Questions and Answers of Financial Accounting 11th

The principle or assumption dictating that efforts(expenses) should be recognized in the period inwhich a company consumes assets or incurs liabilitiesto generate revenue is the:(a) expense
Adjusting entries are made to ensure that:(a) expenses are recognized in the period in whichthey are incurred.(b) revenues are recorded in the period in which servicesare performed.(c) balance sheet
Each of the following is a major type (or category) ofadjusting entries except:(a) prepaid expenses.(b) accrued revenues.(c) accrued expenses.(d) recognized revenues.
The trial balance shows Supplies $1,350 and SuppliesExpense $0. If $600 of supplies are on hand at the endof the period, the adjusting entry is: (a) Supplies Supplies Expense (b) Supplies Supplies
Adjustments for prepaid expenses:(a) decrease assets and increase revenues.(b) decrease expenses and increase assets.(c) decrease assets and increase expenses.(d) decrease revenues and increase
Accumulated Depreciation is:(a) a contra asset account.(b) an expense account.(c) a stockholders’ equity account.(d) a liability account.
Rivera Company computes depreciation on deliveryequipment at $1,000 for the month of June. The adjustingentry to record this depreciation is as follows. (a) Depreciation Expense Accumulated
Adjustments for unearned revenues:(a) decrease liabilities and increase revenues.(b) have an assets-and-revenues-account relationship.(c) increase assets and increase revenues.(d) decrease revenues
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
Anika Wilson earned a salary of $400 for the last weekof September. She will be paid on October 1. Theadjusting entry for Anika’s employer at September30 is: (a) No entry is required. (b) Salaries
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
The trial balance s hows 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
Neutrality is an ingredient of: (a) (b) (c) (d) Faithful Representation Yes No Yes No Relevance Yes No No Yes
Which item is a constraint in financial accounting?(a) Comparability.(b) Materiality.(c) Cost.(d) Consistency
Partial adjusted trial balance data for Parsons Company is presented in BE3-9. The balance in Common Stock is the balance as of January 1. Prepare a retained earnings statement for the year assuming
The ledger of Herrera, Inc. on March 31, 2019, includes the following selected accounts before adjusting entries.An analysis of the accounts shows the following.1. Insurance expires at the rate of
Lei Company accumulates the following adjustment data at December 31.1. Services performed but unbilled total $1,000.2. Supplies of $300 have been used.3. Utility expenses of $225 are unpaid.4.
Selected accounts of Koffman Company are as follows.Instructions After analyzing the accounts, journalize(a) the July transactions and(b) the adjusting entries that were made on July 31. 7/31 7/1
Action Quest Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2019.1. Purchased a 1-year insurance policy on June 1 for $1,800 cash.2.
The following data are taken from the comparative balance sheets of CascadeBilliards Club, which prepares its financial statements using the accrual basis of accounting.Members are billed based upon
PepsiCo’s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual
Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions for accessing and using the complete
IFRS:(a) uses accrual accounting.(b) uses cash-basis accounting.(c) allows revenue to be recognized when a customer makes an order.(d) requires that revenue not be recognized until cash is received.
Which of the following statements is false?(a) IFRS employs the time period assumption.(b) IFRS employs accrual accounting.(c) IFRS requires that revenues and costs must be capable of being measured
As a result of the revenue recognition project by the FASB and IASB:(a) revenue recognition places more emphasis on when the performance obligation is satisfied.(b) revenue recognition places more
Which of the following is false?(a) Under IFRS, the term income describes both revenues and gains.(b) Under IFRS, the term expenses includes losses.(c) Under IFRS, companies do not engage in the
Accrual-basis accounting:(a) is optional under IFRS.(b) results in companies recording transactions that change a company’s financial statements inthe period in which events occur.(c) has been
Which of the following statements is incorrect concerning the worksheet?(a) The worksheet is essentially a working tool of the accountant.(b) The worksheet is distributed to management and other
In the unadjusted trial balance of its worksheet for the year ended December 31, 2019, Knox Company reported Equipment of $120,000. The year-end adjusting entries require an adjustment of $15,000 for
When a net loss has occurred, Income Summary is:(a) debited and Retained Earnings is credited.(b) credited and Retained Earnings is debited.(c) debited and Dividends is credited.(d) credited and
The closing process involves separate entries to close(1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is:(a) (4), (3), (2), (1).(b) (1), (2),
All of the following are required steps in the accounting cycle except:(a) journalizing and posting closing entries.(b) preparing financial statements.(c) journalizing the transactions.(d) preparing
Cash of $100 received at the time the service was performed was journalized and posted as a debit to Cash $100 and a credit to Accounts Receivable $100.Assuming the incorrect entry is not reversed,
The correct order of presentation in a classified balance sheet for the following current assets is:(a) accounts receivable, cash, prepaid insurance, inventory.(b) cash, inventory, accounts
A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be
In a classified balance sheet, assets are usually classified using the following categories:(a) current assets; long-term assets; property, plant, and equipment; and intangible assets.(b) current
Current assets are listed:(a) by expected conversion to cash.(b) by importance.(c) by longevity.(d) alphabetically.
