Financial & Managerial Accounting 13th Edition Carl Warren James M Reeve Jonathan Duchac-Test Bank
To Purchase this Complete Test Bank with Answers Click the link Below
If face any problem or
Further information contact us At tbzuiqe@gmail.com
Sample Test
FinMan_Chapter_03_The_Adjusting_Process
1.
2. Even
though GAAP requires the accrual basis of accounting, some businesses prefer
using the cash basis of accounting.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
3. Generally
accepted accounting principles require accrual-basis accounting.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
4. The
revenue recognition concept states that revenue should be recorded in the same
period as the cash is received.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
5. The
system of accounting where revenues are recorded when they are earned and
expenses are recorded when they are incurred is called the cash basis of
accounting.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
6. The
matching concept requires expenses be recorded in the same period that the
related revenue is recorded.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
7. For
most large businesses, the cash basis of accounting will provide accurate
financial statements for user needs.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
8. An
example of deferred revenue is Unearned Rent.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.04
– Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
9. Accruals
are needed when an unrecorded expense has been incurred or an unrecorded
revenue has been earned.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
10.
If the debit portion of an adjusting entry is to an asset
account, then the credit portion must be to a liability account.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
11.
Reporting of revenues and expenses in the proper period is due
to the accounting period concept.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
12.
The revenue recognition concept requires that the reporting of
revenue be included in the period when cash for the service is received.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
13.
Revenues and expenses should be recorded in the same period to
which they relate.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04
– Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
14.
The matching concept supports matching expenses with the related
revenues.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02
– GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
15.
The updating of accounts is called the adjusting process.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
16.
Adjusting entries affect balance sheet accounts at the exclusion
of income statement accounts.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
17.
Adjusting entries affect only expense and asset accounts.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
18.
An adjusting entry would adjust revenue so it is reported when
earned and not when cash is received.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
19.
An adjusting entry would adjust an expense account so the
expense is reported when incurred.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
20.
An adjusting entry to accrue an incurred expense will affect
total liabilities.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
21.
The difference between deferred revenue and accrued revenue is
that accrued revenue has been recorded and needsadjusting and deferred revenue
has never been recorded.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
22.
Deferrals are recorded transactions that delay the recognition
of an expense or revenue.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
23.
Adjustments for accruals are needed to record a revenue that has
been earned or an expense that has been incurred but not recorded.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
24.
Unearned revenue is a liability.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04
– Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
25.
The systematic allocation of land’s cost to expense is called
depreciation.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.13
– Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
26.
The difference between the balance of a fixed asset account and
the balance of its related accumulated depreciation account is termed the
book value of the asset.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 – Long-term Assets Reporting
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
27.
The balance in the accumulated depreciation account is the sum
of the depreciation expense recorded in past periods.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 – Long-term Assets Reporting
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
28.
Accumulated depreciation accounts are liability accounts.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 – Long-term Assets Reporting
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
29.
Accumulated depreciation is reported on the income statement.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
30.
A contra asset account for Land will normally appear on the
balance sheet.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.13
– Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
31.
Depreciation Expense is reported on the balance sheet as an
addition to the related asset.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
32.
A company pays $36,000 for twelve months’ rent on October 1,
recording the prepayment as an asset.The adjusting entry on December 31 is a
debit to Rent Expense, $9,000, and a credit to Prepaid Rent, $9,000.
1. True
2. False
ANSWER:
True
RATIONALE:
Rent expense per month = $36,000 / 12 = $3,000
Rent expense from October 1 to December 31 = $3,000 × 3 =
$9,000
Debit
Credit
December 31 Rent
Expense
9,000
Prepaid Rent
9,000
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
33.
A company receives $360 for a 12-month trade magazine
subscription on August 1.The adjusting entry on December 31 is a debit to
Unearned Subscription Revenue, $150, and a credit to Subscription Revenue,
$150.
1. True
2. False
ANSWER:
True
RATIONALE:
Unearned subscription revenue per month = $360 / 12 = $30
Subscription revenue from August 1 to December 31 = $30 × 5 =
$150
Debit
Credit
December 31 Unearned Subscription
Revenue 150
Subscription
Revenue
150
DIFFICULTY:
Challenging
Bloom’s: Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
34.
A company depreciates its equipment $500 a year.The adjusting
entry on December 31 is a debit to Depreciation Expense, $500, and a credit to
Equipment, $500.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
35.
A company pays an employee $3,000 for a five-day work week,
Monday–Friday.The adjusting entry on December 31, which is a Wednesday, is a
debit to Wages Expense, $1,800, and a credit to Wages Payable, $1,800.
