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1
Maintaining a set of accounting records is

.
Maintaining a set of accounting records is
Student Response Value Correct Answer Feedback

1. optional.
2. required by the
Internal Revenue
Service and the
Foreign Corrupt
Practices Act.

3. required by the
Foreign Corrupt
Practices Act.
4. required by the 0%

Internal Revenue
Service.
Score: 0/2

Eaton Co. sells major household appliance service contracts for cash. The
2 service contracts are for a one-year, two-year, or three-year period. Cash
. receipts from contracts are credited to Unearned Service Revenue. This account
had a balance of $3,600,000
Eaton Co. sells major household appliance service contracts for cash. The service contracts
are for a one-year, two-year, or three-year period. Cash receipts from contracts are credited
to Unearned Service Revenue. This account had a balance of $3,600,000 at December 31,
2012 before year-end adjustment. Service contract costs are charged as incurred to the
Service Contract Expense account, which had a balance of $900,000 at December 31,
2012.
Service contracts still outstanding at December 31, 2012 expire as follows:

During 2013 $760,000
During 2014 1,140,000
During 2015 700,000
What amount should be reported as Unearned Service Revenue in Eaton's December 31,
2012 balance sheet?

1. $2,700,000. 0% $760,000 + $1,140,000 + $700,0
2. $2,600,000.
3. $1,700,000.
4. $1,000,000.
General $760,000 + $1,140,000 + $700,000 = $2,600,000.
Feedback:
Score: 0/2

Pappy Corporation received cash of $18,000 on September 1, 2012 for one
3
year's rent in advance and recorded the transaction with a credit to Unearned
.
Rent Revenue. The December 31, 2012 adjusting entry is
Pappy Corporation received cash of $18,000 on September 1, 2012 for one year's rent in
advance and recorded the transaction with a credit to Unearned Rent Revenue. The
December 31, 2012 adjusting entry is

1. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$12,000.
2. debit Unearned 100% $18,000 x 4/12 = $6,000.

Rent Revenue and
credit Rent
Revenue, $6,000.
3. debit Cash and
credit Unearned
Rent Revenue,
$12,000.
4. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$6,000.
General Feedback: $18,000 x 4/12 = $6,000.
Score: 2/2

4 When an item of revenue is collected and recorded in advance, it is normally
. called a(n) ___________ revenue.
When an item of revenue is collected and recorded in advance, it is normally called a(n)
___________ revenue.
1. accrued
2. unearned 100%
3. cash
4. prepaid
Score: 2/2

5
An accrued expense can best be described as an amount
.

1. not paid and 100%
currently matched
with earnings.
2. paid and not
currently matched
with earnings.

3. paid and currently
matched with
earnings.
4. not paid and not
currently matched
with earnings.
Score: 2/2

When converting from cash basis to accrual-basis accounting, which of the
6
following adjustments should be made to cash receipts from customers to
.
determine accrual basis service revenue?
When converting from cash basis to accrual-basis accounting, which of the following
adjustments should be made to cash receipts from customers to determine accrual basis
service revenue?

1. Subtract beginning
unearned service
revenue.
2. Add ending
accounts
receivable.
3. Subtract ending 0%

accounts
receivable.
4. Add cash sales.
Score: 0/2

7 When an item of expense is paid and recorded in advance, it is normally called
. a(n)
When an item of expense is paid and recorded in advance, it is normally called a(n)

1. prepaid expense. 100%
2. estimated expense.

3. accrued expense.
4. cash expense.
Score: 2/2

Maso Company recorded journal entries for the issuance of common stock for
8 $80,000, the payment of $26,000 on accounts payable, and the payment of
. salaries expense of $42,000. What net effect do these entries have on owners'
equity?
Maso Company recorded journal entries for the issuance of common stock for $80,000, the
payment of $26,000 on accounts payable, and the payment of salaries expense of $42,000.
What net effect do these entries have on owners' equity?

1. Increase of
$38,000.
2. Increase of 0% $80,000 - $42,000 = $38,00

$12,000.
3. Increase of
$80,000.
4. Increase of
$54,000.
General $80,000 - $42,000 = $38,000.
Feedback:
Score: 0/2

9 Recording the adjusting entry for depreciation has the same effect as recording
. the adjusting entry for
Recording the adjusting entry for depreciation has the same effect as recording the
adjusting entry for

1. an accrued 0%
expense.
2. an accrued

revenue.
3. a prepaid expense.
4. an unearned
revenue.
Score: 0/2

1
0 A journal entry to record the sale of inventory on account will include a
.
A journal entry to record the sale of inventory on account will include a

1. credit to cost of
goods sold.
2. debit toinventory.
3. debit to sales. 0%
4. debit toaccounts
receivable.
Score: 0/2
1
Adjustments are often prepared
.

1. before the balance 0%
sheet date, but
dated as of the
balance sheet date.
2. after the balance
sheet date, and
dated after the
balance sheet date.
sheet date, but
dated as of the
balance sheet date.
4. before the balance
sheet date, and
dated after the
balance sheet date.
Score: 0/2

During the first year of Wilkinson Co.'s operations, all purchases were recorded
2
as assets. Supplies in the amount of $25,800 were purchased. Actual year-end
.
supplies amounted to $8,600. The adjusting entry for store supplies will
During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets.
Supplies in the amount of $25,800 were purchased. Actual year-end supplies amounted to
$8,600. The adjusting entry for store supplies will

1. increase expenses
by $17,200.
2. increase net
income by
$17,200.
3. decrease supplies 0% $25,800 – $8,600 = $17,200.

by $8,600.
4. debit Accounts
Payable for
$8,600.
General $25,800 – $8,600 = $17,200.
Feedback:
Score: 0/2

Garcia Corporation received cash of $24,000 on August 1, 2012 for one year's
3
rent in advance and recorded the transaction with a credit to Rent Revenue.
.
The December 31, 2012 adjusting entry is
Garcia Corporation received cash of $24,000 on August 1, 2012 for one year's rent in
advance and recorded the transaction with a credit to Rent Revenue. The December 31,
2012 adjusting entry is

1. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$10,000.
2. debit Cash and
credit Unearned
Rent Revenue,
$14,000.
3. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$14,000.
4. debit Unearned 0% 7/12 x $24,000 = $14,000.

Rent Revenue and
credit Rent
Revenue, $10,000.
General Feedback: 7/12 x $24,000 = $14,000.
Score: 0/2

4
External events do not include
.

1. a change in the
price of a good or
service that an
entity buys or
sells, a flood or
earthquake.
2. interaction
between an entity
and its
environment.
3. using buildings 100%

and machinery in
operations.
4. improvement in
technology by a
competitor.
Score: 2/2

Starr Corporation loaned $150,000 to another corporation on December 1,
5
2012 and received a 3-month, 8% interest-bearing note with a face value of
.
$150,000. What adjusting entry should Starr make on December 31, 2012?
Starr Corporation loaned $150,000 to another corporation on December 1, 2012 and
received a 3-month, 8% interest-bearing note with a face value of $150,000. What
adjusting entry should Starr make on December 31, 2012?