On December 31, Kevin Hartman Company correctly made an adjusting entry to recognize $2,000 of accrued salaries payable. On January 8 of the next year, total salaries of $3,400 were paid. Assuming
Arapaho Company ended its fiscal year on July 31, 2019. The company’s adjusted trial balance as of the end of its fiscal year is as shown below.Instructions (a) Prepare the closing entries using
The adjusted trial balance for Arapaho Company is presented in Practice Exercise 1.Practice Exercise 1.Arapaho Company ended its fiscal year on July 31, 2019. The company’s adjusted trial balance
At the end of its first month of operations, Pampered Pet Service Inc. has the following unadjusted trial balance.Other data:1. Insurance expires at the rate of $200 per month.2. $1,000 of supplies
The ledger of Rios Company contains the following balances: Retained Earnings$30,000, Dividends $2,000, Service Revenue $50,000, Salaries and Wages Expense $27,000, and Supplies Expense $7,000.
Jarmuz Management Services began business on January 1, 2018, with a capital investment of $90,000. The company manages condominiums for owners (service revenue)and rents space in its own office
At June 30, 2019, the end of its most recent fiscal year, Green River Computer Consultants’post-closing trial balance was as follows:The company underwent a major expansion in July. New staff was
A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the
Companies that use IFRS:(a) may report all their assets on the statement of financial position at fair value.(b) may offset assets against liabilities and show net assets and net liabilities on their
Companies that follow IFRS to prepare a statement of financial position generally use the following order of classification:(a) current assets, current liabilities, non-current assets, non-current
Which of the following is not a step in the accounting process?(a) Identification.(b) Economic entity.(c) Recording.(d) Communication.
Which of the following statements about users of accounting information is incorrect?(a) Management is an internal user.(b) Taxing authorities are external users.(c) Present creditors are external
The historical cost principle states that:(a) assets should be initially recorded at cost and adjusted when the fair value changes.(b) activities of an entity are to be kept separate and distinct
Which of the following statements about basic assumptions is correct?(a) Basic assumptions are the same as accounting principles.(b) The economic entity assumption states that there should be a
The three types of business entities are:(a) proprietorships, small businesses, and partnerships.(b) proprietorships, partnerships, and corporations.(c) proprietorships, partnerships, and large
Net income will result during a time period when:(a) assets exceed liabilities.(b) assets exceed revenues.(c) expenses exceed revenues.(d) revenues exceed expenses.
As of December 31, 2019, Reed Company has assets of $3,500 and stockholders' equity of $1,500. What are the liabilities for Reed Company as of December 31,
Performing services on account will have the following effects on the components of the basic accounting equation: (a) increase assets and decrease stockholders' equity. (b) increase assets and
Which of the following events is not recorded in the accounting records? (a) Equipment is purchased on account. (b) An employee is terminated. (c) A cash investment is made into the business. (d) The
During 2019, Seisor Company's assets decreased $50,000 and its liabilities decreased $90,000. Its stock- holders' equity therefore:(a) increased $40,000.(b) decreased $140,000.(c) decreased
Payment of an account payable affects the components of the accounting equation in the following way. (a) Decreases stockholders' equity and decreases liabilities. (b) Increases assets and decreases
Which of the following statements is false?(a) A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time. (b) A
On the last day of the period, Alan Cesska Company buys a $900 machine on credit. This transaction will affect the: (a) income statement only. (b) balance sheet only. (c) income statement and
The financial statement that reports assets, liabilities, and stockholders' equity is the: (a) income statement. (b) retained earnings statement. (c) balance sheet. (d) statement of cash flows.
Services performed by a public accountant include: (a) auditing, taxation, and management consulting. (b) auditing, budgeting, and management consulting. (c) auditing, budgeting, and cost
Harper Travel Agency purchased land for $85,000 cash on December 10, 2019. At December 31, 2019, the land’s value has increased to $93,000. What amount should be reported for land on Harper’s
The basic accounting equation is Assets = Liabilities +Stockholders’ equity. Replacing the words in that equation with dollar amounts, what is Apple’s accounting equation at September 26, 2015?
At the beginning of the year, Canon Company had total assets of $870,000 and total liabilities of $500,000. Answer the following questions.(a) If total assets increased $150,000 during the year and
Toth Company had the following assets and liabilities on the dates indicated.Toth began business on January 1, 2018, with an investment of $100,000 from stockholders.Instructions From an analysis of
The following information relates to La Greca Co. for the year 2019.Instructions After analyzing the data, prepare an income statement and a retained earnings statement for the year ending December
Presented below is information related to Alexis and Ryans, Attorneys at LawInstructions Prepare the 2019 retained earnings statement for Alexis and Ryans, Attorneys at Law. Retained earnings,
This information is for Paulo Company for the year ended December 31, 2019.Instructions Prepare the 2019 statement of cash flows for Paulo Company. Cash received from revenues from customers Cash
The statement of cash flows classifies each transaction as an operating activity, an investing activity, or a financing activity. Operating activities are the types of activities the company performs
Kathy and James Mohr, local golf stars, opened the Chip-Shot Driving Range Company on March 1, 2019. They invested $25,000 cash and received common stock in exchange for their investment.A caddy
Which of the following is not a reason why a single set of high-quality international accounting standards would be beneficial?(a) Mergers and acquisition activity.(b) Financial markets.(c)
The Sarbanes-Oxley Act determines:(a) international tax regulations.(b) internal control standards as enforced by the IASB.(c) internal control standards of U.S. publicly traded companies.(d) U.S.
