Accounting 101 - Financial Accounting » Spring 2021 » Chapter 3 Quiz
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Question #1
Which of the following describes the information reported in the income statement?
A.
Total assets equal total liabilities plus stockholders’ equity.
B.
Changes in stockholders’ equity are shown through changes in common stock and retained earnings.
C.
All accounts and account balances are shown.
D.
Net income for the period is calculated by subtracting expenses from revenues.
Question #2
Which of the following is a characteristic of adjusting entries?
A.
Recorded at the beginning of the accounting period.
B.
Reduces the balances of revenue accounts to zero.
C.
Allows for proper application of the revenue recognition principle (revenues) or expenses recognition.
D.
Used in cash-basis accounting.
Question #3
Which of the following describes the information reported in the statement of cash flows?
A.
Net cash flows from operating, investing, and financing activities.
B.
Changes in stockholders’ equity through changes in common stock and retained earnings.
C.
Equality of total assets with total liabilities plus stockholders’ equity.
D.
Net income for the period calculated as revenues minus expenses.
Question #4
Which of the following is an example of a prepaid expense?
A.
Rent has been purchased in advance.
B.
Interest is incurred through the passage of time.
C.
Service was provided to a customer but not yet billed.
D.
Utilities have been incurred but not yet paid.
Question #5
The balance of retained earnings in the adjusted trial balance:
A.
Equals the balance of retained earnings after closing entries.
B.
Equals the balance of retained earnings at the beginning of the accounting period.
C.
Is the amount shown for retained earnings in the balance sheet.
D.
Is not shown.
Question #6
Which of the following describes the information reported in the balance sheet?
A.
Net income for the period is calculated by subtracting expenses from revenues.
B.
Total assets equal total liabilities plus stockholders’ equity.
C.
All accounts and account balances are shown and all debits equal all credits.
D.
Changes in stockholders’ equity are shown through changes in common stock and retained earnings.
Question #7
The revenue recognition principle states that companies typically record revenue:
A.
In the period in which we received cash from customers for goods and services.
B.
In the period in which we provide goods and services to customers.
C.
In the period in which customers order goods and services.
D.
In the period in which goods and services are prepared to be sold to customers.
Question #8
On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under accrual-basis accounting?
A.
December 20.
B.
Neither.
C.
One-half on each date.
D.
December 10.
Question #9
Financial statements are prepared from which of the following trial balances?
A.
Adjusted trial balance.
B.
Financial trial balance.
C.
Post-closing trial balance.
D.
Unadjusted trial balance.
Question #10
After the closing entries are posted to the accounts, all temporary accounts:
A.
Have zero balances.
B.
Are open.
Question #11
The adjusting entry to record interest earned during the period includes a:
A.
Credit to Interest Revenue.
B.
Debit to Cash.
C.
Debit to Interest Expense.
D.
Credit to Cash.
Question #12
The adjusting entry to record supplies used during the period includes a:
A.
Debit to Supplies.
B.
Debit to Supplies Expense
C.
Credit to Service Revenue
D.
Credit to Cash
Question #13
On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Using cash-basis accounting, on which date should Tonkawa record lawn maintenance expense?
A.
Evenly over the three dates.
B.
March 12 (date of cash payment).
C.
March 4 (date of request).
D.
March 8 (date of lawn maintenance service).
Question #14
On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. On which date should the revenue be recorded under cash-basis accounting?
A.
November 15.
B.
One-half on each date.
C.
November 1.
Question #15
On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using accrual-basis accounting, on which date should Clearmore Services record service revenue?
A.
September 22 (date of cash receipt).
B.
September 15 (date of service).
C.
Evenly over the three dates.
D.
September 9 (date of service request).
Question #16
Which of the following describes the closing process?
A.
Store all source documents used to record transactions throughout the period.
B.
Record activities that have occurred but that have not been recorded by the end of the accounting period.
C.
Transfer the balances of temporary accounts (revenues, expenses, and dividends) to retained earnings.
D.
Record external events for the period so that financial statements can be prepared.
Question #17
Under cash-basis accounting, companies typically report expenses:
A.
In the same period in which an asset is purchased.
B.
In the same period in which cash is paid.
C.
In the same period in which a divided is paid.
D.
In the same period as the revenue they help to generate.
Question #18
On December 10, a company pays $500 for advertising to appear on December 20. On which date should the expense be recorded under cash-basis accounting?
A.
December 20.
B.
December 10.
C.
One-half on each date.
D.
Neither.
Question #19
Which of the following accounts is not listed in a post-closing trial balance?
A.
Accounts Receivable.
B.
Equipment.
C.
Service Revenue.
D.
E.
Interest Payable.
Question #20
Under accrual-basis accounting, companies typically report expenses:
A.
In the same period in which an asset is purchased.
B.
In the same period in which a liability is paid.
C.
In the same period as the revenue they help to generate.
D.
In the same period in which cash is paid.
E.
Question #21
On March 4, Tonkawa Law asks Green Lawn Services for basic lawn maintenance totaling $200. Green Lawn provides maintenance on March 8, and Tonkawa pays for the lawn maintenance on March 12. Under accrual-basis accounting, on which date should Tonkawa record lawn maintenance expense?
A.
March 4 (date of request).
B.
March 8 (date of lawn maintenance service).
C.
March 12 (date of cash payment).
D.
Evenly over the three dates.
Question #22
On September 9, Clearmore Services receives a request for services from a customer. The service is scheduled for September 15. On September 15, the service is provided, and the customer pays one week later on September 22. Using cash-basis accounting, on which date should Clearmore Services record service revenue?
A.
September 15 (date of service).
B.
Evenly over the three dates.
C.
September 9 (date of service request).
D.
September 22 (date of cash receipt).
Question #23
Under cash-basis accounting, companies typically record revenue:
A.
In the period in which customers order goods and services.
B.
In the period in which we provide goods and services to customers.
C.
In the period in which goods and services are prepared to be sold to customers.
D.
In the period in which we received cash from customers for goods and services.
Question #24
The entry to close the expense accounts includes:
A.
A debit to all expense accounts.
B.
A credit to Retained Earnings.
C.
A debit to Retained Earnings.
D.
A debit to all expense accounts and a credit to Retained Earnings.
Question #25
Which of the following is an example of an accrued revenue?
A.
Delaying the payment of interest on an outstanding loan until next year.
B.
Prepaying insurance coverage for the next 12 months.
C.
Receiving cash in advance of a service to be provided to a customer.
D.
Providing services to a customer without having yet collected the cash.
Question #26
Recording salaries owed to employees that will not be paid by the company until the following accounting period is an example of a(n):
A.
Unearned revenue.
B.
Prepaid expense.
C.
Accrued expense.
D.
Accrued revenue.
Question #27
On November 15, Meier Company received $3,000 cash from a customer for services that were performed on November 1. According to the Revenue Recognition Principle, on which date should the revenue be recorded?
A.
November 1.
B.
Neither.
C.
One-half on each date.
D.
November 15.
Question #28
Which of the following accounts is listed in a post-closing trial balance?
A.
Advertising Expense.
B.
Salaries Payable.
C.
Service Revenue.
D.
Dividends.
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