1. True
2. False
ANSWER:
True
RATIONALE:
Wages expense per day = $3,000 / 5 = $600
Wages
expense for 3 days = $600 × 3 = $1,800
Debit
Credit
December 31 Wages
Expense
1,800
Wages
Payable
1,800
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
36.
A company receives $6,500 for two season tickets sold on
September 1.If $2,500 is earned by December 31, the adjusting entry made at
that time is a debit to Cash, $2,500, and a credit to Ticket Revenue, $2,500.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
37.
A company realizes that the last two days’ revenue for the month
was billed but not recorded.The adjusting entry on December 31 is a debit to
Accounts Receivable and a credit to Fees Earned.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
38.
At year-end, the balance in the prepaid insurance account, prior
to any adjustments, is $6,000.The amount of the journal entry required to
record insurance expense will be $4,000 if the amount of unexpired insurance
applicable to future periods is $2,000.
1. True
2. False
ANSWER:
True
RATIONALE:
Insurance expense = Balance in the prepaid insurance account, prior to any
adjustments
– Amount of unexpired insurance applicable to future periods
= $6,000 – $2,000 = $4,000
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.15
– Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
39.
A fixed asset’s market value is reflected on the balance sheet.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.13
– Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
40.
If the adjustment for accrued salaries at the end of the period
is inadvertently omitted, both liabilities and stockholders’ equity will be
understated for the period.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
41.
If the adjustment to recognize expired insurance at the end of
the period is inadvertently omitted, the assets at the end of the period will
be understated.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
42.
If the adjustment of the unearned rent account at the end of the
period to recognize the amount of rent earned is inadvertently omitted, the net
income for the period will be understated.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
43.
If the adjustment for depreciation for the year is inadvertently
omitted, the assets on the balance sheet at the end of the period will be
understated.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
44.
Adjusting journal entries are dated on the last day of the
period.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
45.
By ignoring and not posting the adjusting journal entries to the
appropriate accounts, net income will always be overstated.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-03 – LO: 03-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
46.
The financial statements are prepared from the unadjusted trial
balance.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-06 – LO: 03-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
47.
The adjustment for accrued fees was debited to Accounts Payable
instead of Accounts Receivable.This error will be detected when the adjusted
trial balance is prepared.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-06 – LO: 03-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
48.
The adjusted trial balance verifies that total debits equals
total credits before the adjusting entries are prepared.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-06 – LO: 03-06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
49.
Vertical analysis compares each item in a financial statement
with a total amount from the same statement.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-05 – LO: 03-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.23
– Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
50.
When preparing an income statement using vertical analysis, each
revenue and expense is expressed as a percent of net income.
1. True
2. False
ANSWER:
False
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-05 – LO: 03-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.23
– Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
51.
Vertical analysis is useful for analyzing financial statement
changes over time.
1. True
2. False
ANSWER:
True
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-05 – LO: 03-05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.ACBSP.APC.23
– Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
52.
The revenue recognition concept
1. is
not in conflict with the cash method of accounting
2. determines
when revenue is credited to a revenue account
3. states
that revenue is not recorded until the cash is received
4. controls
all revenue reporting for the cash basis of accounting
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
53.
The matching concept
1. addresses
the relationship between the journal and the balance sheet
2. determines
whether the normal balance of an account is a debit or credit
3. requires
that the dollar amount of debits equal the dollar amount of credits on a trial
balance
4. states
that the revenues and related expenses should be reported in the same period
ANSWER:
d
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
54.
Using accrual accounting, revenue is recorded and reported only
1. when
cash is received without regard to when the services are rendered
2. when
the services are rendered without regard to when cash is received
3. when
cash is received at the time services are rendered
4. if
cash is received after the services are rendered
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
55.
Using accrual accounting, expenses are recorded and reported
only
1. when
they are incurred, whether or not cash is paid
2. when
they are incurred and paid at the same time
3. if
they are paid before they are incurred
4. if
they are paid after they are incurred
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
56.
The accounting concept upon which deferrals and accruals are
based is
1. matching
2. cost
3. price-level
adjustment
4. conservatism
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.ACBSP.APC.04
– Cash vs. Accrual
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
57.
If the effect of the debit portion of an adjusting entry is to
increase the balance of an expense account, which of the following describes
the effect of the credit portion of the entry?
1. decreases
the balance of an stockholders’ equity account
2. increases
the balance of a liability account
3. increases
the balance of an asset account
4. decreases
the balance of an expense account
ANSWER:
b
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
58.
