Question 1

Which of the following statements is true about the accrual basis of accounting?

Accepted Answer

A)   The timing of cash receipts and disbursements is emphasized.
B)   A minimal amount of record keeping is required in accrual basis accounting compared to cash basis.
C)   This method is used less frequently by businesses than the cash method of accounting.
D)   Revenues are recognized in the period the performance obligation is satisfied, regardless of the time period the cash is received.

Question 2

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 2014 are as follows:Last payroll was paid on 12/26/14, for the 2-week period ended 12/26/14.Overtime pay earned in the 2-week period ended 12/26/14 was $20,000.Remaining work days in 2014 were December 29, 30, 31, on which days there was no overtime.The recurring biweekly salaries total $360,000.Assuming a five-day workweek, Colaw should record a liability at December 31, 2014 for accrued salaries of

Accepted Answer

A)   $108,000.
B)   $128,000.
C)   $216,000.
D)   $236,000.

Question 3

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

Accepted Answer

A)   overstatement of assets and an overstatement of owners' equity.
B)   understatement of assets and an understatement of owner's equity.
C)   overstatement of assets and an overstatement of liabilities.
D)   overstatement of liabilities and an understatement of owners' equity.

Question 4

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

Accepted Answer

A)   net income for the period.
B)   beginning inventory.
C)   cost of goods sold.
D)   net loss for the period.

Question 5

When a revenue is collected and recorded in advance, it is normally accounted for as a(n)  ___________ revenue.

Accepted Answer

A)   accrued
B)   prepaid
C)   unearned
D)   cash

Question 6

The following information is available for Ace Company for 2014:  Cost of goods sold for 2014 was

Accepted Answer

A)   $1,500,000.
B)   $1,420,000.
C)   $1,300,000.
D)   $1,220,000.

Question 7

A journal entry to record a payment on account will include a

Accepted Answer

A)   debit to Accounts Receivable.
B)   credit to Accounts Receivable.
C)   debit to Accounts Payable.
D)   credit to Accounts Payable.

Question 8

Under the cash-basis of accounting, revenues are recorded

Accepted Answer

A)   when they are recognized and realized.
B)   when they are recognized and realizable.
C)   when they are recognized.
D)   when they are realized.

Question 9

Cash basis vs. accrual basis of accounting.Contrast the cash basis of accounting with the accrual basis of accounting.

Accepted Answer

The essential difference between the cas...

Question 10

The failure to properly record an adjusting entry to accrue a revenue item will result in an

Accepted Answer

A)   understatement of revenues and an understatement of liabilities.
B)   overstatement of revenues and an overstatement of liabilities.
C)   overstatement of revenues and an overstatement of assets.
D)   understatement of revenues and an understatement of assets.

Question 11

IASB is working to establish high-quality auditing and assurance quality standards throughout the world.

Accepted Answer

A) True 
 B)False

Question 12

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 $11,500 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:

Accepted Answer

A)   Supplies Expense for $3,500.
B)   Supplies for $3,500.
C)   Supplies Expense for $46,500.
D)   Supplies for $11,500.

Question 13

Which of the following is a nominal (temporary)  account?

Accepted Answer

A)   Unearned Service Revenue
B)   Salaries and Wages Expense
C)   Inventory
D)   Retained Earnings

Question 14

An adjusted trial balance

Accepted Answer

A)   is prepared after the financial statements are completed.
B)   proves the equality of the debit balances and credit balances of ledger accounts after all adjustments have been made.
C)   is a required financial statement under generally accepted accounting principles.
D)   cannot be used to prepare financial statements.

Question 15

How do these prepaid expenses expire?

Accepted Answer

The answer of How do these prepaid expenses expire? ...

Question 16

IFRS 1 requires information in a company's first IFRS statement to:

Accepted Answer

A)   be same as in GAAP statement.
B)   be transparent.
C)   be as lengthy as possible.
D)   provide a suitable ending point.

Question 17

Which of the following is a real (permanent)  account?

Accepted Answer

A)   Goodwill
B)   Service Revenue
C)   Accounts Receivable
D)   Both Goodwill and Accounts Receivable

Question 18

Tolan Corp.'s trademark was licensed to Eddy Co. for royalties of 15% of sales of the trademarked items. Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year. Tolan received the following royalties from Eddy:  Eddy estimated that sales of the trademarked items would total $30,000 for July through December 2014. In Tolan's 2014 income statement, the royalty revenue should be

Accepted Answer

A)   $14,000.
B)   $15,500.
C)   $20,000.
D)   $20,500.

