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Accounting 3

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Hiền Minh
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12 views

Accounting 3

Uploaded by

Hiền Minh
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. (LO 1) The revenue recognition principle states that: b.

revenues are recorded in the period in which services


are performed.
a. revenue should be recognized in the accounting period
in which a performance obligation is satisfied. c. balance sheet and income statement accounts have
correct balances at the end of an accounting period.
b. expenses should be matched with revenues.
d. All the responses above are correct.
c. the economic life of a business can be divided into
artificial time periods. 6. (LO 1) Each of the following is a major type (or
category) of adjusting entries except:
d. the fiscal year should correspond with the calendar
year. a. prepaid expenses. c. accrued expenses.

2. (LO 1) The time period assumption states that: b. accrued revenues. d. recognized revenues.

a. companies must wait until the calendar year is 7. (LO 2) The trial balance shows Supplies $1,350 and
completed to prepare financial statements. Supplies Expense $0. If $600 of supplies are on hand at
the end of the period, the adjusting entry is:
b. companies use the fiscal year to report financial
information.

c. the economic life of a business can be divided into


artificial time periods.

d. companies record information in the time period in


which the events occur.

3. (LO 1) Which of the following statements about the


accrual basis of accounting is false? 8. (LO 2) Adjustments for prepaid expenses:
a. Events that change a company’s financial statements a. decrease assets and increase revenues.
are recorded in the periods in which the events occur.
b. decrease expenses and increase assets.
b. Revenue is recognized in the period in which services
are performed. c. decrease assets and increase expenses.

c. This basis is in accordance with generally accepted d. decrease revenues and increase assets.
accounting principles. 9. (LO 2) Accumulated Depreciation is:
d. Revenue is recorded only when cash is received, and a. a contra asset account. c. an owner’s equity account.
expense is recorded only when cash is paid.
b. an expense account. d. a liability account.
4. (LO 1) The principle or assumption dictating that eff
orts (expenses) should be recognized in the period in 10. (LO 2) Rivera Company computes depreciation on
which a company consumes assets or incurs liabilities to delivery equipment at $1,000 for the month of June. The
generate revenue is the: adjusting entry to record this depreciation is as follows.

a. expense recognition principle.

b. cost assumption.

c. time period assumption.

d. revenue recognition principle.

5. (LO 1) Adjusting entries are made to ensure that:

a. expenses are recognized in the period in which they


are incurred.
d. The adjusted trial balance is prepared after the
adjusting entries have been journalized and posted.

*15. (LO 5) The trial balance shows Supplies $0 and


Supplies Expense $1,500. If $800 of supplies are on
hand at the end of the period, the adjusting entry is:

a. debit Supplies $800 and credit Supplies Expense


$800.

b. debit Supplies Expense $800 and credit Supplies


$800.
11. (LO 2) Adjustments for unearned revenues:
c. debit Supplies $700 and credit Supplies Expense
a. decrease liabilities and increase revenues.
$700.
b. have an assets-and-revenues-account relationship.
d. debit Supplies Expense $700 and credit Supplies
c. increase assets and increase revenues. $700.
d. decrease revenues and decrease assets. *16. (LO 6) Neutrality is an ingredient of:
12. (LO 3) Adjustments for accrued revenues:

a. have a liabilities-and-revenues-account relationship.

b. have an assets-and-revenues-account relationship.

c. decrease assets and revenues.

d. decrease liabilities and increase revenues. *17. (LO 6) Which item is a constraint in financial
accounting?
13. (LO 3) Anika Wilson earned a salary of $400 for the
last week of September. She will be paid on October 1. a. Comparability. c. Cost.
The adjusting entry for Anika’s employer at September
b. Materiality. d. Consistency.
30 is:

14. (LO 4) Which of the following statements is


incorrect concerning the adjusted trial balance?

a. An adjusted trial balance proves the equality of the


total debit

balances and the total credit balances in the ledger after


all adjustments are made.

b. The adjusted trial balance provides the primary basis


for the preparation of financial statements.

c. The adjusted trial balance lists the account balances


segregated by assets and liabilities.

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