If the effect of the credit portion of an adjusting entry is to
increase the balance of a liability account, which of the following describes
the effect of the debit portion of the entry?
1. increases
the balance of a contra asset account
2. increases
the balance of an asset account
3. decreases
the balance of an stockholders’ equity account
4. increases
the balance of an expense account
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
59.
Prior to the adjusting process, accrued expenses have
1. not
yet been incurred, paid, or recorded
2. been
incurred, not paid, but have been recorded
3. been
incurred, not paid, and not recorded
4. been
paid but have not yet been incurred
ANSWER:
c
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
60.
Prior to the adjusting process, accrued revenue has
1. been
earned and cash received
2. been
earned and not recorded as revenue
3. not
been earned but recorded as revenue
4. not
been recorded as revenue but cash has been received
ANSWER:
b
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
61.
Deferred expenses have
1. not
yet been recorded as expenses but have been paid
2. been
recorded as expenses and paid
3. been
incurred and paid
4. not
yet been recorded as expenses
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.16
– Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
62.
Deferred revenue is revenue that is
1. earned
and the cash has been received
2. earned
but the cash has not been received
3. not
earned and the cash has not been received
4. not
earned but the cash has been received
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.15
– Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
63.
Adjusting entries are
1. the
same as correcting entries
2. needed
to bring accounts up to date and match revenue and expense
3. optional
under generally accepted accounting principles
4. rarely
needed in large companies
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
64.
Adjusting entries affect at least one
1. income
statement account and one balance sheet account
2. revenue
and the dividends account
3. asset
and one stockholders’ equity account
4. revenue
and one stockholders’ equity account
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
65.
The term used to describe an expense that has not been paid and
has not yet been recognized in the accounts by a routine entry is
1. prepaid
2. deferred
3. accrued
4. matched
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.ACBSP.APC.16
– Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
66.
Which of the following is not a
characteristic of the accrual basis of accounting?
1. revenues
and expenses are reported in the period in which cash is received or paid
2. revenues
are reported on the income statement in the period in which they are earned
3. accrual
basis of accounting supports the matching concept
4. expenses
are reported in the same period as the revenues to which they relate
ANSWER:
a
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
67.
Generally accepted accounting principles require that companies
use the ____ of accounting.
1. cash
basis
2. deferral
basis
3. accrual
basis
4. account
basis
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
68.
The cash basis of accounting records revenues and expenses when
the cash is exchanged while the accrual basis of accounting
1. records
revenues when they are earned and expenses when they are paid
2. records
revenues and expenses when they are incurred
3. records
revenues when cash is received and expenses when they are incurred
4. records
revenues and expenses when the company needs to apply for a loan
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
69.
By matching revenues and expenses in the same period in which
they are incurred
1. net
income or loss will always be underestimated
2. net
income or loss will always be overestimated
3. net
income or loss will be properly reported on the income statement
4. net income
or loss will not be determined
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
70.
Adjusting entries always include
1. only
income statement accounts
2. only
balance sheet accounts
3. the
cash account
4. at
least one income statement account and one balance sheet account
ANSWER:
d
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
71.
Prepaid expenses are eventually expected to become
1. expenses
when their future economic value expires
2. revenues
when services are performed
3. expenses
in the period when they are paid
4. revenues
when the liability is no longer owed
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.13
– Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
72.
Which of the following is considered to be unearned revenue?
1. theater
tickets sold last month for yesterday’s performance
2. theater
tickets sold yesterday on credit for yesterday’s performance
3. theater
tickets that were not sold for the current performance
4. theater
tickets sold for next month’s performance
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.16
– Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
73.
Which of the following is an example of accrued revenue?
1. snow
removal services that have been paid for three months in advance
2. snow
removal services that have been provided but have not been billed or paid
3. an
agreement that has been signed for snow removal services for the next three
months
4. snow
removal services that has been provided and paid on the same day
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.15
– Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
74.
Which of the following is considered to be an accrued expense?
1. a
computer technician has installed the latest software updates and was paid on
the same day
2. a computer
technician has been paid in advance to install software updates as they become
available
3. a
computer technician has just signed an agreement with you regarding pricing for
future work
4. a
computer technician has installed the latest software updates, but you have not
received an invoice or made payment
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.16
– Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
75.
Which one of the accounts below would likely be included in an
accrual adjusting entry?
1. Insurance
Expense
2. Prepaid
Rent
3. Interest
Expense
4. Unearned
Rent
ANSWER:
c
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
FNMN.WARD.16.03-02
– LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
76.
Which of the following accounts would likely be included in a
deferral adjusting entry?
