Question 1

The first step in the accounting cycle is the journalizing of transactions and selected other events.

Accepted Answer

A) True 
 B)False

Question 2

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Accepted Answer

A) True 
 B)False

Question 3

External events do not include

Accepted Answer

A)  interaction between an entity and its environment.
B)  a change in the price of a good or service that an entity buys or sells, a flood or earthquake.
C)  improvement in technology by a competitor.
D)  using buildings and machinery in operations.

Question 4

Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Accepted Answer

A)  debit Rent Revenue and credit Unearned Rent, $4,500.
B)  debit Rent Revenue and credit Unearned Rent, $9,000.
C)  debit Unearned Rent and credit Rent Revenue, $4,500.
D)  debit Cash and credit Unearned Rent, $9,000.

Question 5

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Accepted Answer

A)  Expiration of prepaid insurance
B)  Depreciation of fixed assets
C)  Accrued wages payable
D)  All of these

Question 6

An unearned revenue can best be described as an amount

Accepted Answer

A)  collected and currently matched with expenses.
B)  collected and not currently matched with expenses.
C)  not collected and currently matched with expenses.
D)  not collected and not currently matched with expenses.

Question 7

Allen Corp.'s liability account balances at June 30, 2007 included a 10% note payable in the amount of $2,400,000.The note is dated October 1, 2005 and is payable in three equal annual payments of $800,000 plus interest.The first interest and principal payment was made on October 1, 2006.In Allen's June 30, 2007 balance sheet, what amount should be reported as accrued interest payable for this note?

Accepted Answer

A)  $180,000.
B)  $120,000.
C)  $60,000.
D)  $40,000.

Question 8

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

Accepted Answer

A)  The original cost of the asset
B)  Its useful life
C)  The decline of its fair market value
D)  Both the original cost of the asset and its useful life.

Question 9

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Accepted Answer

A)  Decrease of $71,000.
B)  Decrease of $39,000.
C)  Decrease of $18,000.
D)  Increase of $11,000.

Question 10

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

Accepted Answer

A)  Increase of $40,000.
B)  Increase of $27,000.
C)  Increase of $19,000.
D)  Increase of $6,000.

Question 11

In November and December 2007, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2008 issue.Lane included the entire $90,000 in its 2007 income tax return.What amount should Lane report in its 2007 income statement for subscriptions revenue?

Accepted Answer

A)  $0.
B)  $5,000.
C)  $30,000.
D)  $90,000.

Question 12

Adjustments are often prepared

Accepted Answer

A)  after the balance sheet date, but dated as of the balance sheet date.
B)  after the balance sheet date, and dated after the balance sheet date.
C)  before the balance sheet date, but dated as of the balance sheet date.
D)  before the balance sheet date, and dated after the balance sheet date.

Question 13

A prepaid expense can best be described as an amount

Accepted Answer

A)  paid and currently matched with revenues.
B)  paid and not currently matched with revenues.
C)  not paid and currently matched with revenues.
D)  not paid and not currently matched with revenues.

Question 14

Which of the following would not be a correct form for an adjusting entry?

Accepted Answer

A)  A debit to a revenue and a credit to a liability
B)  A debit to an expense and a credit to a liability
C)  A debit to a liability and a credit to a revenue
D)  A debit to an asset and a credit to a liability

Question 15

An accrued expense can best be described as an amount

Accepted Answer

A)  paid and currently matched with earnings.
B)  paid and not currently matched with earnings.
C)  not paid and not currently matched with earnings.
D)  not paid and currently matched with earnings.

Question 16

Which of the following is a real (permanent)  account?

Accepted Answer

A)  Goodwill
B)  Sales
C)  Accounts Receivable
D)  Both Goodwill and Accounts Receivable

Exam 3: The Accounting Information System

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Correct Answer
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Which of the following would not be a correct form for an adjusting entry?

Correct Answer
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An accrued expense can best be described as an amount

Correct Answer
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Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

Correct Answer
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Correct Answer
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Adjustments are often prepared

Correct Answer
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An unearned revenue can best be described as an amount

Correct Answer
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The first step in the accounting cycle is the journalizing of transactions and selected other events.

Correct Answer
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Which of the following must be considered in estimating depreciation on an asset for an accounting period?

Correct Answer
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Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Correct Answer
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Correct Answer
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External events do not include

Correct Answer
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Which of the following is a real (permanent) account?

Correct Answer
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The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Correct Answer
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Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Correct Answer
verified

A prepaid expense can best be described as an amount

Correct Answer
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Exam 3: The Accounting Information System

Mune Company recorded journal entries for the payment of $50,000 of dividends, the $32,000 increase in accounts receivable for services rendered, and the purchase of equipment for $21,000.What net effect do these entries have on owners' equity?

Correct AnswerverifiedShow Answer

Which of the following would not be a correct form for an adjusting entry?

Correct AnswerverifiedShow Answer

An accrued expense can best be described as an amount

Correct AnswerverifiedShow Answer

Maso Company recorded journal entries for the issuance of common stock for $40,000, the payment of $13,000 on accounts payable, and the payment of salaries expense of $21,000.What net effect do these entries have on owners' equity?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adjustments are often prepared

Correct AnswerverifiedShow Answer

An unearned revenue can best be described as an amount

Correct AnswerverifiedShow Answer

The first step in the accounting cycle is the journalizing of transactions and selected other events.

Correct AnswerverifiedShow Answer

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

Correct AnswerverifiedShow Answer

Year-end net assets would be overstated and current expenses would be understated as a result of failure to record which of the following adjusting entries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

External events do not include

Correct AnswerverifiedShow Answer

Which of the following is a real (permanent) account?

Correct AnswerverifiedShow Answer

The ending retained earnings balance is reported on both the retained earnings statement and the balance sheet.

Correct AnswerverifiedShow Answer

Pappy Corporation received cash of $13,500 on September 1, 2007 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent.The December 31, 2007 adjusting entry is

Correct AnswerverifiedShow Answer

A prepaid expense can best be described as an amount

Correct AnswerverifiedShow Answer

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