1. Debit Cash and
credit Interest
Receivable,
$3,000.
2. Debit Cash and
credit Interest
Revenue, $1,000.
3. Debit Interest
Receivable and
credit Interest
Revenue, $1,000.
4. Debit Interest 0% 1/12 x 8% x $150,000 &#61

Receivable and
credit Interest
Revenue, $3,000.
General 1/12 x 8% x $150,000 = $1,000.
Feedback:
Score: 0/2

6
Unearned revenue on the books of one company is likely to be
.

1. a prepaid expense
on the books of the
company that
made the advance
payment.
2. an accrued
revenue on the
books of the
company that
made the advance
payment.

3. an accrued
expense on the
books of the
company that
made the advance
payment.
4. an unearned 0%
revenue on the
books of the
company that
made the advance
payment.
Score: 0/2

7
Stockholders' equity is not affected by all
.

1. dividends.
2. expenses.
3. cash receipts. 100%

4. revenues.
Score: 2/2

Murphy Company sublet a portion of its warehouse for five years at an annual
8 rental of $30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid
. one year's rent in advance, which Murphy recorded as a credit to Unearned
Rent Revenue. Murphy report
Murphy Company sublet a portion of its warehouse for five years at an annual rental of
$30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid one year's rent in
advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports
on a calendar-year basis. The adjustment on December 31, 2012 for Murphy should be
Student Response Value Correct Answer

1. Revenue Revenue 10,000
Unearned Rent Revenue 10,000

2. Unearned Rent Revenue 20,000 100%

Revenue Revenue 20,000

3. No entry
4. Unearned Rent Revenue 10,000

General $30,000 x 8/12 = $20,000.
Feedback:
Score: 2/2

9
.

1. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$6,000.
2. debit Unearned 100% $18,000 x 4/12 = $6,000.

Rent Revenue and
credit Rent
Revenue, $6,000.
3. debit Cash and
credit Unearned
Rent Revenue,
$12,000.
4. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$12,000.
Score: 2/2

The Supplies account had a balance at the beginning of year 3 of $8,000
1
(before the reversing entry). Payments for purchases of supplies during year 3
0
amounted to $50,000 and were recorded as expense. A physical count at the
.
end of year 3 revealed supplie
The Supplies account had a balance at the beginning of year 3 of $8,000 (before the
reversing entry). Payments for purchases of supplies during year 3 amounted to $50,000
and were recorded as expense. A physical count at the end of year 3 revealed supplies
costing $9,500 were on hand. Reversing entries are used by this company. The required
adjusting entry at the end of year 3 will include a debit to:

1. Supplies for
$9,500.
2. Supplies Expense
for $1,500.
3. Supplies for
$1,500.
4. Supplies Expense 0% $9,500 + $8,000 – $8,000 = $9,5

for $48,500.
General $9,500 + $8,000 – $8,000 = $9,500.
Feedback:
Score: 0/2

1
Olsen Company paid or collected during 2012 the following items:
.
Olsen Company paid or collected during 2012 the following items:
Insurance premiums paid $ 20,800
Interest collected 67,800
Salaries paid 240,400
The following balances have been excerpted from Olsen's balance sheets:
December 31, 2012 December 31, 2011
Prepaid insurance $ 2,400 $ 3,000
Interest receivable 7,400 5,800
Salaries and wages payable 24,600 21,200
The insurance expense on the income statement for 2012 was

1. $20,200.
2. $26,200.
3. $21,400. 100% $20,800 + $600 = $21,400.
4. $15,400.
General $20,800 + $600 = $21,400.
Feedback:
Score: 2/2

Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay,
2 however, is paid in the next biweekly period. Colaw accrues salaries expense
. only at its December 31 year end. Data relating to salaries earned in December
2012 are as follows:
Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is
paid in the next biweekly period. Colaw accrues salaries expense only at its December 31
year end. Data relating to salaries earned in December 2012 are as follows:
Last payroll was paid on 12/26/12, for the 2-week period ended 12/26/12.
Overtime pay earned in the 2-week period ended 12/26/12 was $15,000.
Remaining work days in 2012 were December 29, 30, 31, on which days there was
no overtime.
The recurring biweekly salaries total $270,000.
Assuming a five-day work week, Colaw should record a liability at December 31, 2012 for
accrued salaries of

1. $81,000.
2. $162,000.
3. $177,000.
4. $96,000.
General $15,000 + ($270,000 ÷ 10 × 3) = $96,000.
Feedback:
Score: 0/2

3
The following information is available for Ace Company for 2012:
.
Disbursements for purchases $1,160,000
Increase in trade accounts payable 100,000
Decrease in merchandise inventory 40,000
Cost of goods sold for 2012 was

1. $1,100,000. 0% $1,160,000 + $100,000 + $40,00

2. $1,220,000.
3. $1,020,000.
4. $1,300,000.
General $1,160,000 + $100,000 + $40,000 = $1,300,000.
Feedback:
Score: 0/2

4 When an item of expense is paid and recorded in advance, it is normally called
. a(n)
When an item of expense is paid and recorded in advance, it is normally called a(n)

1. accrued expense.
2. estimated expense.
3. prepaid expense. 100%
4. cash expense.
Score: 2/2

5
Which type of account is always debited during the closing process?
.
Which type of account is always debited during the closing process?

1. Expense. 0%
2. Dividends.

3. Revenue.
4. Retained earnings.
Score: 0/2

Starr Corporation loaned $150,000 to another corporation on December 1,
6
2012 and received a 3-month, 8% interest-bearing note with a face value of
.
$150,000. What adjusting entry should Starr make on December 31, 2012?
Starr Corporation loaned $150,000 to another corporation on December 1, 2012 and
received a 3-month, 8% interest-bearing note with a face value of $150,000. What
adjusting entry should Starr make on December 31, 2012?

1. Debit Interest 100% 1/12 x 8% x $150,000 &#61
Receivable and
credit Interest
Revenue, $1,000.
2. Debit Interest
Receivable and
credit Interest
Revenue, $3,000.
3. Debit Cash and
credit Interest
Receivable,
$3,000.
4. Debit Cash and
credit Interest
Revenue, $1,000.
General 1/12 x 8% x $150,000 = $1,000.
Feedback:
Score: 2/2

Year-end net assets would be overstated and current expenses would be
7
understated as a result of failure to record which of the following adjusting
.
entries?
Year-end net assets would be overstated and current expenses would be understated as a
result of failure to record which of the following adjusting entries?