1. Interest
Revenue
2. Unearned
Revenue
3. Salaries
Payable
4. Accounts
Receivable
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
FNMN.WARD.16.03-02
– LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
77.
If there is a balance in the prepaid rent account after
adjusting entries are made, it represents a(n)
1. deferral
2. accrual
3. revenue
4. liability
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
78.
If there is a balance in the unearned subscriptions account
after adjusting entries are made, it represents a(n)
1. deferral
2. accrual
3. dividend
4. revenue
ANSWER:
a
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.07
– Adjusting Entries
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
79.
The unexpired insurance at the end of the fiscal period
represents
1. an
accrued asset
2. an accrued
liability
3. an
accrued expense
4. a
deferred expense
ANSWER:
d
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.09
– Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
80.
The general term used to indicate delaying the recognition of an
expense already paid or of a revenue already received is
1. depreciation
2. deferral
3. accrual
4. inventory
ANSWER:
b
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-01 – LO: 03-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.04 – Cash vs. Accrual
ACCT.ACBSP.APC.16
– Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
81.
Which account would normally not require
an adjusting entry?
1. Wages
Expense
2. Accounts
Receivable
3. Accumulated
Depreciation
4. Cash
ANSWER:
d
DIFFICULTY:
Challenging
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
82.
The balance in the prepaid rent account before adjustment at the
end of the year is $32,000, which represents four months’ rent paid on December
1.The adjusting entry required on December 31 is
1. debit
Rent Expense, $8,000; credit Prepaid Rent, $8,000
2. debit
Prepaid Rent, $24,000; credit Rent Expense, $8,000
3. debit
Rent Expense, $24,000; credit Prepaid Rent, $8,000
4. debit
Prepaid Rent, $8,000; credit Rent Expense, $8,000
ANSWER:
a
RATIONALE:
Rent expense per month = $32,000 / 4 = $8,000
Debit
Credit
December 31 Rent
Expense
8,000
Prepaid
Rent
8,000
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
–Measurement
BUSPROG: Analytic
83.
The balance in the office supplies account on January 1 was
$7,000, supplies purchased during January were $3,000, and the supplies on hand
at January 31 were $2,000.The amount to be used for the appropriate adjusting
entry is
1. $4,300
2. $12,000
3. $5,000
4. $8,000
ANSWER:
d
RATIONALE:
Amount to be used for the appropriate adjusting entry = Balance in the office
supplies
account on January 1 + Supplies purchased during January – Supplies on
hand at January 31 = $7,000 + $3,000 – $2,000 = $8,000
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
84.
Which of the following is the proper adjusting entry, based on a
prepaid insurance account balance before adjustment of $14,000 and unexpired
insurance of $3,000, for the fiscal year ending on April 30?
1. debit
Insurance Expense, $3,000; credit Prepaid Insurance, $3,000
2. debit
Insurance Expense, $14,000; credit Prepaid Insurance, $14,000
3. debit
Prepaid Insurance, $11,000; credit Insurance Expense, $11,000
4. debit
Insurance Expense, $11,000; credit Prepaid Insurance, $11,000
ANSWER:
d
RATIONALE:
Insurance expense = Prepaid insurance account balance before adjustment –
Unexpired
insurance = $14,000 – $3,000 = $11,000
Debit
Credit
April 30
Insurance
Expense
11,000
Prepaid
Insurance
11,000
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
85.
The entry to adjust for the cost of supplies used during the
accounting period is
1. debit
Supplies Expense; credit Supplies
2. debit
Stockholders’ Equity; credit Supplies
3. debit
Accounts Payable; credit Supplies
4. debit
Supplies; credit Stockholders’ Equity
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
86.
Buster Industries pays weekly salaries of $30,000 on Friday for
a five-day week ending on that day.The adjusting entry necessary at the end of
the fiscal period ending on Tuesday is
1. debit
Salaries Payable, $12,000; credit Cash, $12,000
2. debit
Salary Expense, $12,000; credit Dividends, $12,000
3. debit
Salary Expense, $12,000; credit Salaries Payable, $12,000
4. debit
Dividends, $12,000; credit Cash, $12,000
ANSWER:
c
RATIONALE:
Salary expense per day = $30,000 / 5 = $6,000
Salary expense for 2 days = $6,000 × 2 = $12,000
Debit
Credit
Salary
Expense
12,000
Salaries
Payable
12,000
DIFFICULTY:
Bloom’s: Remembering
Challenging
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
87.
The difference between the balance of a fixed asset account and
the related accumulated depreciation account is termed
1. historical
cost
2. contra
asset
3. book
value
4. market
value
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 – Long-term Assets Reporting
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
88.