IFRS is considered to be more:(a) principles-based and less rules-based than GAAP.(b) rules-based and less principles-based than GAAP.(c) detailed than GAAP.(d) None of the above.
Which of the following statements about an accountis true?(a) The right side of an account is the debit, or increase,side.(b) An account is an individual accounting record ofincreases and decreases
Debits:(a) increase both assets and liabilities.(b) decrease both assets and liabilities.(c) increase assets and decrease liabilities.(d) decrease assets and increase liabilities.
A revenue account:(a) is increased by debits.(b) is decreased by credits.(c) has a normal balance of a debit.(d) is increased by credits.
Accounts that normally have debit balances are:(a) assets, expenses, and revenues.(b) assets, expenses, and common stock.(c) assets, liabilities, and dividends.(d) assets, dividends, and expenses.
The expanded accounting equation is:(a) Assets + Liabilities = Common Stock + RetainedEarnings + Revenues + Expenses + Dividends.(b) Assets = Liabilities + Common Stock + RetainedEarnings + Revenues
Which of the following is not part of the recordingprocess?(a) Analyzing transactions.(b) Preparing an income statement.(c) Entering transactions in a journal.(d) Posting journal entries.
Which of the following statements about a journal isfalse?(a) It is not a book of original entry.(b) It provides a chronological record of transactions.(c) It helps to locate errors because the debit
The purchase of supplies on account should result in:(a) a debit to Supplies Expense and a credit to Cash.(b) a debit to Supplies Expense and a credit toAccounts Payable.(c) a debit to Supplies and a
The order of the accounts in the ledger is:(a) assets, revenues, expenses, liabilities, commonstock, dividends.(b) assets, liabilities, common stock, dividends, revenues,expenses.(c) common stock,
A ledger:(a) contains only asset and liability accounts.(b) should show accounts in alphabetical order.(c) is a collection of the entire group of accountsmaintained by a company.(d) is a book of
Posting:(a) normally occurs before journalizing.(b) transfers ledger transaction data to the journal.(c) is an optional step in the recording process.(d) transfers journal entries to ledger accounts.
Before posting a payment of $5,000, the AccountsPayable of Chola Corporation had a normal balanceof $18,000. The balance after posting this transactionwas:(a) $13,000.(b) $5,000. (c) $23,000.(d)
A trial balance:(a) is a list of accounts with their balances at a giventime.(b) proves the mathematical accuracy of journalizedtransactions.(c) will not balance if a correct journal entry is
A trial balance will not balance if:(a) a correct journal entry is posted twice.(b) the purchase of supplies on account is debited toSupplies and credited to Cash.(c) a $100 cash dividend is debited
The trial balance of Stevens Corporation had accountswith the following normal balances: Cash $5,000,Service Revenue $85,000, Salaries and Wages Payable$4,000, Salaries and Wages Expense $40,000,
Two students are discussing the use of a trial balance.They wonder whether the following errors, each considered separately, would prevent the trial balance from balancing. What would you tell
James Mayaguez recorded the following transactions during the month of April.Post these entries to the Cash T-account of the general ledger to determine the ending balance in cash. The beginning
The following accounts are taken from the ledger of Chillin’ Company at December 31, 2019. 200 Notes Payable 311 Common Stock 157 Equipment 332 Dividends 726 Salaries and $20,000 25,000 76,000
Which statement is correct regarding IFRS?(a) IFRS reverses the rules of debits and credits, that is, debits are on the right and credits are on the left.(b) IFRS uses the same process for recording
The expanded accounting equation under IFRS is as follows:(a) Assets = Liabilities + Common Stock + Retained Earnings + Revenues − Expenses + Dividends.(b) Assets + Liabilities = Common Stock +
A trial balance:(a) is the same under IFRS and GAAP.(b) proves that transactions are recorded correctly.(c) proves that all transactions have been recorded.(d) will not balance if a correct journal
One difference between IFRS and GAAP is that:(a) GAAP uses accrual-accounting concepts and IFRS uses primarily the cash basis of accounting.(b) IFRS uses a different posting process than GAAP.(c)
The general policy for using proper currency signs (dollar, yen, pound, etc.) is the same for bothIFRS and this textbook. This policy is as follows:(a) Currency signs only appear in ledgers and
Accounting is an information system that identifies, records, and communicates the economic events of an organization to interested users. The major users and uses of accounting are as follows. (a)
Ethics are the standards of conduct by which actions are judged as right or wrong.Effective financial reporting depends on sound ethical behavior. Generally accepted accounting principles are a
State the accounting equation, and defi ne its components.

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