1. Expiration of 0%
prepaid insurance
2. Depreciation of

fixed assets
3. All of these
4. Accrued wages
payable
Score: 0/2

8
Which of the following properly describes a deferral?
.

1. Cash is received
after revenue is
earned.
2. Cash is paid in the
same time period
that an expense is
incurred.
3. Cash is paid after
expense is
incurred.
4. Cash is received 100%
before revenue is
earned.
Score: 2/2

9
Adjusting entries that should be reversed include
.
Adjusting entries that should be reversed include

1. those that debit an
asset or credit a
liability.
2. all accrued

expenses.
3. all accrued 0%

revenues.
4. all of these.
Score: 0/2

1
0 Debit always means
.
Debit always means

1. increase.
2. decrease.
3. none of these. 100% left or left-side.
4. right side of an
account.
General left or left-side.
Feedback:
Score: 2/2
1 Factors that shape an accounting information system include the

.
Factors that shape an accounting information system include the

1. all of these. 100%
2. volume of data to
be handled.

3. size of the firm.
4. nature of the
business.
Score: 2/2

2
At the time a company prepays a cost
.
At the time a company prepays a cost

1. more than one of
the above.
2. it debits an
expense account to
match the expense
against revenues
earned.
3. it debits an asset 100%

account to show
the service or
benefit it will
receive in the
future.
4. its credits a
liability account to
show the
obligation to pay
for the service in
the future.
Score: 2/2

3
The difference between the accounting process and the accounting cycle is
.

1. the accounting
process represents
the steps taken to
accomplish the
accounting cycle.
2. the accounting 0%

process results in
the preparation of
financial
statements,
whereas the
accounting cycle is
concerned with
recording business
transactions.
3. the accounting
cycle represents
the steps taken to
accomplish the
accounting
process.
4. merely semantic,
because both
concepts refer to
the same thing.
Score: 0/2

4
An unearned revenue can best be described as an amount
.
An unearned revenue can best be described as an amount

1. not collected and
currently matched
with expenses.
not currently
matched with
expenses.
3. collected and
currently matched
with expenses.
4. collected and not 100%

currently matched
with expenses.
Score: 2/2

Maso Company recorded journal entries for the issuance of common stock for
5 $80,000, the payment of $26,000 on accounts payable, and the payment of
. salaries expense of $42,000. What net effect do these entries have on owners'
equity?
Maso Company recorded journal entries for the issuance of common stock for $80,000, the
payment of $26,000 on accounts payable, and the payment of salaries expense of $42,000.
What net effect do these entries have on owners' equity?

1. Increase of
$80,000.
2. Increase of
$54,000.

3. Increase of
$12,000.
4. Increase of 100% $80,000 - $42,000 = $38,00

$38,000.
General $80,000 - $42,000 = $38,000.
Feedback:
Score: 2/2

6
An adjusting entry should never include
.
An adjusting entry should never include

1. a debit to a
liability account
and a credit to
revenue account.
2. a debit to an
expense account
and a credit to a
liability account.
3. a debit to an
expense account
and a credit to a
revenue account.
4. a debit to a 0%
revenue account
and a credit to a
liability account.
Score: 0/2

If, during an accounting period, an expense item has been incurred and
7
consumed but not yet paid for or recorded, then the end-of-period adjusting
.
entry would involve
If, during an accounting period, an expense item has been incurred and consumed but not
yet paid for or recorded, then the end-of-period adjusting entry would involve

1. a liability account 100%
and an expense
account.
2. an asset or contra
asset account and
an expense
account.
3. a receivable
account and a
revenue account.
4. a liability account
and an asset
account.
Score: 2/2

8
How do these prepaid expenses expire?
.
How do these prepaid expenses expire?
Rent Supplies

Student Response Value

1. Through use and consumption With the passage of time

2. With the passage of time With the passage of time

3. Through use and consumption Through use and consumption

4. With the passage of time Through use and consumption 100%

Score: 2/2

Mune Company recorded journal entries for the declaration of $100,000 of
9 dividends, the $64,000 increase in accounts receivable for services rendered,
. and the purchase of equipment for $42,000. What net effect do these entries
have on owners' equity?
Mune Company recorded journal entries for the declaration of $100,000 of dividends, the
$64,000 increase in accounts receivable for services rendered, and the purchase of
equipment for $42,000. What net effect do these entries have on owners' equity?

1. Increase of
$22,000.
2. Decrease of
$78,000.
3. Decrease of
$142,000.
4. Decrease of 100% $100,000 - $64,000 = $36,0

$36,000.
General $100,000 - $64,000 = $36,000.
Feedback:
Score: 2/2

At December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding,
1
which had been sold to customers during 2012 for $75 each. Sue's operates on
0
a gross profit of 60% of its sales. What amount of revenue pertaining to the
.
1,000 outstanding gift
At December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding, which had
been sold to customers during 2012 for $75 each. Sue's operates on a gross profit of 60%
of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates
should be deferred at December 31, 2012?

1. $0. 0% 1,000 × $75 = $75,000.

2. $45,000.
3. $30,000.
4. $75,000.
General 1,000 × $75 = $75,000.
Feedback:
Score: 0/2
Brown Company's account balances at December 31, 2012 for Accounts
1 Receivable and the related Allowance for Doubtful Accounts are $920,000 debit
. and $1,400 credit, respectively. From an aging of accounts receivable, it is
estimated that $25,000 of the De
Brown Company's account balances at December 31, 2012 for Accounts Receivable and
the related Allowance for Doubtful Accounts are $920,000 debit and $1,400 credit,
respectively. From an aging of accounts receivable, it is estimated that $25,000 of the
December 31 receivables will be uncollectible. The necessary adjusting entry would
include a credit to the allowance account for

1. $26,400. 0% $25,000 – $1,400 = $23,600.
2. $23,600.

3. $1,400.
4. $25,000.
General $25,000 – $1,400 = $23,600.
Feedback:
Score: 0/2

2
The debit and credit analysis of a transaction normally takes place
.

1. when the entry is
posted to the
ledger.
2. at some other
point in the
accounting cycle.

3. when the trial
balance is
prepared.
4. before an entry is 100%

recorded in a
journal.
Score: 2/2

The worksheet for Sharko Co. consisted of five pairs of debit and credit
3 columns. The dollar amount of one item appeared in both the credit column of
. the income statement section and the debit column of the balance sheet
section. That item is
The worksheet for Sharko Co. consisted of five pairs of debit and credit columns. The
dollar amount of one item appeared in both the credit column of the income statement
section and the debit column of the balance sheet section. That item is

1. beginning 0%
inventory.
2. cost of goods sold.
3. net income for the
period.
4. Net loss for the
period.
Score: 0/2

4 Which of the following must be considered in estimating depreciation on an
. asset for an accounting period?
Which of the following must be considered in estimating depreciation on an asset for an
accounting period?

