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“1. Which of the following methods of accounting records revenue as it is earned; or expenses when it is incurred; but no cash is exchanged? a. Earned accounting system b. Cash basis of accounting c. Double-entry accounting system d. Accrual basis of accounting”
d. Accrual basis of accounting
2. On April 1; Tule Inc. paid $3;600 for an insurance premium on a three-year insurance policy. At the end of December; Tule\'s fiscal year end; what should be the balance in the Prepaid Insurance account? a. $2;700 b. $3;600 c. $2;400 d. $0
a. $2700
3. What type of account is unearned revenue? a. Asset b. Revenue c. Stockholders\' equity d. Liability
d. liability
4. An example of an accrued revenue is __________. a. interest accrued on a note receivable b. interest accrued on a note payable c. unearned revenues d. accounts payable
a. interest accrued on a note receivable
5. During July; wage expense of $25;000 was reported on the income statement. If wages payable at July 1st was $2;000; and wages of $20;000 were paid during July; how much will be the balance of wages payable on July 31st? a. $2;000 b. $1;500 c. $7;000 d. $1;000
c. $7000
6. The financial statements are affected by which type(s) of adjustments? Accruals Deferrals a.Yes Yes b.Yes No c.No Yes d.No No
a
7. Phil\'s Lawn Service provides lawn care services to residential customers on a monthly basis. Occasionally; Phil\'s Lawn Service would sell some of its used equipment or rent some of its specialized equipment to other lawn service companies.Which of the following would be reported on Phil\'s income statement? a. Book value of equipment b. Rental revenue c. Revenue from sales of equipment d. All of the above
d. all of the above
8. Canyon Candy Co. began operations on January 1; 2013; by purchasing $2;000 of supplies. At the end of its first year of operations; $1;400 of supplies were on hand. Additionally; during the year; the company purchased $900 of supplies. The year-end adjusting entry for Canyon would include a debit to supplies expense for: a. $1;500. b. $2;900. c. $500. d. $2;500.
a. $1500
9. While reconciling net income to net cash flows from operating activities on the statement of cash flows; a decrease in __________ is subtracted from net income. a. accounts receivable b. accounts payable c. prepaid insurance d. supplies
b. accounts payable
10. A&M Co. provided services of $1;000;000 to clients on account. How does this transaction affect A&M\'s accounts? a. If using the accrual method; increase accounts receivable and cash by $1;000;000 each. b. If using the accrual method; increase accounts receivable and revenues by $1;000;000 each. c. If using the cash method; increase accounts receivable and unearned revenues by $1;000;000 each. d. If using the cash method; increase cash and revenues by $1;000;000 each. B. If using the accrual method: increase accounts receivable and revenues by $1000000 each.
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