Question 1
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The basic purpose of a trial balance is to:
list all of the accounts in the general ledger.
list all of the accounts in the general ledger that have a balance
be sure that all journal entries have been recorded.
verify that the total credits equal the total debits.
Question 2
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Accrued revenues
have been earned and collected, but not yet recorded
have been collected, but not yet earned or recorded
have been earned and recorded, but not yet collected
have been earned, but not yet collected or recorded
Question 3
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Two constraints mentioned by the FASB in Statement of Financial
Accounting Concepts No. 2 on qualitative characteristics are
understandability and decision usefulness
comparability and consistency
relevance and reliability
benefits greater than costs and materiality
Question 4
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The organization that presently has the primary responsibility to establish
generally accepted accounting principles that are applicable to the financial
statements of entities in the private sector of the U.S. is the
Accounting Principles Board
Securities and Exchange Commission
Financial Accounting Standards Board
Committee on Accounting Procedure
Question 5
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When preparing closing entries you would expect to find:
debit Unearned Rent, credit Income Summary
debit Sales Revenue, credit Income Summary
debit Income Summary, credit Dividends Distributed
debit Income Summary, credit Gain on Sale of Land
Question 6
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Which of the following is a specific objective of financial reporting?
provide information that is useful to investors in making investment
decisions
provide information useful in assessing the amounts, timing, and
uncertainty of prospective cash receipts
provide information useful in assessing the amounts, timing, and
uncertainty of prospective cash inflows
provide information about a company's economic resources,
obligations, and owners' equity
Question 7
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Which of the following is an economic resource that should be depreciated
over the accounting periods estimated to be benefited?
salaries incurred but unpaid at year-end
rent collected in advance for a three-year rental period
equipment purchased for use in the business operations
interest revenue accrued on investment in bonds
Question 8
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Which of the following documents includes all of the accounting
standards?
Regulation S-X
The FASB Conceptual Framework
Statements of Financial Accounting Standards
none of the above
Question 9
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Distributions that are paid to owners would affect both the
balance sheet and statement of cash flows
balance sheet and income statement
income statement and statement of changes in equity
income statement and statement of cash flows
Question 10
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Which of the following errors will be detected by a trial balance?
posting a credit to Sales instead of to Accounts Payable
incorrectly computing the balance of the cash account
not journalizing a complete sales transaction
forgetting to post a complete purchase transaction
Question 11
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If collectibility of the revenue is highly uncertain, an appropriate method
that should be used to recognize revenue would be
the percentage-of-completion method
at the point of sale
the proportional performance method
the installment method
Question 12
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A primary focus of financial reporting about a company's performance
during an accounting period is information related to the company's:
Balance Sheet
Income Statement
Comprehensive Income
Cash Flows
Question 13
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On June 1, 2006, Whiting Corporation received $4,104 in advance for a
two-year rental of some land, and credited Unearned Rent. In the
adjusting entry at December 31, 2006, there would be a
debit to Unearned Rent for $1,026
credit to Unearned Rent for $1,197
credit to Rent Revenue for $1,197
debit to Unearned Rent for $2,907
Question 14
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Which of the following are considered secondary characteristics of
accounting information?
verifiability and feedback value
predictive value and timeliness
comparability and consistency
representational faithfulness and neutrality
Question 15
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Intracompany comparability would be violated if
a company used LIFO as its inventory cost method while other
companies in the same industry used FIFO
a company changed its bad debts expense estimate from one
percent to two percent
a bank did not classify its assets as current assets and noncurrent
assets
a company expenses all expenditures of less than $500 even if the
expenditures result in probable future economic benefit
Question 16
2.5 points Save
An organization will typically utilize a subsidiary ledger to:
make sure all debits equal credits.
make it easier to handle cash received from customers.
keep supplier accounts up-to-date.
record customer credit sales outside of the normal double entry
system.
Question 17
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Which of the following accounts would not be closed to Income Summary
during the year-end closing entry process?
Loss of Sale of Land
Prepaid Rent
Freight-in
Sales Discounts
Question 18
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The Yellow Company made year-end adjusting entries affecting each of
the following accounts: Office Salaries Payable (credited); Depreciation
Expense (debited); Unearned Rental Revenue (debited); and Prepaid
Insurance (credited). Which account is likely to appear in Yellow's
reversing entries?
Office Salaries Payable
Depreciation Expense
Unearned Rental Revenue
Prepaid Insurance
Question 19
2.5 points Save
Which of the following items would be a violation of materiality?
a company did not separately report an unusual gain of $50,000. Its
income from operations was $5,000,000
a company expensed the purchase of pencil sharpeners that have an
estimated useful life of three years
a $25,000 illegal bribe to a foreign official was not separately
disclosed in the annual report
a $5,000 expenditure to improve a building that originally cost
$5,000,000 was expensed
Question 20
2.5 points Save
In terms of debits and credits, which accounts below will have the same
normal balances?
dividends, expenses, assets
assets, capital stock, revenues
retained earnings, dividends, liabilities
expenses, liabilities, capital stock