1. Its useful life
2. The decline of its
fair market value

3. The original cost
of the asset
4. Both the original 100%

cost of the asset
and its useful life.
Score: 2/2

On June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in
5 five annual installments of $120,000 beginning January 2, 2013. In connection
. with this loan, Horn was required to deposit $5,000 in a noninterest-bearing
escrow account. The amoun
On June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in five annual
installments of $120,000 beginning January 2, 2013. In connection with this loan, Horn
was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held
in escrow is to be returned to Horn after all principal and interest payments have been
made. Interest on the note is payable on the first day of each month beginning July 1, 2012.
Horn made timely payments through November 1, 2012. On January 2, 2013, Nott
received payment of the first principal installment plus all interest due. At December 31,
2012, Nott's interest receivable on the loan to Horn should be

1. $18,000.
2. $0.
3. $12,000.
4. $6,000. 0% $600,000 × 12%

General $600,000 × 12% × 2/12 = $12,000.
Feedback:
Score: 0/2

6 At December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding,
which had been sold to customers during 2012 for $75 each. Sue's operates on
. a gross profit of 60% of its sales. What amount of revenue pertaining to the
1,000 outstanding gift
At December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding, which had
been sold to customers during 2012 for $75 each. Sue's operates on a gross profit of 60%
of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates
should be deferred at December 31, 2012?

1. $75,000. 100% 1,000 × $75 = $75,000.
2. $30,000.
3. $0.
4. $45,000.
General 1,000 × $75 = $75,000.
Feedback:
Score: 2/2

Gregg Corp. reported revenue of $1,250,000 in its accrual basis income
7
statement for the year ended June 30, 2013. Additional information was as
.
follows:
Gregg Corp. reported revenue of $1,250,000 in its accrual basis income statement for the
year ended June 30, 2013. Additional information was as follows:
Accounts receivable June 30, 2012 $400,000
Accounts receivable June 30, 2013 530,000
Uncollectible accounts written off during the fiscal year 15,000
Under the cash basis, Gregg should report revenue of

1. $1,135,000.

2. $850,000. 0% $1,250,000 + $400,000 – $530,0
3. $1,105,000.
4. $835,000.
General $1,250,000 + $400,000 – $530,000 – $15,000 = $1,105,000.
Feedback:
Score: 0/2

8 Big-Mouth Frog Corporation had revenues of $300,000, expenses of $180,000,
and dividends of $45,000. When Income Summary is closed to Retained
.
Earnings, the amount of the debit or credit to Retained Earnings is a
Big-Mouth Frog Corporation had revenues of $300,000, expenses of $180,000, and
dividends of $45,000. When Income Summary is closed to Retained Earnings, the amount
of the debit or credit to Retained Earnings is a

1. credit of $120,000. 100% $300,000 - $180,000 = $12
2. debit of $120,000.

3. credit of $75,000.
4. debit of $75,000.
General $300,000 - $180,000 = $120,000.
Feedback:
Score: 2/2

9
An accrued revenue can best be described as an amount
.
An accrued revenue can best be described as an amount

currently matched
with expenses.
2. collected and not
currently matched
with expenses.

3. collected and
currently matched
with expenses.
4. not collected and 0%

not currently
matched with
expenses.
Score: 0/2

1 Mune Company recorded journal entries for the declaration of $100,000 of
0 dividends, the $64,000 increase in accounts receivable for services rendered,
. and the purchase of equipment for $42,000. What net effect do these entries
have on owners' equity?
Mune Company recorded journal entries for the declaration of $100,000 of dividends, the
$64,000 increase in accounts receivable for services rendered, and the purchase of
equipment for $42,000. What net effect do these entries have on owners' equity?

1. Decrease of
$78,000.
2. Increase of
$22,000.
3. Decrease of 100% $100,000 - $64,000 = $36,0

$36,000.
4. Decrease of
$142,000.
General $100,000 - $64,000 = $36,000.
Feedback:
Score: 2/2
1
A prepaid expense can best be described as an amount
.

1. not paid and not
currently matched
with revenues.
2. not paid and
currently matched
with revenues.

matched with
revenues.
4. paid and not 100%

currently matched
with revenues.
Score: 2/2

2 External events do not include
.

1. a change in the
price of a good or
service that an
entity buys or
sells, a flood or
earthquake.

and machinery in

operations.
3. improvement in
technology by a
competitor.
4. interaction
between an entity
and its
environment.
Score: 2/2

3 At the end of 2012, Drew Company made four adjusting entries for the
. following items:
At the end of 2012, Drew Company made four adjusting entries for the following items:
1. Depreciation expense, $25,000.
2. Expired insurance, $2,200 (originally recorded as prepaid insurance.)
3. Interest payable, $6,000.
4. Rent receivable, $10,000.
In the normal situation, to facilitate subsequent entries, the adjusting entry or entries that
may be reversed is (are)

1. Entry No. 3. 0%
2. Entry No. 2, No. 3

and No. 4.
3. Entry No. 3 and
No. 4.
4. Entry No. 4.
Score: 0/2

4 The income statement of Dolan Corporation for 2012 included the following
. items:
The income statement of Dolan Corporation for 2012 included the following items:
Interest revenue $131,000
Salaries and wages expense 170,000
Insurance expense 15,200
The following balances have been excerpted from Dolan Corporation's balance sheets:
December 31, 2012 December 31, 2011
Interest receivable $18,200 $15,000
Salaries and wages payable 17,800 8,400
Prepaid insurance 2,200 3,000
The cash paid for salaries during 2012 was

1. $179,400. 0% $8,400 + $170,000 - $17,800 &#
2. $160,600.
3. $161,600.
4. $187,800.
General $8,400 + $170,000 - $17,800 = $160,600.
Feedback:
Score: 0/2

5
Which of the following errors will cause an imbalance in the trial balance?
.

1. Omission of a
transaction in the
journal.
2. Posting a credit of
$720 to Accounts
Payable as a credit
of $720 to
Accounts
Receivable.
3. Listing the balance 100%

of an account with
a debit balance in
the credit column
of the trial
balance.
4. Posting an entire
journal entry twice
to the ledger.
Score: 2/2

6
.

be handled.

4. nature of the
business.
Score: 2/2

7
.

1. dividends.
2. revenues.
3. expenses.
4. cash receipts. 100%

Score: 2/2

A company receives interest on a $40,000, 8%, 5-year note receivable each
8
April 1. At December 31, 2012, the following adjusting entry was made to
.
accrue interest receivable:
A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At
December 31, 2012, the following adjusting entry was made to accrue interest receivable:
Interest Receivable 2,400
Interest Revenue 2,400
Assuming that the company does use reversing entries, what entry should be made on
April 1, 2013 when the annual interest payment is received?

