Question 1

A post-closing trial balance.

Accepted Answer

A)  includes temporary accounts only.
B)  includes permanent accounts only.
C)  includes both temporary and permanent accounts.
D)  may include expenses.

Question 2

Use the following information for questions
The income statement of Carsen Corporation for 2010 included the following items:
 
-The cash paid for salaries during 2010 was

Accepted Answer

A)  $69,700.
B)  $60,300.
C)  $60,800.
D)  $73,900.

Question 3

On June 1, 2010, Mays Corp.loaned Farr $500,000 on a 12% note, payable in five annual instalments of $100,000 beginning January 2, 2011.In connection with this loan, Farr was required to deposit $6,000 in a non-interest-bearing escrow account.The amount held in escrow is to be returned to Farr after all principal and interest payments have been made.Interest on the note is payable on the first day of each month beginning July 1, 2010.Farr made timely payments through November 1, 2010.On January 2, 2011, Mays received payment of the first principal instalment plus all interest due.At December 31, 2010, Mays' interest receivable on the loan to Farr should be

Accepted Answer

A)  $0.
B)  $5,000.
C)  $10,000.
D)  $15,000.

Question 4

Why are certain costs of doing business capitalized when incurred and then amortized over subsequent accounting cycles?

Accepted Answer

A)  To reduce the income tax liability
B)  To aid management in cash-flow analysis
C)  To match the costs of production with revenues as earned
D)  To adhere to the accounting constraint of conservatism

Question 5

Adjusting entries that should be reversed include those for prepaid or unearned items that

Accepted Answer

A)  create an asset or a liability account.
B)  were originally entered in a revenue or expense account.
C)  were originally entered in an asset or liability account.
D)  create an asset or a liability account and were originally entered in a revenue or

Question 6

Some events are not recorded in the accounting information system because

Accepted Answer

A)  the amounts are not material.
B)  the service has not been provided yet although the cash has been received.
C)  the problems measuring them are too complex.
D)  all of these.

Question 7

Which of the following is a nominal (temporary)  account?

Accepted Answer

A)  Unearned Revenue
B)  Salary Expense
C)  Inventory
D)  Retained Earnings

Question 8

Scott Company purchased equipment on November 1, 2010 and gave a 3-month, 9 percent note with a face value of $50,000.The December 31, 2010 adjusting entry is

Accepted Answer

A)  debit Interest Expense and credit Interest Payable, $4,500.
B)  debit Interest Expense and credit Interest Payable, $3,750.
C)  debit Interest Expense and credit Cash, $750.
D)  debit Interest Expense and credit Interest Payable, $750.

Question 9

Which of the following best describes adjustments:

Accepted Answer

A)  adjustments ensure proper matching.
B)  they are used to record external events.
C)  (a)  and (d) .
D)  they are usually prepared at the end of the accounting period.

Question 10

Fischer Consulting paid $18,000 on December 1, 2010 for a three-year insurance policy (December 1, 2010 to November 30, 2013)  and recorded the entire amount as prepaid insurance.The December 31, 2010 adjustment should be recorded as follows:

Accepted Answer

A)  debit prepaid insurance and credit insurance expense $500.
B)  debit insurance expense and credit prepaid insurance $500.
C)  debit insurance expense and credit prepaid insurance $17,500.
D)  debit prepaid insurance and credit insurance expense $17,500.

Question 11

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 12

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

Accepted Answer

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

Question 13

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 14

If the inventory account at the end of the year is understated, the effect will be to

Accepted Answer

A)  overstate the gross profit on sales.
B)  understate the net purchases.
C)  overstate the cost of goods sold.
D)  overstate the goods available for sale.

Exam 3: The Accounting Information System

Some events are not recorded in the accounting information system because

Correct Answer
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Scott Company purchased equipment on November 1, 2010 and gave a 3-month, 9 percent note with a face value of $50,000.The December 31, 2010 adjusting entry is

Correct Answer
verified

Fischer Consulting paid $18,000 on December 1, 2010 for a three-year insurance policy (December 1, 2010 to November 30, 2013) and recorded the entire amount as prepaid insurance.The December 31, 2010 adjustment should be recorded as follows:

Correct Answer
verified

An accrued expense can best be described as an amount

Correct Answer
verified

Correct Answer
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Why are certain costs of doing business capitalized when incurred and then amortized over subsequent accounting cycles?

Correct Answer
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Which of the following best describes adjustments:

Correct Answer
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If the inventory account at the end of the year is understated, the effect will be to

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

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
verified

Which of the following is a nominal (temporary) account?

Correct Answer
verified

Adjusting entries that should be reversed include those for prepaid or unearned items that

Correct Answer
verified

Use the following information for questions The income statement of Carsen Corporation for 2010 included the following items: -The cash paid for salaries during 2010 was

Correct Answer
verified

A post-closing trial balance.

Correct Answer
verified

Exam 3: The Accounting Information System

Some events are not recorded in the accounting information system because

Correct AnswerverifiedShow Answer

Scott Company purchased equipment on November 1, 2010 and gave a 3-month, 9 percent note with a face value of $50,000.The December 31, 2010 adjusting entry is

Correct AnswerverifiedShow Answer

Fischer Consulting paid $18,000 on December 1, 2010 for a three-year insurance policy (December 1, 2010 to November 30, 2013) and recorded the entire amount as prepaid insurance.The December 31, 2010 adjustment should be recorded as follows:

Correct AnswerverifiedShow Answer

An accrued expense can best be described as an amount

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Why are certain costs of doing business capitalized when incurred and then amortized over subsequent accounting cycles?

Correct AnswerverifiedShow Answer

Which of the following best describes adjustments:

Correct AnswerverifiedShow Answer

If the inventory account at the end of the year is understated, the effect will be to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a nominal (temporary) account?

Correct AnswerverifiedShow Answer

Adjusting entries that should be reversed include those for prepaid or unearned items that

Correct AnswerverifiedShow Answer

Use the following information for questions The income statement of Carsen Corporation for 2010 included the following items: -The cash paid for salaries during 2010 was

Correct AnswerverifiedShow Answer

A post-closing trial balance.

Correct AnswerverifiedShow Answer

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