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Principles of Accounting, Volume 1: Financial Accounting

Multiple Choice

Principles of Accounting, Volume 1: Financial AccountingMultiple Choice
1.

LO 4.1Which of the following is any reporting period shorter than a full year (fiscal or calendar) and can encompass monthly, quarterly, or half-year statements?

  1. fiscal year
  2. interim period
  3. calendar year
  4. fixed year
2.

LO 4.1Which of the following is the federal, independent agency that provides oversight of public companies to maintain fair representation of company financial activities for investors to make informed decisions?

  1. IRS (Internal Revenue Service)
  2. SEC (Securities and Exchange Commission)
  3. FASB (Financial Accounting Standards Board)
  4. FDIC (Federal Deposit Insurance Corporation)
3.

LO 4.1Revenues and expenses must be recorded in the accounting period in which they were earned or incurred, no matter when cash receipts or outlays occur under which of the following accounting methods?

  1. accrual basis accounting
  2. cash basis accounting
  3. tax basis accounting
  4. revenue basis accounting
4.

LO 4.1Which of the following breaks down company financial information into specific time spans, and can cover a month, quarter, half-year, or full year?

  1. accounting period
  2. yearly period
  3. monthly period
  4. fiscal period
5.

LO 4.1Which of the following is a twelve-month reporting cycle that can begin in any month, except January 1, and records financial data for that twelve-month consecutive period?

  1. fixed year
  2. interim period
  3. calendar year
  4. fiscal year
6.

LO 4.2Which type of adjustment occurs when cash is either collected or paid, but the related income or expense is not reportable in the current period?

  1. accrual
  2. deferral
  3. estimate
  4. cull
7.

LO 4.2Which type of adjustment occurs when cash is not collected or paid, but the related income or expense is reportable in the current period?

  1. accrual
  2. deferral
  3. estimate
  4. cull
8.

LO 4.2If an adjustment includes an entry to a payable or receivable account, which type of adjustment is it?

  1. accrual
  2. deferral
  3. estimate
  4. cull
9.

LO 4.2If an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it?

  1. accrual
  2. deferral
  3. estimate
  4. cull
10.

LO 4.2Rent collected in advance is an example of which of the following?

  1. accrued expense
  2. accrued revenue
  3. deferred expense (prepaid expense)
  4. deferred revenue (unearned revenue)
11.

LO 4.2Rent paid in advance is an example of which of the following?

  1. accrued expense
  2. accrued revenue
  3. deferred expense (prepaid expense)
  4. deferred revenue (unearned revenue)
12.

LO 4.2Salaries owed but not yet paid is an example of which of the following?

  1. accrued expense
  2. accrued revenue
  3. deferred expense (prepaid expense)
  4. deferred revenue (unearned revenue)
13.

LO 4.2Revenue earned but not yet collected is an example of which of the following?

  1. accrued expense
  2. accrued revenue
  3. deferred expense (prepaid expense)
  4. deferred revenue (unearned revenue)
14.

LO 4.3What adjusting journal entry is needed to record depreciation expense for the period?

  1. a debit to Depreciation Expense; a credit to Cash
  2. a debit to Accumulated Depreciation; a credit to Depreciation Expense
  3. a debit to Depreciation Expense; a credit to Accumulated Depreciation
  4. a debit to Accumulated Depreciation; a credit to Cash
15.

LO 4.3Which of these transactions requires an adjusting entry (debit) to Unearned Revenue?

  1. revenue earned but not yet collected
  2. revenue collected but not yet earned
  3. revenue earned before being collected, when it is later collected
  4. revenue collected before being earned, when it is later earned
16.

LO 4.4What critical purpose does the adjusted trial balance serve?

  1. It proves that transactions have been posted correctly
  2. It is the source document from which to prepare the financial statements
  3. It shows the beginning balances of every account, to be used to start the new year’s records
  4. It proves that all journal entries have been made correctly.
17.

LO 4.4Which of the following accounts’ balance would be a different number on the Balance Sheet than it is on the adjusted trial balance?

  1. accumulated depreciation
  2. unearned service revenue
  3. retained earnings
  4. dividends
18.

LO 4.5On which financial statement would the Supplies account appear?

  1. Balance Sheet
  2. Income Statement
  3. Retained Earnings Statement
  4. Statement of Cash Flows
19.

LO 4.5On which financial statement would the Dividends account appear?

  1. Balance Sheet
  2. Income Statement
  3. Retained Earnings Statement
  4. Statement of Cash Flows
20.

LO 4.5On which financial statement would the Accumulated Depreciation account appear?

  1. Balance Sheet
  2. Income Statement
  3. Retained Earnings Statement
  4. Statement of Cash Flows
21.

LO 4.5On which two financial statements would the Retained Earnings account appear?

  1. Balance Sheet
  2. Income Statement
  3. Retained Earnings Statement
  4. Statement of Cash Flows
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