1. Cash 3,200

2. Cash 800
Interest Revenue 800

3. Cash 2,400

4. Cash 3,200 0%


Score: 0/2

9
Which of the following would not be a correct form for an adjusting entry?
.

1. A debit to an asset
and a credit to a
liability
2. A debit to an 0%
expense and a
credit to a liability
3. A debit to a
revenue and a
4. A debit to a
liability and a
credit to a revenue
Score: 0/2

1
0 Debit always means
.
Debit always means

1. increase.
2. right side of an
account.

3. none of these. 100% left or left-side.
4. decrease.
General left or left-side.
Feedback:
Score: 2/2

A company receives interest on a $40,000, 8%, 5-year note receivable each
1
April 1. At December 31, 2012, the following adjusting entry was made to
.
accrue interest receivable:
A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At
December 31, 2012, the following adjusting entry was made to accrue interest receivable:
Assuming that the company does use reversing entries, what entry should be made on
April 1, 2013 when the annual interest payment is received?

1. Cash 3,200 100%

2. Cash 800

3. Cash 2,400

4. Cash 3,200

Score: 2/2

Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay,
2 however, is paid in the next biweekly period. Colaw accrues salaries expense
. only at its December 31 year end. Data relating to salaries earned in December
2012 are as follows:
Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is
paid in the next biweekly period. Colaw accrues salaries expense only at its December 31
year end. Data relating to salaries earned in December 2012 are as follows:
Last payroll was paid on 12/26/12, for the 2-week period ended 12/26/12.
Overtime pay earned in the 2-week period ended 12/26/12 was $15,000.
Remaining work days in 2012 were December 29, 30, 31, on which days there was
no overtime.
The recurring biweekly salaries total $270,000.
Assuming a five-day work week, Colaw should record a liability at December 31, 2012 for
accrued salaries of

1. $81,000. 0% $15,000 + ($270,000
2. $96,000.
3. $177,000.
4. $162,000.
General $15,000 + ($270,000 ÷ 10 × 3) = $96,000.
Feedback:
Score: 0/2

3
.

1. credit to cost of 0%
goods sold.

3. debit to sales.
4. debit toaccounts
receivable.
Score: 0/2

4
When a corporation pays a note payable and interest,
.

1. the accountinterest
expensewill be
decreased.
2. they will 100%

debitnotes payable
and interest

expense.
3. they will
debitcash.
4. the accountnotes
payablewill be
increased.
Score: 2/2

5 Which of the following criteria must be met before an event or item should be
. recorded for accounting purposes?
Which of the following criteria must be met before an event or item should be recorded for
accounting purposes?

1. The event or item
is an element.
is relevant and
reliable.

3. All of these must 100%
be met.
can be measured
objectively in
financial terms.
Score: 2/2

6
.

1. paid and not
currently matched
with earnings.
matched with
earnings.

3. not paid and 100%
currently matched
with earnings.
4. not paid and not
currently matched
with earnings.
Score: 2/2

7 Compared to the accrual basis of accounting, the cash basis of accounting
. overstates income by the net increase during the accounting period of the
Compared to the accrual basis of accounting, the cash basis of accounting overstates
income by the net increase during the accounting period of the
Accounts Receivable Accrued Expenses Payable


1. No Yes 100%

2. Yes Yes

3. No No

4. Yes No

General Conceptual.
Feedback:
Score: 2/2

8 An accounting record into which the essential facts and figures in connection
. with all transactions are initially recorded is called the
An accounting record into which the essential facts and figures in connection with all
transactions are initially recorded is called the

1. ledger.
2. trial balance.

3. none of these. 100% journal.
4. account.
General journal.
Feedback:
Score: 2/2

9
.

sheet date, but
dated as of the
balance sheet date.
2. after the balance 100%

sheet date, but
dated as of the
balance sheet date.
sheet date, and
dated after the
balance sheet date.
sheet date, and
dated after the
balance sheet date.
Score: 2/2

1
0 Adjusting entries are necessary to
.
Adjusting entries are necessary to
1. obtain a proper matching of revenue and expense.
2. achieve an accurate statement of assets and equities.
3. adjust assets and liabilities to their fair market value.


1. 3
2. 2
3. 1 and 2 100%
4. 1
Score: 2/2
1
.

1. improvement in
technology by a
competitor.
2. a change in the
price of a good or
service that an
entity buys or
sells, a flood or
earthquake.

and machinery in
operations.
4. interaction
between an entity
and its
environment.
Score: 2/2

On June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in
2 five annual installments of $120,000 beginning January 2, 2013. In connection
. with this loan, Horn was required to deposit $5,000 in a noninterest-bearing
escrow account. The amoun
On June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in five annual
installments of $120,000 beginning January 2, 2013. In connection with this loan, Horn
was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held
in escrow is to be returned to Horn after all principal and interest payments have been
made. Interest on the note is payable on the first day of each month beginning July 1, 2012.
Horn made timely payments through November 1, 2012. On January 2, 2013, Nott
received payment of the first principal installment plus all interest due. At December 31,
2012, Nott's interest receivable on the loan to Horn should be

1. $0.
2. $18,000.
3. $12,000. 100% $600,000 × 12%
4. $6,000.
General $600,000 × 12% × 2/12 = $12,000.
Feedback:
Score: 2/2

3
.
Disbursements for purchases $1,160,000
Increase in trade accounts payable 100,000
Decrease in merchandise inventory 40,000
Cost of goods sold for 2012 was

1. $1,020,000.

2. $1,220,000. 0% $1,160,000 + $100,000 + $40,00
3. $1,300,000.
4. $1,100,000.
General $1,160,000 + $100,000 + $40,000 = $1,300,000.
Feedback:
Score: 0/2

When converting from cash basis to accrual basis accounting, which of the
4
following adjustments should be made to cash paid for operating expenses to
.
determine accrual basis operating expenses?
When converting from cash basis to accrual basis accounting, which of the following
adjustments should be made to cash paid for operating expenses to determine accrual basis
operating expenses?

1. Subtract interest
expense.
2. Add beginning

prepaid expense.
3. Add beginning
accrued liabilities.
4. Subtract ending 100%

prepaid expense.
Score: 2/2

5 If, during an accounting period, an expense item has been incurred and
consumed but not yet paid for or recorded, then the end-of-period adjusting
.
entry would involve
If, during an accounting period, an expense item has been incurred and consumed but not
yet paid for or recorded, then the end-of-period adjusting entry would involve

1. a liability account 100%
and an expense
account.
2. a liability account
and an asset
account.

