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Exam 4: Income Measurement and Accrual Accounting

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Question 51

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Gear Shop purchased supplies at a cost of $1,000 during the year.At January 1, the beginning balance in the supplies account was $300.At December 31, supplies on hand are $100.Determine supplies expense for the year.

A) $ 1,300
B) $ 1,200
C) $ 1,100
D) $ 1,400

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Question 52

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Why is the use of the U.S.dollar as a unit of measure for financial statement data in the U.S.widely accepted?

A) U.S.dollar remains stable over a long period of time.
B) U.S.dollar is universally recognized as a reliable financial measure.
C) U.S.dollar is the medium of monetary exchange in the U.S.
D) U.S.dollar is required for financial statement presentation by the FASB and SEC.

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Question 53

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What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Which of the following statements is true concerning assets?

Failure to record dividends paid would result in which of the following?

Expired costs are called assets.

Which one of the following is an example of an accrued liability?

Grove Corp.purchased equipment at a cost of $260,000 in January, 2012.As of January 1, 2016, depreciation of $88,000 had been recorded on this asset.Depreciation expense for 2016 is $22,000.After the adjustments are recorded and posted at December 31, 2016.What are the balances for the Depreciation Expense and Accumulated Depreciation? ​​ $\begin{array}{lc}\underline{\text { Depreciation Expense }}& \underline{\text { Accumulated Depreciation}} \\\text { a. } \$ 22,000 & \$ 110,000 \\\text { b. } \$ 22,000 & \$ 88,000 \\\text { c. } \$ 110,000 & \$ 110,000 \\\text { d. } \$ 110,000 & \$ 88,000\end{array}$

Masters Company borrowed on a one-year, 10%, $150,000 note on May 1, with interest and principal to be paid at maturity.How much interest payable will be reported on Masters' balance sheet as of November 30 of the same year?

According to the revenue recognition principle, revenues are recognized when they are _________________________.

A company forgot to record four adjustments during 2016.Which one of the following omissions of adjustments will overstate assets?

A(n) ____________________ creates an increase in income for the period.

Which of the following accounts is not closed to Income Summary at the end of the accounting period?

Failure to record the earned portion of unearned revenue would result in which of the following?

The statement of cash flows reflects the revenues actually earned by the business, regardless of whether cash has been collected.

Recognition is the process of formally recording or incorporating an item into the financial statements.

CBA Corp.has grown significantly over the past year.One area that has plagued the Controller of CBA is the reconciliation of supplies expense.The end-of-year supplies on hand totaled $20, and purchases totaled $500, and supplies on hand at the beginning of the year amounted to $300.How much will CBA report as supplies expense for the current year?

A company forgot to record four adjustments during 2016.Which one of the following omissions of adjustments will understate net income?

Measurement of the economic effects on an entity involves each of the following except

Failure to record the supplies used during the year would result in which of the following?