)  debit to Prepaid Expenses and a credit to Service Revenue.E) B) and C)
F) A) and B)

Question 17

The unadjusted trial balance:

Accepted Answer

A)  is a preliminary financial statement for external and internal users.
B)  generally lists account names in alphabetical order.
C)  is created to determine that total debits equal total credits.
D)  indicates whether or not errors were made in recording transactions.E) A) and D)
F) A) and C)

Question 18

Net Income refers to:

Accepted Answer

A)  The difference between what was earned and the costs incurred during a period.
B)  The difference between the cash received and the cash paid out during a period.
C)  The difference between what is owned and what is owed at a point in time.
D)  The change in the value of the company during a period.E) A) and B)
F) B) and D)

Question 19

What is the total of the debit side of the unadjusted trial balance?

Accepted Answer

A)  $22,000
B)  $17,350
C)  $16,500
D)  $13,500E) B) and D)
F) A) and D)

Question 20

Which of the following statements is TRUE about the activities for Maverick Law Firm for 2013?

Accepted Answer

A)  If Accounts receivable prior to February 1,2013 was $25,000,the amount of Accounts Receivable to be reported on the Balance Sheet at December 31,2013 will be $24,000.
B)  The $2,000 received from clients for law services to be performed next year will be reported as revenue on the Income Statement this year since cash was received.
C)  The $4,000 billed to clients for services rendered this year and unpaid as of December 31 will be reported on the Balance Sheet at December 31 as Accounts Payable.
D)  The $5,000 received this year from clients in payment of their accounts will be reported on the Income Statement of 2013 as Revenue.E) None of the above
F) C) and D)

Exam 3: The Income Statement

Net Income refers to:

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In January,the Caribbean Dream Resort books and accepts a cash payment for $32,000 for vacation services to be provided during spring break in March.The $32,000 would be recorded during January as a:

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Which account is least likely to be credited when an expense is recorded?

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Unearned Revenue is reported on the Balance Sheet as a liability.

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Correct Answerverifieddr,cr,dr,c...View AnswerShow Answer

The unadjusted trial balance:

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A customer purchased $1,500 of services on credit two months ago and has just paid the bill.The receipt of the payment from the customer is recorded as a

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Which of the following is not true about the unadjusted trial balance?

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Which of the following errors would most likely lead to an overstatement of net income in the current year?

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Which of the following journal entries would decrease stockholders' equity?

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Which of the following is the correct sequence of steps in the accounting cycle?

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At September 30,Balance Corporation reported the following unadjusted amounts for its accounts,each of which is considered to be a "normal" balance.That is,an account that normally has a debit balance actually does have a debit balance.Prepare an unadjusted trial balance.

Correct AnswerverifiedShow Answer

During June,the Grass is Greener Company mows 100 lawns a week;the company was paid in advance during May by those customers.The company uses the accrual basis of accounting.How will these events affect the company's financial statements?

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE about the activities for Maverick Law Firm for 2013?

Correct AnswerverifiedShow Answer

The period of time from buying goods and services to collecting cash from customers is called the accounting cycle.

Correct AnswerverifiedShow Answer

If a company is paid in full for services provided this month,how will the basic accounting equation be affected?

Correct AnswerverifiedShow Answer

Which of the following accounts has a normal credit balance?

Correct AnswerverifiedShow Answer

What is the total of the debit side of the unadjusted trial balance?

Correct AnswerverifiedShow Answer

In January,the Huntington Beach Resort (HBR) accepts your reservation and receives your $2,000 payment for a week of sun and fun in California during spring break.The $2,000 would be recorded by HBR during January as a:

Correct AnswerverifiedShow Answer

Revenues

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dr,cr,dr,c...
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