Question 1

prepaid expenses are eventually expected to become

Accepted Answer

expenses when their future economic value expires or is used up

Question 2

if there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Accepted Answer

deferral

Question 3

the unexpired insurance at the end of the fiscal period represents a(n)

Accepted Answer

deferred expense

Question 4

the general term to indicate delaying the recognition of an expense already paid or of a revenue already received is

Accepted Answer

deferral

Question 5

the account type and normal balance of unearned revenue would be

Accepted Answer

liability, credit

Question 6

the entry to adjust the accounts for salaries accrued at the end of the accounting period is

Accepted Answer

debit salaries expense, credit salaries payable

Question 7

Data for an adjusting entry described as accrued wages, $2,020 requires a

Accepted Answer

debit to wages expense and a credit to wages payable

Question 8

accrued revenues would affect ____________ on the balance sheet

Accepted Answer

assets

Question 9

accrued expenses affect __________ on the balance sheet

Accepted Answer

liabilities

Question 10

which of the following is an example of an accrued expense

Accepted Answer

salary owed but not yet paid

Question 11

the entry to adjust for the cost of supplies used during the accounting period is

Accepted Answer

debit supplies expense, credit supplies

Question 12

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Accepted Answer

used

Question 13

the cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as

Accepted Answer

an asset

Question 14

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a (n)

Accepted Answer

an asset

Question 15

the difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Accepted Answer

book value

Question 16

accumulated depreciation and depreciation expense are classified, respectively as

Accepted Answer

contra asset, expense

Question 17

the net book value of a fixed asset is determined by the original cost

Accepted Answer

less accumulated depreciation

Question 18

accrual basis of accounting

Accepted Answer

revenues are reported on the income statement in the period in which a service has been performed or a product has been delivered

Question 19

revenue recognition principle

Accepted Answer

revenues are recorded when services have been performed or products have been delivered to customers

Question 20

revenue recongition

Accepted Answer

the process of recognizing revenues

Question 21

expense recognition principle

Accepted Answer

the expenses incurred in generating revenue must be reported in the same period as the related revenue, also called the matching principle

Question 22

adjusting process

Accepted Answer

the analysis and updating of accounts at the end of the period before the financial statements are prepared

Question 23

accural

Accepted Answer

occurs when revenue has been earned or an expense has been incurred but has not been recorded

Question 24

deferral

Accepted Answer

when cash related to a future revenue or expense has been initially recorded as a liability or an asset

Question 25

an end-of-period spreadsheet includes columns for

Accepted Answer

adjusting entries

Question 26

when the end-of-period spreadsheet is complete, the adjustments columns should have

Accepted Answer

total debits equal to total credits

Question 27

notes recievable

Accepted Answer

are written promises by the customer to pay the amount of the note and interest

Question 28

current liabilities

Accepted Answer

amounts the business owes to creditors that will be due within a short time and are to be paid out of current assets

Question 29

owner's equity

Accepted Answer

is added to the total liabilities, and this combined total must be equal to the total assets

Question 30

property, plant, and equipment

Accepted Answer

include land and assets that depreciate over a period of time

Question 31

long-term liabilities

Accepted Answer

amounts the business owes to creditors that will not be due for a long time

Question 32

temporary accounts

Accepted Answer

Accounts that report amounts for only one period.

Question 33

closing entries

Accepted Answer

Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders' equity account, Retained Earnings.

Question 34

permanent accounts

Accepted Answer

accounts that are relatively permanent from year to year

Question 35

post-closing trail balance

Accepted Answer

a trail balance prepared after the closing entries are posted

Question 36

accounting cycle

Accepted Answer

the accounting process that begins with analyzing and journalizing transactions and ends with the post-closing trial balance

Question 37

accounting cycle first step

Accepted Answer

Transactions are analyzed and recorded in the journal

Question 38

accounting cycle last step

Accepted Answer

preparing a post-closing trial balance

Question 39

fiscal year

Accepted Answer

The annual accounting period adopted by a business.

Question 40

liquidity

Accepted Answer

the ability to easily convert financial assets into cash without loss in value

Question 41

solvency

Accepted Answer

the ability of a business to pay its debts

Question 42

working capital

Accepted Answer

The excess of the current assets of a business over its current liabilities.

Principles of accounting test 2

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