The adjusting entry to record the depreciation of a building for
the fiscal period is
1. debit
Depreciation Expense; credit Building.
2. debit
Depreciation Expense; credit Accumulated Depreciation.
3. debit
Accumulated Depreciation; credit Depreciation Expense.
4. debit
Building; credit Depreciation Expense.
ANSWER:
b
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
89.
As time passes, fixed assets other than land lose their capacity
to provide useful services.To account for this decrease in usefulness, the cost
of fixed assets is systematically allocated to expense through a process called
1. equipment
allocation
2. depreciation
3. accumulation
4. matching
ANSWER:
b
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.13
– Long-term Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
90.
The entry to adjust the accounts for salaries accrued at
the end of the accounting period is
1. debit
Salaries Payable; credit Cash
2. debit
Cash; credit Salaries Payable
3. debit
Salaries Payable; credit Salaries Expense
4. debit
Salaries Expense; credit Salaries Payable
ANSWER:
d
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
91.
The supplies account had a balance of $4,400 at the beginning of
the year and was debited during the year for $2,400, representing the total of
supplies purchased during the year.If $400 of supplies are on hand at the end
of the year, the supplies expense to be reported on the income statement for
the year is
1. $400
2. $2,000
3. $6,800
4. $6,400
ANSWER:
d
RATIONALE:
Supplies expense to be reported on the income statement for the year = Balance
of
supplies account at the beginning of the year + Supplies purchased during the
year + Supplies on hand at the end of the year = $4,400 + $2,400
– $400
= $6,400
DIFFICULTY:
Moderate
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.09
– Financial Statements
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
92.
Smokey Company purchases a one-year insurance policy on July 1
for $3,600.The adjusting entry on December 31 is
1. debit
Insurance Expense, $1,800; credit Prepaid Insurance, $1,800
2. debit
Insurance Expense, $1,500; credit Prepaid Insurance, $1,500
3. debit
Insurance Expense, $2,100; credit Prepaid Insurance, $2,100
4. debit
Prepaid Insurance, $1,800; credit Cash, $1,800
ANSWER:
a
RATIONALE:
Insurance expense per month = $3600 / 12 = $300
Insurance expense from July 1 to December 31 = $300 × 6 = $1,800
Debit
Credit
December 31 Insurance
Expense
1,800
Prepaid
Insurance
1,800
DIFFICULTY:
Challenging
Bloom’s:
Applying
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
93.
Gracie, Inc. made a prepaid rent payment of $2,800 on January
1.The company’s monthly rent is $700.The amount of prepaid rent that would
appear on the January 31 balance sheet after adjustment is
1. $2,100
2. $700
3. $2,800
4. $1,400
ANSWER:
a
RATIONALE:
Amount of prepaid rent that would appear on the January 31 balance sheet after
adjustment
= Prepaid rent payment on January 1 – Rent for January
= $2,800 – $700 = $2,100
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.ACBSP.APC.15
– Current Assets Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
94.
Accumulated Depreciation and Depreciation Expense are
classified, respectively, as
1. expense,
contra asset
2. asset,
contra liability
3. revenue,
asset
4. contra
asset, expense
ANSWER:
d
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
95.
The type of account and normal balance of Prepaid Insurance is
1. asset,
credit
2. asset,
debit
3. contra
asset, credit
4. contra
asset, debit
ANSWER:
b
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
96.
The type of account and normal balance of Unearned Consulting
Fees is
1. revenue,
credit
2. expense,
debit
3. liability,
credit
4. liability,
debit
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.09 – Financial Statements
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
97.
Data for an adjusting entry described as “accrued wages, $2,020”
requires a
1. debit
to Wages Expense and a credit to Wages Payable
2. debit
to Wages Payable and a credit to Wages Expense
3. debit
to Accounts Receivable and a credit to Wages Expense
4. debit
to Dividends and a credit to Wages Payable
ANSWER:
a
DIFFICULTY:
Moderate
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
98.
Supplies are recorded as assets when purchased. Therefore, the
credit to Supplies in the adjusting entry is for the amount of supplies
1. still
on hand
2. purchased
3. used
4. required
for the next accounting period
ANSWER:
c
DIFFICULTY:
Easy
Bloom’s:
Remembering
LEARNING OBJECTIVES:
FNMN.WARD.16.03-02 – LO: 03-02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.07 – Adjusting Entries
ACCT.AICPA.FN.03
– Measurement
BUSPROG: Analytic
Comments
Post a Comment