3. a receivable
account and a
revenue account.
4. an asset or contra
asset account and
an expense
account.
Score: 2/2

Tate Company purchased equipment on November 1, 2012 and gave a 3-month,
6
9% note with a face value of $40,000. The December 31, 2012 adjusting entry
.
is
Tate Company purchased equipment on November 1, 2012 and gave a 3-month, 9% note
with a face value of $40,000. The December 31, 2012 adjusting entry is

1. debit Interest
Expense and credit
Interest Payable,
$600.
2. debit Interest
Expense and credit
Interest Payable,
$3,600.
3. debit Interest 0% 2/12 x 9% x $40,000 =

Expense and credit
Cash, $600.
4. debit Interest
Expense and credit
Interest Payable,
$900.
General 2/12 x 9% x $40,000 = $600.
Feedback:
Score: 0/2

7
.

1. Cash is received
after revenue is
earned.
expense is
incurred.

same time period
that an expense is
incurred.

before revenue is
earned.
Score: 2/2

8
An adjusting entry to record an accrued expense involves a debit to a(an):
.
An adjusting entry to record an accrued expense involves a debit to a(an):

1. expense account
and a credit to a
prepaid account.
2. expense account
and a credit to a
liability account.
3. liability account 0%

and a credit to an
expense account.
4. expense account
and a credit to
Cash.
Score: 0/2

9 The omission of the adjusting entry to record depreciation expense will result
. in an:
The omission of the adjusting entry to record depreciation expense will result in an:

1. overstatement of
assets and an
overstatement of
liabilities.
2. overstatement of
liabilities and an
understatement of
owners'
equity.

3. understatement of
assets and an
understatement of
owner's
equity.
4. overstatement of 100%

assets and an
overstatement of
owners'
equity.
Score: 2/2

1
service contracts are for a one-year, two-year, or three-year period. Cash
0
receipts from contracts are credited to Unearned Service Revenue. This account
.
2012.

During 2013 $760,000
During 2014 1,140,000
During 2015 700,000
2012 balance sheet?

1. $2,600,000.
2. $1,000,000.
3. $1,700,000.
4. $2,700,000. 0% $760,000 + $1,140,000 + $700,0

General $760,000 + $1,140,000 + $700,000 = $2,600,000.
Feedback:
Score: 0/2
1
The double-entry accounting system means
.
The double-entry accounting system means

1. Each item is
recorded in a
journal entry, then
in a general ledger
account.
2. Each transaction is
recorded with two
journal entries.
3. The dual effect of 100%

each transaction is
recorded with a
debit and a credit.
4. More than one of
the above.
Score: 2/2

2
.

1. at some other
point in the
accounting cycle.
2. when the trial
balance is
prepared.

recorded in a
journal.
posted to the
ledger.
Score: 2/2

3
A trial balance
.
A trial balance

1. proves that debits
and credits are
equal in the ledger.
3. supplies a listing
of open accounts
and their balances
that are used in
preparing financial
statements.
4. is normally
prepared three
times in the
accounting cycle.
Score: 2/2

4
.

1. not paid and not
currently matched
with revenues.
matched with
revenues.

3. not paid and
currently matched
with revenues.
4. paid and not 100%

currently matched
with revenues.
Score: 2/2

5
A journal entry to record a receipt of rent revenue in advance will include a
.
A journal entry to record a receipt of rent revenue in advance will include a

1. credit to rent
revenue.
2. credit to cash.
3. debit to rent
revenue.
4. credit tounearned 100%

rent.
Score: 2/2

6
.

sheet date, and
dated after the
balance sheet date.
sheet date, but
dated as of the
balance sheet date.

sheet date, and
dated after the
balance sheet date.
4. after the balance 100%

sheet date, but
dated as of the
balance sheet date.
Score: 2/2

7
Which of the following is an example of an accrued expense?
.

1. Depreciation
expense
2. Property taxes 100%

incurred during the
year, to be paid in
the first quarter of
the subsequent
year.
3. Office supplies
purchased at the
beginning of the
year and debited to
an expense
account.
4. Rent earned during
the period, to be
received at the end
of the year
Score: 2/2

8
.

1. credit to cost of
goods sold.
2. debit toaccounts 100%

receivable.
4. debit to sales.
Score: 2/2

In November and December 2012, Lane Co., a newly organized magazine
9 publisher, received $75,000 for 1,000 three-year subscriptions at $25 per year,
. starting with the January 2013 issue. Lane included the entire $75,000 in its
2012 income tax return. What
In November and December 2012, Lane Co., a newly organized magazine publisher,
received $75,000 for 1,000 three-year subscriptions at $25 per year, starting with the
January 2013 issue. Lane included the entire $75,000 in its 2012 income tax return. What
amount should Lane report in its 2012 income statement for subscriptions revenue?

1. $25,000. 0% $0, none of the $75,000 is earned
2. $0.
3. $75,000.
4. $4,167.
General $0, none of the $75,000 is earned.
Feedback:
Score: 0/2

1 Pappy Corporation received cash of $18,000 on September 1, 2012 for one
0 year's rent in advance and recorded the transaction with a credit to Unearned
. Rent Revenue. The December 31, 2012 adjusting entry is

1. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$6,000.
2. debit Cash and
credit Unearned
Rent Revenue,

$12,000.
3. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$12,000.
4. debit Unearned 100% $18,000 x 4/12 = $6,000.

Rent Revenue and
credit Rent
Revenue, $6,000.
Score: 2/2
1
.

2. nature of the
business.
be handled.
Score: 2/2

2
A reversing entry should never be made for an adjusting entry that
.
A reversing entry should never be made for an adjusting entry that

1. adjusts unexpired 0%
costs from an
expense account to
an asset account.
2. accrues
unrecorded
expenses.

3. accrues
unrecorded
revenue.
4. adjusts expired
costs from an asset
account to an
expense account.
Score: 0/2

3
Which of the following is not an internal event?
.

1. Depreciation
2. All of these are 0%

internal
transactions.
3. Using raw
materials in the
production process
4. Dividend
declaration and
subsequent
payment
Score: 0/2

4 service contracts are for a one-year, two-year, or three-year period. Cash
. receipts from contracts are credited to Unearned Service Revenue. This account
2012.

During 2013 $760,000
During 2014 1,140,000
During 2015 700,000
2012 balance sheet?

1. $1,700,000.
2. $2,700,000.
3. $1,000,000.
4. $2,600,000. 100% $760,000 + $1,140,000 + $700,0

General $760,000 + $1,140,000 + $700,000 = $2,600,000.
Feedback:
Score: 2/2

5
If ending accounts receivable exceeds the beginning accounts receivable:
.
If ending accounts receivable exceeds the beginning accounts receivable:
1. no cash was
collected during
the period.
2. net income for the
period is less than
the amount of cash
basis income.
3. cash collections 100%

during the year are
less than the
amount of revenue
earned.
4. cash collections
during the period
exceed the amount
of revenue earned.
Score: 2/2

6
.

