Quiz 2 example #48429

What do accountants commonly do when the connection between an expense and the corresponding revenue is vague? Multiple Choice Accelerate revenue recognition and delay expense recognition. Match the expense with the period in which it is incurred. Recognize the expense at the time payment is made. Delay expense recognition until it can be matched with revenue.

Which of the following adjustments would not be described as an accrual? Recording interest that has been earned but will not be collected until the next accounting period Recording operating expenses that have been incurred but not paid as of the end of the accounting period Recording salary expense that has been incurred but not paid as of the end of the accounting period Recording insurance expense relating to insurance premiums that were paid in advance

How would a payment for rent paid in advance be classified? Multiple Choice Asset source transaction Asset use transaction Asset exchange transaction Claims exchange transaction

Which of the following types of accounts is closed at the end of an accounting cycle? Multiple Choice Dividends Common stock Assets Liabilities

Which of the following are "matched" under the matching concept? Multiple Choice Expenses and revenues Expenses and liabilities Assets and equity Assets and liabilities

Which of the following is frequently used to describe the expenses that are matched in the same accounting period in which they are incurred? Multiple Choice Market expenses Matching expenses Period costs Working costs

Which of the following correctly states the proper order of the steps in the accounting cycle? Multiple Choice Record transactions, adjust accounts, close temporary accounts, prepare statements Adjust accounts, record transactions, close temporary accounts, prepare statements Record transactions, adjust accounts, prepare statements, close temporary accounts Adjust accounts, prepare statements, record transactions, close temporary accounts

Which of the following accounts would not appear on a balance sheet? Multiple Choice Service Revenue Salaries Payable Unearned Revenue Interest Payable

Revenue on account amounted to $5,000. Cash collections of accounts receivable amounted to $2,300. Expenses for the period were $2,100. The company paid dividends of $450. What was net income for the period? Multiple Choice $1,200 $2,900 $2,850 $2,450

Which of the following types of accounts is not closed at the end of an accounting cycle? Multiple Choice Revenues Retained earnings Dividends Expenses

Which of the following would be included in the cash flow from operating activities section of the statement of cash flows? Multiple Choice Accrual of salary expense at year-end. Purchase of equipment for cash. Payments of cash dividends to the owners of the business. Cash paid for interest on a note payable.

Which of the following statements best describes the balance in a revenue account at the beginning of an accounting period? Multiple Choice Zero Last period's ending balance Higher than the previous period's beginning balance Equal to the amount of retained earnings for the previous period

Revenue on account amounted to $9,000. Cash collections of accounts receivable amounted to $8,100. Cash paid for operating expenses was $7,500. The amount of employee salaries accrued at the end of the year was $900. What was the net cash flow from operating activities? Multiple Choice $900 $600 $1,500 $8,700

On January 1, Year 2, the Supplies account of Sheldon Company had a balance of $1,200. During the year, the company purchased $3,400 of supplies on account and made partial payments totaling $3,000 on those accounts. On December 31, Year 2, Sheldon determined that there were $1,400 of supplies on hand. Which of the following would be reported on Sheldon's Year 2 financial statements? Multiple Choice $1,600 of supplies; $200 of supplies expense $1,400 of supplies; $2,000 of supplies expense $1,400 of supplies; $3,200 of supplies expense $1,600 of supplies; $3,400 of supplies expense

Rushmore Company provided services for $45,000 cash during Year 1. Rushmore incurred $36,000 of operating expenses on account during Year 1, and by the end of the year, $9,000 of that amount had been paid with cash. If these are the only accounting events that affected Rushmore during Year 1, which of the following statements is true? Multiple Choice The amount of net loss shown on the income statement is $9,000. The amount of net income shown on the income statement is $27,000. The amount of net income shown on the income statement is $9,000. The amount of net cash flow from operating activities shown on the statement of cash flows is $18,000.

On December 31, Year 1, Gaskins Co. owed $4,500 in salaries to employees who had worked during December but will not be paid until January, Year 2. If the year-end adjustment is properly recorded on December 31, Year 1, what will be the effect of this accrual on net income and cash flows from operating activities reported for Year 1? Multiple Choice No effect on net income; no effect on cash flow from operating activities Decrease in net income; no effect on cash flow from operating activities Increase in net income; decrease in cash flow from operating activities No effect on net income; decrease in cash flow from operating activities

Which of the following is a claims exchange transaction? Multiple Choice Recognized revenue earned on a contract where the cash had been collected at an earlier date Issued common stock Invested cash in an interest earning account Purchased machine for cash

Warren Enterprises began operations during Year 1. The company had the following events during Year 1: The business issued $40,000 of common stock to its stockholders. The business purchased land for $24,000 cash. Services were provided to customers for $32,000 cash. Services were provided to customers for $10,000 on account. The company borrowed $32,000 from the bank. Operating expenses of $24,000 were incurred and paid in cash. Salary expense of $1,600 was accrued. A dividend of $8,000 was paid to the stockholders of Warren Enterprises. After closing, what is the balance of the Retained Earnings account as of December 31, Year 1? Multiple Choice $10,000 $8,400 $16,400 $42,000

Mize Company provided $45,500 of services on account, and collected $38,000 from customers during the year. The company also incurred $37,000 of expenses on account, and paid $32,400 against its payables. How do these events impact the elements of the financial statements model? Multiple Choice Total assets would increase. Total liabilities would increase. Total equity would increase. All of these answer choices are correct.

Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) "cash provided by operating activities" on the statement of cash flows? Multiple Choice Purchased land for cash Purchased supplies for cash Paid advertising expense Paid dividends to stockholderx

Bledsoe Company acquired $17,000 cash by issuing common stock on January 1, Year 1. During Year 1, Bledsoe earned $8,500 of revenue on account. The company collected $6,000 cash from customers in partial settlement of its accounts receivable and paid $5,400 cash for operating expenses. Based on this information alone, what was the impact on total assets during Year 1? Multiple Choice Total assets increased by $20,100. Total assets increased by $600. Total assets increased by $26,100. Total assets did not change.

Which of the following is an asset source transaction? Multiple Choice Issued common stock Paid a cash dividend to stockholders Collected cash from customers in settlement of accounts receivable Accrued salary expense

Which of the following events involves a deferral? Multiple Choice Recording interest that has been earned but not received. Recording revenue that has been earned but not yet collected in cash. Recording supplies that have been purchased with cash but not yet used. Recording salaries owed to employees at the end of the year that will be paid during the following year.

If a company provides services to clients but has not yet collected any cash, how should that transaction be classified? Multiple Choice Claims exchange transaction Asset use transaction Asset source transaction Asset exchange transaction

How does the adjusting entry to recognize the portion of the unearned revenue that a company earned during the accounting period affect the elements of the financial statements? Multiple Choice An increase in assets and a decrease in liabilities An increase in liabilities and a decrease in equity A decrease in liabilities and an increase in equity A decrease in assets and a decrease in liabilities

If retained earnings decreased during the year, and no dividends were paid, which of the following statements must be true? Multiple Choice Expenses for the year exceeded revenues. The company did not have enough cash to pay its expenses. Total equity decreased. Liabilities increased during the year.

Which of the following events would not require a year-end adjusting entry? Multiple Choice Purchasing supplies for cash during the year Paying for one year's rent during the year Providing services on account during the year Each of these events would require a year-end adjusting entry.

On October 1, Year 1, Jason Company paid $7,200 to lease office space for one year beginning immediately. What is the amount of rent expense that will be reported on the Year 1 income statement and what is the cash outflow for rent that would be reported on the Year 1 statement of cash flows? Multiple Choice $7,200; $7,200 $1,800; $1,800 $1,800; $7,200 $1,200; $7,200

Recognition of revenue may be accompanied by which of the following? Multiple Choice A decrease in a liability An increase in a liability An increase in an asset An increase in an asset or a decrease in a liability

Which of the following is an asset use transaction? Multiple Choice Purchased machine for cash Recorded insurance expense at the end of the period Invested cash in an interest earning account Accrued salary expense at the end of the period

Duluth Co. collected a $6,000 cash advance from a customer on November 1, Year 1 for services to be provided over a six-month period beginning on that date. If the year-end adjustment is properly recorded, what will be the effect of the adjusting entry on Duluth's Year 1 financial statements? Multiple Choice Increase assets and decrease liabilities Increase assets and increase revenues Decrease liabilities and increase revenues No effect

The following account balances were drawn from the Year 1 financial statements of Grayson Company: Cash$8,800 Accounts payable$2,500 Accounts receivable$3,000 Common stock ? Land$16,000 Retained earnings, Jan. 1$5,400 Revenue$19,000 Expenses$14,500 What is the balance of the Common Stock account? Multiple Choice $15,400 $19,900 $900 $20,800

What should an accountant do when there is no traceable connection between expenses and revenue? Multiple Choice Apply the matching concept Design a system of internal control Exercise judgment Be as uniform as possible

Which of the following statements is true regarding accrual accounting? Multiple Choice Revenue is recorded only when cash is collected. Expenses are recorded when they are incurred. Revenue is recorded in the period when it is earned. Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.

Which of the following financial statements is impacted most significantly by the matching concept? Multiple Choice Balance sheet Income statement Statement of changes in stockholders' equity Statement of cash flows

Recognizing an expense may be accompanied by which of the following? Multiple Choice An increase in liabilities A decrease in liabilities A decrease in revenue An increase in assets

On September 1, Year 1, Gomez Company collected $9,000 in advance from a customer for services to be provided over a one-year period beginning on that date. How much revenue would Gomez Company report related to this contract on its income statement for the year ended December 31, Year 1? How much would the company report as net cash flows from operating activities for Year 1? Multiple Choice $3,000; $3,000 $9,000; $9,000 $3,000; $9,000 $0; $9,000