Question 19

Cash basis.Revenue on the income statement was $125,800. Accounts receivable were $3,500 on January 1 and $3,540 on December 31. Unearned revenue was $1,050 on January 1 and $1,670 on December 31.Show the computation of revenue for the year on a cash basis.

Accepted Answer

$125,800 + $3,500 - ...

Question 20

Accrual basis.The records for Todd Inc. showed the following for 2014:  Cash paid during the year for expenses, $42,500Show the computation of the amount of expense that should be reported on the income statement.

Accepted Answer

$42,500 - $1,300 + $...

Exam 3: The Accounting Information System

Correct Answer
verified

Accrual basis.The records for Todd Inc. showed the following for 2014: Cash paid during the year for expenses, $42,500Show the computation of the amount of expense that should be reported on the income statement.

Correct Answer
verified
$42,500 - $1,300 + $...
View Answer

An adjusted trial balance

Correct Answer
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The following information is available for Ace Company for 2014: Cost of goods sold for 2014 was

Correct Answer
verified

IASB is working to establish high-quality auditing and assurance quality standards throughout the world.

Correct Answer
verified

Under the cash-basis of accounting, revenues are recorded

Correct Answer
verified

Cash basis.Revenue on the income statement was $125,800. Accounts receivable were $3,500 on January 1 and $3,540 on December 31. Unearned revenue was $1,050 on January 1 and $1,670 on December 31.Show the computation of revenue for the year on a cash basis.

Correct Answer
verified
$125,800 + $3,500 - ...
View Answer

A journal entry to record a payment on account will include a

Correct Answer
verified

The failure to properly record an adjusting entry to accrue a revenue item will result in an

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements is true about the accrual basis of accounting?

Correct Answer
verified

Which of the following is a real (permanent) account?

Correct Answer
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How do these prepaid expenses expire?

Correct Answer
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Correct Answer
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Correct Answer
verified

Cash basis vs. accrual basis of accounting.Contrast the cash basis of accounting with the accrual basis of accounting.

Correct Answer
verified
The essential difference between the cas...
View Answer

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

Correct Answer
verified

IFRS 1 requires information in a company's first IFRS statement to:

Correct Answer
verified

When a revenue is collected and recorded in advance, it is normally accounted for as a(n) ___________ revenue.

Correct Answer
verified

Which of the following is a nominal (temporary) account?

Correct Answer
verified

Exam 3: The Accounting Information System

Correct AnswerverifiedShow Answer

Accrual basis.The records for Todd Inc. showed the following for 2014: Cash paid during the year for expenses, $42,500Show the computation of the amount of expense that should be reported on the income statement.

Correct Answerverified$42,500 - $1,300 + $...View AnswerShow Answer

An adjusted trial balance

Correct AnswerverifiedShow Answer

The following information is available for Ace Company for 2014: Cost of goods sold for 2014 was

Correct AnswerverifiedShow Answer

IASB is working to establish high-quality auditing and assurance quality standards throughout the world.

Correct AnswerverifiedShow Answer

Under the cash-basis of accounting, revenues are recorded

Correct AnswerverifiedShow Answer

Cash basis.Revenue on the income statement was $125,800. Accounts receivable were $3,500 on January 1 and $3,540 on December 31. Unearned revenue was $1,050 on January 1 and $1,670 on December 31.Show the computation of revenue for the year on a cash basis.

Correct Answerverified$125,800 + $3,500 - ...View AnswerShow Answer

A journal entry to record a payment on account will include a

Correct AnswerverifiedShow Answer

The failure to properly record an adjusting entry to accrue a revenue item will result in an

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is true about the accrual basis of accounting?

Correct AnswerverifiedShow Answer

Which of the following is a real (permanent) account?

Correct AnswerverifiedShow Answer

How do these prepaid expenses expire?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Cash basis vs. accrual basis of accounting.Contrast the cash basis of accounting with the accrual basis of accounting.

Correct AnswerverifiedThe essential difference between the cas...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

IFRS 1 requires information in a company's first IFRS statement to:

Correct AnswerverifiedShow Answer

When a revenue is collected and recorded in advance, it is normally accounted for as a(n) ___________ revenue.

Correct AnswerverifiedShow Answer

Which of the following is a nominal (temporary) account?

Correct AnswerverifiedShow Answer

Correct Answer
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$42,500 - $1,300 + $...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
$125,800 + $3,500 - ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The essential difference between the cas...
View Answer

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Correct Answer
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