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Test 2 - Chapters 3/4 A

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Grade 12 Accounting Midterm Prep
Claudia Voin
Quiz por Claudia Voin, atualizado more than 1 year ago
Claudia Voin
Criado por Claudia Voin mais de 9 anos atrás
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Resumo de Recurso

Questão 1

Questão
The time period assumption states that
Responda
  • a transaction can only affect one period of time
  • estimates should not be made if a transaction affects more than one time period
  • adjustments to the enterprise's accounts can only be made in the time period when the business terminates operations
  • the economic life of a business can be divided into artificial time period periods

Questão 2

Questão
In general, the shorter the time period, the difficulty of making the proper adjustments to accounts
Responda
  • is increased
  • is decreased
  • is unaffected
  • depends on if there is a profit or a loss

Questão 3

Questão
The fiscal year of a business is usually determined by
Responda
  • the Canada Customs and Revenue Agency
  • the Tax Act
  • the business
  • provincial securities and exchange commissions

Questão 4

Questão
Moishe's Tune-Up Shop follows the revenue recognition principle. Moishe services a car on July 31. The customer picks up the vehicle August 1st and mails the payment on August 5th. Moishe receives the cheque in the mail on August 6th. When should Moishe show the revenue was earned?
Responda
  • July 31
  • August 1
  • August 5
  • August 6

Questão 5

Questão
A company spends $10 million for an office building. Over what period should the cost be written off?
Responda
  • when the $10 million is expended in cash
  • all in the first year
  • over the useful life of the building
  • after $10 million in revenue is earned

Questão 6

Questão
The matching principle states that expenses should be matched with revenues. Another way of stating the principle is to say that
Responda
  • assets should be matched with liabilities
  • efforts should be matched with accomplishments
  • owner withdrawals should be matched with owner contribuions
  • cash payments should match cash receipts

Questão 7

Questão
A small company may be able to justify using the cash basis of accounting if they have
Responda
  • sales under $1 000 000
  • no accountants on staff
  • few receivables and payables
  • all sales and purchases accounts

Questão 8

Questão
Adjusting entries are
Responda
  • not necessary if the accounting system is operating properly
  • usually required before financial statements are prepared
  • made whenever management desires to change an account balance
  • made to balance sheet accounts only

Questão 9

Questão
Which one of the following is not a justification for adjusting entries?
Responda
  • adjusting entries are necessary to ensure that revenue recognition principles are followed
  • adjusting entries are necessary to ensure that the matching principle is followed
  • adjusting entries are necessary to enable financial statements to be in conformity with IFRS
  • adjusting entries are necessary to bring the ledger accounts in line with budget

Questão 10

Questão
An adjusting entry
Responda
  • affects two balance sheet accounts
  • affects two income statement accounts
  • affects a balance sheet account and an income statement account
  • is always a compound entry

Questão 11

Questão
If a resource has been consumed but a bill has not been received at the end of the accounting period, then
Responda
  • an expense should be recorded when the bill is received
  • an expense should be recorded when the cash is paid out
  • an adjusting entry should be made recognizing the expense
  • it is optional whether to record the expense before the bill is received

Questão 12

Questão
An asset-expense relationship exists with
Responda
  • liability accounts
  • revenue accounts
  • prepaid expense adjusting entries
  • accrued expense adjusting entries

Questão 13

Questão
A law firm received $2 000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Legal Fees. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause
Responda
  • expenses to be overstated
  • net income to be overstated
  • liabilities to be understated
  • revenues to be understated

Questão 14

Questão
Accrued revenues are
Responda
  • received and recorded as liabilities before they are earned
  • earned and recorded as liabilities before they are received
  • earned but not yet received or recorded
  • earned and already received and recorded

Questão 15

Questão
Prepaid expenses are
Responda
  • paid and recorded in an asset account before they are used or consumed
  • paid and recorded in an asset account after they are used or consumed
  • incurred but not yet paid or recorded
  • incurred and already paid and recorded

Questão 16

Questão
Accrued expenses are
Responda
  • paid and recorded in an asset account before they are used or consumed
  • paid and recorded in an asset account after they are used or consumed
  • incurred but not yet paid or recorded
  • incurred and already paid and recorded

Questão 17

Questão
Unearned revenues are
Responda
  • received and recorded as liabilities before they are earned
  • earned and recorded as liabilities before they are received
  • earned but not yet received or recorded
  • earned and already received and recorded

Questão 18

Questão
A liability-revenue relationship exists with
Responda
  • prepaid expense adjusting entries
  • accrued expense adjusting entries
  • unearned revenue adjusting entries
  • accrued revenue adjusting entries

Questão 19

Questão
Which of the following reflect the balances of prepayment accounts prior to adjustment?
Responda
  • Balance sheet accounts are understated and income statement accounts are understated
  • Balance sheet accounts are overstated and income statement accounts are overstated
  • Balance sheet accounts are understated and income statement accounts are overstated
  • Balance sheet accounts are overstated and income statement accounts are understated

Questão 20

Questão
Amortization of a capital asset is the process of
Responda
  • valuing a capital asset at its fair market value
  • increasing the cost of a capital asset over the periods the asset benefits
  • allocating the cost of a capital asset to an expense over the periods the asset benefits
  • writing down a capital asset to its real value each account period

Questão 21

Questão
An accumulated amortization account
Responda
  • is a contra-liability
  • increased on the debit side
  • is offset against total assets on the balance sheet
  • has a normal credit balance

Questão 22

Questão
The difference between the cost of a capital asset and its related accumulated amortization is referred to as the
Responda
  • market value
  • blue book value
  • net book value
  • amortized difference

Questão 23

Questão
If a business pays rent in advance and debit a prepaid rent account, the company receiving the rent payment will credit
Responda
  • cash
  • prepaid rent
  • unearned rent revenue
  • accrued rent revenue

Questão 24

Questão
Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause
Responda
  • net income to be understated
  • an overstatement of assets and an overstatement of liabilities
  • an understatement of expenses and an understatement of liabilities
  • an overstatement of expenses and an overstatement of liabilities

Questão 25

Questão
Failure to prepare a an adjusting entry at the end of the period to record an accrued revenue would cause
Responda
  • net income to be overstated
  • an understatement of assets and an understatement of revenues
  • an understatement of revenues and an understatement of liabilities
  • an understatement of revenues and an overstatement of liabilities

Questão 26

Questão
Closing entries are made
Responda
  • in order to terminate the business as an operating entity
  • so that all assets, liabilities, and owner's capital accounts will have zero balances when the next accounting period starts
  • in order to transfer net income/loss and owner's drawings to the capital account
  • so that financial statements can be prepared

Questão 27

Questão
The owner's capital account
Responda
  • is a permanent account
  • appears on the cash flow statement
  • appears on the income statement
  • is a temporary account

Questão 28

Questão
The purpose of a post-closing trial balance is to
Responda
  • prove that no mistakes were made
  • prove the equality of the balance sheet account balances that are carried forward into the next accounting period
  • prove the equality of the income statement account balances that are carried forward into the next accounting period
  • list all the balance sheet accounts in alpha order for easy reference

Questão 29

Questão
After closing entries are posted, the balance in the owner's capital account in the ledger is equal to
Responda
  • the beginning owner's capital reported on the statement of OE
  • the amount of the owner's capital reported on the balance sheet
  • zero
  • the net income for the period

Questão 30

Questão
Reversing entries are required for
Responda
  • prepayment adjustments
  • accrual adjustments
  • estimate adjustments
  • prepayment and accrual adjustments

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