1.The accounting principle that requires revenue to be reported when earned is the:
A) Matching principle.
B) Revenue recognition principle.
C) Time period principle.
D) Accrual reporting principle.
E) Going-concern principle.
2.Adjusting entries are journal entries made at the end of an accounting period for the
purpose of:
A) Updating liability and asset accounts to their proper balances.
B) Assigning revenues to the periods in which they are earned.
C) Assigning expenses to the periods in which they are incurred.
D) Assuring that financial statements reflect the of revenues earned and the expenses
incurred.
E) All of the above.
3.The total amount of depreciation recorded against an asset or group of assets during the
entire time the asset or assets have been owned:
A) Is referred to as depreciation expense.
B) Is referred to as accumulated depreciation.
C) Is shown on the income statement of the final period.
D) Is only recorded when the asset is disposed of.
E) Is referred to as an accrued asset.
4.If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the
entry to record payment of these wages on the following January 5 would include:
A) A debit to Cash and a credit to Salaries Payable.
B) A debit to Cash and a credit to Prepaid Salaries.
C) A debit to Salaries Payable and a credit to Cash.
D) A debit to Salaries Payable and a credit to Salaries Expense.
E) No entry would be necessary on January 5.
Problem
5.Pfister, Co. leases an office to a tenant at the rate of $5,000 per month. The tenant
contacted Pfister and arranged to pay the rent for December 2004 on January 8, 2005.
Pfister agrees to this arrangement.
a.) Prepare the journal entry that Pfister must make at December 31, 2004 to record the
accrued rent revenue.
b.) Prepare the journal entry to record the receipt of the rent on January 8, 2005.
a)
Debit. Rent Receivable $5,000
Credit. Rent Revenue $5,000
b)
Debit. Cash $5,000
Credit. Rent Receivable $5,000
1.Accounting is an information and measurement system that:
A) Identifies business activities.
B) Records business activities.
C) Communicates business activities.
D) Helps people make better decisions.
E) All of the above.
2.Internal users of accounting information include:
A) Shareholders.
B) Managers.
C) Lenders.
D) Suppliers.
E) Customers.
3.A Certified Public Accountant
A) Must meet education and experience requirements
B) Must pass an examination
C) Must exhibit ethical character
D) May also be a Certified Management Accountant.
E) All of the above.
4.A corporation:
A) Is a legal entity separate and distinct from its owners.
B) Is controlled by the FASB.
C) Has shareholders who have unlimited liability for the acts of the corporation.
D) Is the same as a limited liability partnership.
E) All of the above.
5.The account used to record the transfers of assets from a business to its owner is:
A) A revenue account.
B) The withdrawals account.
C) The capital account.
D) An expense account.
E) A liability account.
6.A ledger is:
A) A record containing increases and decreases in a specific asset, liability, equity,
revenue, or expense item.
B) A journal in which transactions are first recorded.
C) A collection of documents that describe transactions and events entering the
accounting process.
D) A list of all accounts with their debit balances at a point in time.
E) A list of all accounts a company uses and includes an identification number assigned
to each account.
7.A simple account form widely used in accounting to illustrate how debits and credits work
is called a:
A) Withdrawals account.
B) Capital account.
C) Drawing account.
D) T-account.
E) Balance column sheet.
8.The main purpose of adjusting entries is to:
A) Record external transactions and events.
B) Record internal transactions and events.
C) Recognize assets purchased during the period.
D) Recognize debts paid during the period.
E) Correct errors.
9.The approach to preparing financial statements based on recognizing revenues when
they are earned and matching expenses to those revenues is:
A) Cash basis accounting.
B) The matching principle.
C) The time period principle.
D) Accrual basis accounting.
E) Revenue basis accounting.
10.An adjusting entry could be made for each of the following except:
A) Prepaid expenses.
B) Depreciation.
C) Owner withdrawals.
D) Unearned revenues.
E) Accrued revenues.