1. Which of the following statements related to U.S. GAAP and IFRS is not true?

Multiple Choice

• Both U.S. GAAP and IFRS include guidance for adjusting entries.
• Both U.S. GAAP and IFRS prepare the same four financial statements.
• U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.
• U.S. GAAP balance sheets report current items first.
• IFRS balance sheets normally present noncurrent items first.

2. A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees. If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account, one effect will be:

Multiple Choice

• An overstatement of equity.
• An understatement of equity.
• An understatement of assets.
• An understatement of liabilities.
• An overstatement of assets.

3. Which of the following is not true regarding unearned revenues?

Multiple Choice

• They are payments received in advance of services performed.
• The adjusting entry for unearned revenues increases assets and increases revenues.
• The adjusting entry for unearned revenues increases revenues and decreases liabilities.
• They are liabilities.
• As they are earned, they become revenues.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below 1 US GAAP does not require items to be ... View the full answer