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Question 1 of 20
5.0/ 5.0 Points
In a transaction where purchased merchandise has been
returned, the buyer will increase the Sales Returns and Allowances account and
the seller will increase the Purchases Returns and Allowances account.
A. True
B. False
Answer Key:
Question 2 of 20
5.0/ 5.0 Points
Liabilities that will not be due for more than one year are
called long-term liabilities.
A. True
B. False
Answer Key:
Question 3 of 20
0.0/ 5.0 Points
UNI Co. received $1,000 advance from Newbie as rent for the
use of a building owned by UNI. How does this transaction affect UNI’s accounts
if UNI recognizes a liability?
A.Cash is increased
and revenue is increased.
B.Cash is increased
and revenue is decreased.
C.Cash is increased
and unearned revenue is increased.
In D.It is
not recorded.
Answer Key:
Question 4 of 20
5.0/ 5.0 Points
Which of the following accounts would likely be included in
a deferral adjusting entry?
A.Interest Revenue
B.Unearned Revenue
C.Salaries Payable
D.Accounts Receivable
Answer Key: BQuestion 5 of 20
5.0/ 5.0 Points
The amount of the total cash paid to the seller for merchandise
purchased would normally include:
A.only the list
price.
B.only the sales tax.
C.the list price plus the sales tax.
D.the list price less
the sales tax.
Answer Key:
Question 6 of 20
0.0/ 5.0 Points
The merchandise inventory account is found on the balance
sheet.
In
A. True
B. False
Answer Key:
Question 7 of 20
5.0/ 5.0 Points
Sales discounts are granted by the seller to customers for
payment at the end of the month.
A. True
B. False
Answer Key:
Question 8 of 20
5.0/ 5.0 Points
Which transaction would be recorded in a cash basis system
of accounting?
A.Purchase of
equipment by signing a note
B.Purchase of
supplies on credit
C.Sale of goods
against a note
D.Sale of goods for cash
Answer Key: D
Question 9 of 20
5.0/ 5.0 Points
The revenue recognition concept states that revenue should
be recorded in the same period as the cash is received.
A. true
B. False
Answer Key:
Question 10 of 20
5.0/ 5.0 Points
If the buyer is to pay the delivery expense of delivering
merchandise, delivery terms are stated as:
A.FOB shipping point.
B.FOB destination.
C.FOB n/30.
D.FOB buyer.
Answer Key:
Question 11 of 20
5.0/ 5.0 Points
The liabilities that are due to be paid usually within a
year of less are called:
A.long-term
liabilities.
B.deferred
liabilities.
C.current liabilities.
D.contingent
liabilities.
Answer Key:
Question 12 of 20
5.0/ 5.0 Points
Under the accrual basis of accounting, net cash flows from
operating activities on the statement of cash flows will normally be the same
as net income.
A. True
B. False
Answer Key:
Question 13 of 20
5.0/ 5.0 Points
On April 1, Bear, Inc. paid $2,400 for an insurance premium
on a three-year insurance policy. At the end of December, Bear’s fiscal
year-end, what should be the balance in the prepaid insurance account?
A.$2,700
B.$3,000
C.$2,400
D.$1,800
Answer Key:
Question 14 of 20
5.0/ 5.0 Points
Since merchandise inventory is normally sold within a year,
how is it reported on the balance sheet?
A.As a revenue
B.As the cost of
merchandise sold
C.It does not appear
on the balance sheet
D.As a current asset
Answer Key:
Question 15 of 20
5.0/ 5.0 Points
The accrual basis of accounting requires revenue to be
recorded when the service is performed.
A. True
B. False
Answer Key:
Question 16 of 20
5.0/ 5.0 Points
Eagle Eye, Inc., a corporation, received an additional
investment of $6,000 cash in exchange for shares of capital stock. How does
this transaction affect Eagle Eye’s accounts?
A.Increase in stock
expense and decrease cash by $6,000 each
B.Increase capital stock and increase cash by
$6,000 each
C.Increase capital
stock and increase revenue by $6,000 each
D.Increase capital
stock and decrease retained earnings by $6,000 each
Answer Key:
Question 17 of 20
5.0/ 5.0 Points
Flyer Co. billed a client for flying lessons given in
January. The payment was received in February. Under the accrual basis of
accounting, when should Flyer Co. record the revenue?
A.January
B.February
C.Some in January and
some in February
D.Flyer Co. should
not record any revenue
Answer Key:
Question 18 of 20
5.0/ 5.0 Points
Which expenses are subtracted from gross profit to arrive at
income from operations?
A.All expenses
B.Cost of merchandise
sold
C.Operating expenses
D.Sales discounts
Answer Key:
Question 19 of 20
5.0/ 5.0 Points
Depreciation Expense and Accumulated Depreciation are
classified, respectively, as:
A.expense and contra asset.
B.asset and contra
liability.
C.revenue and asset.
D.contra asset and
expense.
Answer Key:
Question 20 of 20
5.0/ 5.0 Points
The __________ is prepared with various sections,
subsections, and captions that aid in its interpretation and analysis.
A.accounting equation
B.retained earnings
statement
C.intangible asset
section
D.classified balance sheet
Answer Key:
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