Scribd
Upload
188 views

LinkedIn Learning - EXAM

Uploaded by

vakhman
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
188 views

LinkedIn Learning - EXAM

Uploaded by

vakhman
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

LinkedIn Learning - Accounting Foundations

(Understanding the Accounting Cycle and Accrual-Basis


Accounting)
EXAM
1 – Which of these accounts needs to be closed at the end of each period?

ANSWER:
Supplies Expense

2 – Recognizing revenue when the customer pays us is the premise of _____.

ANSWER:
Cash-Basis Accounting

3 – When a customer purchases merchandise on account, you debit _____.

ANSWER:
AR

4 – Company Z sold $250 of merchandise to Customer C on July 19. The customer took
immediate possession and ownership of the merchandise. The terms of the sale were 2/10, net
30. The customer paid for the merchandise on July 15.

When can Company Z record the revenue from this sale?

ANSWER:
July 19

5 – The first financial statement to be prepared is the _____.

ANSWER:
Income Statement

6 – The first financial statement to be prepared is the _____.

ANSWER:
Identify and Analyze transactions
7 – The term "on account" with regarding to incurring an expense simply means the expense
will be _____.

ANSWER:
Paid later than at the point of the sale

8 – Company P purchased supplies for $25 on account on June 16. Those supplies were used in
June to help produce revenue in June even though the supplies were not paid for until July.

In which month should the supplies be expensed?

ANSWER:
June

9 – Your company needed a new delivery truck and, rather than use our case, you decided to
finance the purchase with a note from our financial institution. At the point of the purchase,
what would the journal entry look like?

ANSWER:
Dr – Truck
Cr – Notes Payable

10 – If 2% of credit sales have historically been uncollectable in the past, what is the estimate of
bad debt expense this period given:

credit sales are $12,000


accounts receivable balance is $1,850
allowance for doubtful accounts balance is $375

ANSWER:
2% of $12,000 or $240

11 – Each of the following is an economic event that should be identified, analyzed and then
recorded, except _____.

ANSWER:
A potential customer called to inquire about a product

12 – What is the central purpose of general ledger?

ANSWER:
Keep balance up to date for each account
13 – A deferred revenue account is a __ account.

ANSWER:
Liability

14 – Income taxes must be accrued at year end with a credit to a liability and a debit to __ for
an estimated amount of taxes owed.

ANSWER:
Income Tax Expense

15 – Accrual-basis accounting will impact the balance sheet when an expense is incurred on
account and a _____ is recorded.

ANSWER:
Liability

16 – The indirect method statement of cash flows starts with net income. One of the first
adjustments is for _____.

ANSWER:
Non-Cash transactions like Depreciation

17 – Adjusting entries are needed for both accruals and deferrals. Which of the following is an
example of an accrual?

ANSWER:
Unrecorded sales

18 – What is an example of a prepaid expense?

ANSWER:
Rent Expense

19 – Business decisions that impact the income statement because of accrual-basis accounting
most likely involve:

ANSWER:
Recognition of revenue in sale of product
20 – Company A purchased inventory on February 10 for $100 on account, taking possession
and ownership immediately. Company A paid for the inventory on February 28 and sold it to a
customer on March 22 on account. The customer paid for Company A for the sale on April 10.

Using the accrual-basis of accounting, when should Company A record the purchase of
inventory?

ANSWER:
February 10

You might also like