1. Depreciation
expense
2. Property taxes 100%

incurred during the
year, to be paid in
the first quarter of
the subsequent
year.
3. Office supplies
purchased at the
beginning of the
year and debited to
an expense
account.
4. Rent earned during
the period, to be
received at the end
of the year
Score: 2/2

7
.

expense is
incurred.
2. Cash is received
after revenue is
earned.

same time period
that an expense is
incurred.

before revenue is
earned.
Score: 2/2

8
.

journal entry twice
to the ledger.
$720 to Accounts
Payable as a credit
of $720 to
Accounts
Receivable.
3. Omission of a
transaction in the
journal.

of an account with
a debit balance in
the credit column
of the trial
balance.
Score: 2/2

Murphy Company sublet a portion of its warehouse for five years at an annual
9 rental of $30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid
. one year's rent in advance, which Murphy recorded as a credit to Unearned
Rent Revenue. Murphy report
Murphy Company sublet a portion of its warehouse for five years at an annual rental of
$30,000, beginning on May 1, 2012. The tenant, Sheri Charter, paid one year's rent in
advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports
on a calendar-year basis. The adjustment on December 31, 2012 for Murphy should be

1. No entry
2. Unearned Rent Revenue 10,000

3. Unearned Rent Revenue 20,000 100%

4. Revenue Revenue 10,000
Unearned Rent Revenue 10,000

General $30,000 x 8/12 = $20,000.
Feedback:
Score: 2/2

1 During the first year of Wilkinson Co.'s operations, all purchases were recorded
0 as assets. Supplies in the amount of $25,800 were purchased. Actual year-end
. supplies amounted to $8,600. The adjusting entry for store supplies will
During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets.
Supplies in the amount of $25,800 were purchased. Actual year-end supplies amounted to
$8,600. The adjusting entry for store supplies will

1. decrease supplies
by $8,600.
2. increase net
income by
$17,200.
3. debit Accounts
Payable for
$8,600.
4. increase expenses 100% $25,800 – $8,600 = $17,200.

by $17,200.
General $25,800 – $8,600 = $17,200.
Feedback:
Score: 2/2
1
A journal entry to record a payment on account will include a
.
A journal entry to record a payment on account will include a

1. credit toaccounts 0%
payable.
2. credit toaccounts
receivable.

3. debit toaccounts
receivable.
4. debit toaccounts
payable.
Score: 0/2

2
.

1. Omission of a
transaction in the
journal.
$720 to Accounts
Payable as a credit
of $720 to
Accounts
Receivable.

journal entry twice
to the ledger.

of an account with
a debit balance in
the credit column
of the trial
balance.
Score: 2/2

On September 1, 2012, Lowe Co. issued a note payable to National Bank in the
3 amount of $900,000, bearing interest at 12%, and payable in three equal
. annual principal payments of $300,000. On this date, the bank's prime rate was
11%. The first payment for
On September 1, 2012, Lowe Co. issued a note payable to National Bank in the amount of
$900,000, bearing interest at 12%, and payable in three equal annual principal payments of
$300,000. On this date, the bank's prime rate was 11%. The first payment for interest and
principal was made on September 1, 2013. At December 31, 2013, Lowe should record
accrued interest payable of

1. $22,000.
2. $36,000.
3. $33,000.
4. $24,000. 100% ($900,000 – $300,000)

General ($900,000 – $300,000) × 12% × 4/12 = $24,000.
Feedback:
Score: 2/2

4
.

1. a change in the
price of a good or
service that an
entity buys or
sells, a flood or
earthquake.
2. improvement in
technology by a

competitor.

and machinery in
operations.
4. interaction
between an entity
and its
environment.
Score: 2/2

5
A trial balance
.
A trial balance

1. proves that debits
and credits are
equal in the ledger.
3. supplies a listing
of open accounts
and their balances
that are used in
preparing financial
statements.
4. is normally
prepared three
times in the
accounting cycle.
Score: 2/2

The Supplies account had a balance at the beginning of year 3 of $8,000
6 (before the reversing entry). Payments for purchases of supplies during year 3
. amounted to $50,000 and were recorded as expense. A physical count at the
end of year 3 revealed supplie
The Supplies account had a balance at the beginning of year 3 of $8,000 (before the
reversing entry). Payments for purchases of supplies during year 3 amounted to $50,000
and were recorded as expense. A physical count at the end of year 3 revealed supplies
costing $9,500 were on hand. Reversing entries are used by this company. The required
adjusting entry at the end of year 3 will include a debit to:

1. Supplies Expense
for $48,500.
2. Supplies for 0% $9,500 + $8,000 – $8,000 = $9,5

$1,500.
3. Supplies Expense
for $1,500.
4. Supplies for
$9,500.
General $9,500 + $8,000 – $8,000 = $9,500.
Feedback:
Score: 0/2

7
.

1. when the trial
balance is
prepared.
2. at some other
point in the
accounting cycle.

recorded in a
journal.
posted to the
ledger.
Score: 2/2

8
.

1. A debit to a
liability and a
credit to a revenue
2. A debit to a
revenue and a

3. A debit to an asset 100%
and a credit to a
liability
4. A debit to an
expense and a
Score: 2/2

9
.

1. debit Cash and
credit Unearned
Rent Revenue,
$12,000.
2. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$6,000.
3. debit Rent
Revenue and
credit Unearned
Rent Revenue,
$12,000.
4. debit Unearned 100% $18,000 x 4/12 = $6,000.

Rent Revenue and
credit Rent
Revenue, $6,000.
Score: 2/2

Jim Yount, M.D., keeps his accounting records on the cash basis. During 2013,
1
Dr. Yount collected $300,000 from his patients. At December 31, 2012, Dr.
0
Yount had accounts receivable of $40,000. At December 31, 2013, Dr. Yount
.
had accounts receivable of $7
Jim Yount, M.D., keeps his accounting records on the cash basis. During 2013, Dr. Yount
collected $300,000 from his patients. At December 31, 2012, Dr. Yount had accounts
receivable of $40,000. At December 31, 2013, Dr. Yount had accounts receivable of
$70,000 and unearned revenue of $10,000. On the accrual basis, how much was Dr.
Yount's patient service revenue for 2013?

