Chapter 3

1. 1The revenue recognition principle states that:

   1. Arevenue should be recognized in the accounting period in which a performance obligation is satisfied.
   2. Bexpenses should be matched with revenues.
   3. Cthe economic life of a business can be divided into artificial time periods.
   4. Dthe fiscal year should correspond with the calendar year.
2. 2The time period assumption states that:

   1. Acompanies must wait until the calendar year is completed to prepare financial statements.
   2. Bcompanies use the fiscal year to report financial information.
   3. Cthe economic life of a business can be divided into artificial time periods
   4. Dcompanies record information in the time period in which the events occur.
3. 3Which of the following statements about the accrual basis of accounting is false?

   1. AEvents that change a company's financial statements are recorded in the periods in which the events occur.
   2. BRevenue is recognized in the period in which services are performed.
   3. CThis basis is in accord with generally accepted accounting principles.
   4. DRevenue is recorded only when cash is received, and expense is recorded only when cash is paid.
4. 4The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is the:

   1. Aexpense recognition principle.
   2. Bcost assumption.
   3. Ctime period assumption.
   4. Drevenue recognition principle.
5. 5Adjusting entries are made to ensure that:

   1. Aexpenses are recognized in the period in which they are incurred.
   2. Brevenues are recorded in the period in which services are performed.
   3. Cbalance sheet and income statement accounts have correct balances at the end of an accounting period.
   4. DAll the responses above are correct.
6. 6Each of the following is a major type (or category) of adjusting entries except:

   1. Aprepaid expenses.
   2. Baccrued revenues.
   3. Caccrued expenses.
   4. Drecognized revenues.
7. 7The trial balance shows Supplies $1,350 and Supplies Expense $0. If $600 of supplies are on hand at the end of the period, the adjusting entry is:

   1. ASupplies 600
      Supplies Expense 600
   2. BSupplies 750
      Supplies Expense 750
   3. CSupplies Expense 750
      Supplies 750
   4. DSupplies Expense 600
      Supplies 600
8. 8Adjustments for prepaid expenses:

   1. Adecrease assets and increase revenues.
   2. Bdecrease expenses and increase assets.
   3. Cdecrease assets and increase expenses.
   4. Ddecrease revenues and increase assets.
9. 9Accumulated Depreciation is:

   1. Aa contra asset account.
   2. Ban expense account.
   3. Can owner's equity account.
   4. Da liability account.
10. 10Rivera Company computes depreciation on delivery equipment at $1,000 for the month of June. The adjusting entry to record this depreciation is as follows.

    1. ADepreciation Expense 1,000
       Accumulated Depreciation—Rivera Company 1,000
    2. BDepreciation Expense 1,000
       Equipment 1,000
    3. CDepreciation Expense 1,000
       Accumulated Depreciation—Equipment 1,000
    4. DEquipment Expense 1,000
       Accumulated Depreciation—Equipment 1,000

11. 11Adjustments for unearned revenues:

    1. Adecrease liabilities and increase revenues.
    2. Bhave an assets and revenues account relationship.
    3. Cincrease assets and increase revenues.
    4. Ddecrease revenues and decrease assets.
12. 12Adjustments for accrued revenues:

    1. Ahave a liabilities and revenues account relationship.
    2. Bhave an assets and revenues account relationship.
    3. Cdecrease assets and revenues.
    4. Ddecrease liabilities and increase revenues.
13. 13Anika Wilson earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Anika's employer at September 30 is:

    1. ANo entry is required.
    2. BSalaries and Wages Expense 400
       Salaries and Wages Payable 400
    3. CSalaries and Wages Expense 400
       Cash 400
    4. DSalaries and Wages Payable 400
       Cash 400
14. 14Which of the following statements is incorrect concerning the adjusted trial balance?

    1. AAn adjusted trial balance proves the equality of the total debit balances and the total credit balances in the ledger after all adjustments are made.
    2. BThe adjusted trial balance provides the primary basis for the preparation of financial statements.
    3. CThe adjusted trial balance lists the account balances segregated by assets and liabilities.
    4. DThe adjusted trial balance is prepared after the adjusting entries have been journalized and posted.
15. 15The 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:

    1. ADebit Supplies $800 and credit Supplies Expense $800.
    2. BDebit Supplies Expense $800 and credit Supplies $800.
    3. CDebit Supplies $700 and credit Supplies Expense $700.
    4. DDebit Supplies Expense $700 and credit Supplies $700.
16. 16Neutrality is an ingredient of:

    1. AFaithful Representation - Yes
       Relevance - Yes
    2. BFaithful Representation - No
       Relevance - No
    3. CFaithful Representation - Yes
       Relevance - No
    4. DFaithful Representation - No
       Relevance - Yes
17. 17Which item is a constraint in financial accounting?

    1. AComparability.
    2. BMateriality.
    3. CCost.
    4. DConsistency.

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221 Principles of Accounting I Quiz on Chapter 3, created by Emily Christisen on 10/05/2016.

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