Quiz
Test 2 - Chapters 3/4 A
Fragen in diesem Quiz (30)
1The time period assumption states that
- Aa transaction can only affect one period of time
- Bestimates should not be made if a transaction affects more than one time period
- Cadjustments to the enterprise's accounts can only be made in the time period when the business terminates operations
- Dthe economic life of a business can be divided into artificial time period periods
2In general, the shorter the time period, the difficulty of making the proper adjustments to accounts
- Ais increased
- Bis decreased
- Cis unaffected
- Ddepends on if there is a profit or a loss
3The fiscal year of a business is usually determined by
- Athe Canada Customs and Revenue Agency
- Bthe Tax Act
- Cthe business
- Dprovincial securities and exchange commissions
4Moishe's Tune-Up Shop follows the revenue recognition principle. Moishe services a car on July 31. The customer picks up the vehicle August 1st and mails the payment on August 5th. Moishe receives the cheque in the mail on August 6th. When should Moishe show the revenue was earned?
- AJuly 31
- BAugust 1
- CAugust 5
- DAugust 6
5A company spends $10 million for an office building. Over what period should the cost be written off?
- Awhen the $10 million is expended in cash
- Ball in the first year
- Cover the useful life of the building
- Dafter $10 million in revenue is earned
6The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
- Aassets should be matched with liabilities
- Befforts should be matched with accomplishments
- Cowner withdrawals should be matched with owner contribuions
- Dcash payments should match cash receipts
7A small company may be able to justify using the cash basis of accounting if they have
- Asales under $1 000 000
- Bno accountants on staff
- Cfew receivables and payables
- Dall sales and purchases accounts
8Adjusting entries are
- Anot necessary if the accounting system is operating properly
- Busually required before financial statements are prepared
- Cmade whenever management desires to change an account balance
- Dmade to balance sheet accounts only
9Which one of the following is not a justification for adjusting entries?
- Aadjusting entries are necessary to ensure that revenue recognition principles are followed
- Badjusting entries are necessary to ensure that the matching principle is followed
- Cadjusting entries are necessary to enable financial statements to be in conformity with IFRS
- Dadjusting entries are necessary to bring the ledger accounts in line with budget
10An adjusting entry
- Aaffects two balance sheet accounts
- Baffects two income statement accounts
- Caffects a balance sheet account and an income statement account
- Dis always a compound entry
11If a resource has been consumed but a bill has not been received at the end of the accounting period, then
- Aan expense should be recorded when the bill is received
- Ban expense should be recorded when the cash is paid out
- Can adjusting entry should be made recognizing the expense
- Dit is optional whether to record the expense before the bill is received
12An asset-expense relationship exists with
- Aliability accounts
- Brevenue accounts
- Cprepaid expense adjusting entries
- Daccrued expense adjusting entries
13A law firm received $2 000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Legal Fees. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause
- Aexpenses to be overstated
- Bnet income to be overstated
- Cliabilities to be understated
- Drevenues to be understated
14Accrued revenues are
- Areceived and recorded as liabilities before they are earned
- Bearned and recorded as liabilities before they are received
- Cearned but not yet received or recorded
- Dearned and already received and recorded
15Prepaid expenses are
- Apaid and recorded in an asset account before they are used or consumed
- Bpaid and recorded in an asset account after they are used or consumed
- Cincurred but not yet paid or recorded
- Dincurred and already paid and recorded
16Accrued expenses are
- Apaid and recorded in an asset account before they are used or consumed
- Bpaid and recorded in an asset account after they are used or consumed
- Cincurred but not yet paid or recorded
- Dincurred and already paid and recorded
17Unearned revenues are
- Areceived and recorded as liabilities before they are earned
- Bearned and recorded as liabilities before they are received
- Cearned but not yet received or recorded
- Dearned and already received and recorded
18A liability-revenue relationship exists with
- Aprepaid expense adjusting entries
- Baccrued expense adjusting entries
- Cunearned revenue adjusting entries
- Daccrued revenue adjusting entries
19Which of the following reflect the balances of prepayment accounts prior to adjustment?
- ABalance sheet accounts are understated and income statement accounts are understated
- BBalance sheet accounts are overstated and income statement accounts are overstated
- CBalance sheet accounts are understated and income statement accounts are overstated
- DBalance sheet accounts are overstated and income statement accounts are understated
20Amortization of a capital asset is the process of
- Avaluing a capital asset at its fair market value
- Bincreasing the cost of a capital asset over the periods the asset benefits
- Callocating the cost of a capital asset to an expense over the periods the asset benefits
- Dwriting down a capital asset to its real value each account period
21An accumulated amortization account
- Ais a contra-liability
- Bincreased on the debit side
- Cis offset against total assets on the balance sheet
- Dhas a normal credit balance
22The difference between the cost of a capital asset and its related accumulated amortization is referred to as the
- Amarket value
- Bblue book value
- Cnet book value
- Damortized difference
23If a business pays rent in advance and debit a prepaid rent account, the company receiving the rent payment will credit
- Acash
- Bprepaid rent
- Cunearned rent revenue
- Daccrued rent revenue
24Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
- Anet income to be understated
- Ban overstatement of assets and an overstatement of liabilities
- Can understatement of expenses and an understatement of liabilities
- Dan overstatement of expenses and an overstatement of liabilities
25Failure to prepare a an adjusting entry at the end of the period to record an accrued revenue would cause
- Anet income to be overstated
- Ban understatement of assets and an understatement of revenues
- Can understatement of revenues and an understatement of liabilities
- Dan understatement of revenues and an overstatement of liabilities
26Closing entries are made
- Ain order to terminate the business as an operating entity
- Bso that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts
- Cin order to transfer net income/loss and owner's drawings to the capital account
- Dso that financial statements can be prepared
27The owner's capital account
- Ais a permanent account
- Bappears on the cash flow statement
- Cappears on the income statement
- Dis a temporary account
28The purpose of a post-closing trial balance is to
- Aprove that no mistakes were made
- Bprove the equality of the balance sheet account balances that are carried forward into the next accounting period
- Cprove the equality of the income statement account balances that are carried forward into the next accounting period
- Dlist all the balance sheet accounts in alpha order for easy reference
29After closing entries are posted, the balance in the owner's capital account in the ledger is equal to
- Athe beginning owner's capital reported on the statement of OE
- Bthe amount of the owner's capital reported on the balance sheet
- Czero
- Dthe net income for the period
30Reversing entries are required for
- Aprepayment adjustments
- Baccrual adjustments
- Cestimate adjustments
- Dprepayment and accrual adjustments
Informationen
- Beschreibung
- Grade 12 Accounting Midterm Prep
- Autor
- Claudia Voin
- Sprache
- English
- Aufrufe
- 107
- Schlagwörter
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