1. $330,000. 0% $300,000 – $40,000 + $70,000 –
2. $340,000.
3. $320,000.
4. $260,000.
General $300,000 – $40,000 + $70,000 – $10,000 = $320,000.
Feedback:
Score: 0/2
On September 1, 2012, Lowe Co. issued a note payable to National Bank in the
1 amount of $900,000, bearing interest at 12%, and payable in three equal
. annual principal payments of $300,000. On this date, the bank's prime rate was
11%. The first payment for
On September 1, 2012, Lowe Co. issued a note payable to National Bank in the amount of
$900,000, bearing interest at 12%, and payable in three equal annual principal payments of
$300,000. On this date, the bank's prime rate was 11%. The first payment for interest and
principal was made on September 1, 2013. At December 31, 2013, Lowe should record
accrued interest payable of

1. $24,000. 100% ($900,000 – $300,000)
2. $22,000.
3. $33,000.
4. $36,000.
General ($900,000 – $300,000) × 12% × 4/12 = $24,000.
Feedback:
Score: 2/2

2
.

1. a prepaid expense 100%
on the books of the
company that
made the advance
payment.
2. an accrued
revenue on the
books of the
company that
made the advance
payment.
3. an unearned
revenue on the
books of the
company that
made the advance
payment.
4. an accrued
expense on the
books of the
company that
made the advance
payment.
Score: 2/2

3
.

1. All of these are
internal
transactions.
2. Using raw
materials in the
production process
3. Dividend 100%

declaration and
subsequent
payment
4. Depreciation
Score: 2/2

4
.

1. they will
debitcash.
2. they will 100%

debitnotes payable
and interest
expense.
3. the accountnotes
payablewill be
increased.
4. the accountinterest
expensewill be
decreased.
Score: 2/2

5
Nominal accounts are also called
.
Nominal accounts are also called

1. real accounts.
2. temporary 100%

accounts.

3. permanent
accounts.
4. none of these.
Score: 2/2

When converting from cash basis to accrual-basis accounting, which of the
6
following adjustments should be made to cash receipts from customers to
.
determine accrual basis service revenue?
When converting from cash basis to accrual-basis accounting, which of the following
adjustments should be made to cash receipts from customers to determine accrual basis
service revenue?

1. Subtract beginning
unearned service
revenue.
2. Add cash sales.
3. Subtract ending
accounts
receivable.
4. Add ending 100%

accounts
receivable.
Score: 2/2

7
.

1. the accounting
process results in
the preparation of
financial
statements,
whereas the
accounting cycle is
concerned with
recording business
transactions.
2. merely semantic,
because both
concepts refer to
the same thing.
3. the accounting
process represents
the steps taken to
accomplish the
accounting cycle.
4. the accounting 100%

cycle represents
the steps taken to
accomplish the
accounting
process.
Score: 2/2

8 Tate Company purchased equipment on November 1, 2012 and gave a 3-month,
9% note with a face value of $40,000. The December 31, 2012 adjusting entry
.
is
Tate Company purchased equipment on November 1, 2012 and gave a 3-month, 9% note
with a face value of $40,000. The December 31, 2012 adjusting entry is

1. debit Interest
Expense and credit
Interest Payable,
$3,600.
2. debit Interest
Expense and credit
Cash, $600.
3. debit Interest
Expense and credit
Interest Payable,
$900.
4. debit Interest 100% 2/12 x 9% x $40,000 =

Expense and credit
Interest Payable,
$600.
General 2/12 x 9% x $40,000 = $600.
Feedback:
Score: 2/2

Allen Corp.'s liability account balances at June 30, 2013 included a 10% note
9 payable in the amount of $3,000,000. The note is dated October 1, 2011 and is
. payable in three equal annual payments of $1,000,000 plus interest. The first
interest and principa
Allen Corp.'s liability account balances at June 30, 2013 included a 10% note payable in
the amount of $3,000,000. The note is dated October 1, 2011 and is payable in three equal
annual payments of $1,000,000 plus interest. The first interest and principal payment was
made on October 1, 2012. In Allen's June 30, 2013 balance sheet, what amount should be
reported as accrued interest payable for this note?

1. $50,000.
2. $75,000. 0% $2,000,000 × 9/12
3. $225,000.
4. $150,000.
General $2,000,000 × 9/12 × 10% = $150,000.
Feedback:
Score: 0/2

1
Which of the following criteria must be met before an event or item should be
0
recorded for accounting purposes?
.
Which of the following criteria must be met before an event or item should be recorded for
accounting purposes?

1. All of these must 100%
be met.
is relevant and
reliable.
is an element.
can be measured
objectively in
financial terms.
Score: 2/2

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1

Maintaining a set of accounting records is

Student Response Value Correct Answer Feedback

4. required by the 0%

Service contracts still outstanding at December 31, 2012 expire as follows:

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

2. debit Unearned 100% $18,000 x 4/12 &#61; $6,000.

2. unearned 100%

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. Subtract ending 0%

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

2. Increase of 0% $80,000 - $42,000 &#61; $38,00

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. debit to sales. 0%

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. decrease supplies 0% $25,800 – $8,600 = $17,200.

Student Response Value Correct Answer Feedback

4. debit Unearned 0% 7/12 x $24,000 &#61; $14,000.

Student Response Value Correct Answer Feedback

3. using buildings 100%

Student Response Value Correct Answer Feedback

4. Debit Interest 0% 1/12 x 8&#37; x $150,000 &#61

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. cash receipts. 100%

Student Response Value Correct Answer

2. Unearned Rent Revenue 20,000 100%

Student Response Value Correct Answer Feedback

2. debit Unearned 100% $18,000 x 4/12 &#61; $6,000.

Student Response Value Correct Answer Feedback

4. Supplies Expense 0% $9,500 + $8,000 – $8,000 = $9,5

The insurance expense on the income statement for 2012 was

3. $21,400. 100% $20,800 + $600 &#61; $21,400.

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. prepaid expense. 100%

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. all accrued 0%

Student Response Value Correct Answer Feedback

1 Factors that shape an accounting information system include the

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

3. it debits an asset 100%

Student Response Value Correct Answer Feedback

2. the accounting 0%

Student Response Value Correct Answer Feedback

4. collected and not 100%

Student Response Value Correct Answer Feedback

4. Increase of 100% $80,000 - $42,000 &#61; $38,00

Student Response Value Correct Answer Feedback

Student Response Value Correct Answer Feedback

Student Response Value

Student Response Value Correct Answer Feedback

2. debit Unearned 100% $18,000 x 4/12 = $6,000.

2. Increase of 0% $80,000 - $42,000 = $38,00

4. debit Unearned 0% 7/12 x $24,000 = $14,000.

4. Debit Interest 0% 1/12 x 8% x $150,000 &#61

2. debit Unearned 100% $18,000 x 4/12 = $6,000.

3. $21,400. 100% $20,800 + $600 = $21,400.

4. Increase of 100% $80,000 - $42,000 = $38,00

4. Decrease of 100% $100,000 - $64,000 = $36,0

3. Decrease of 100% $100,000 - $64,000 = $36,0

3. debit Interest 0% 2/12 x 9% x $40,000 =