Question 1

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Accepted Answer

A)   Depreciation Expense.
B)   Unearned Depreciation.
C)   Prepaid Depreciation.
D)   Depreciation Value.
E)   Book Value.F) B) and C)
G) D) and E)

Question 2

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Accepted Answer

A)   Adjusted trial balance.
B)   Work sheet.
C)   Post-closing trial balance.
D)   Unadjusted trial balance.
E)   General ledger.F) A) and B)
G) B) and E)

Question 3

Current liabilities are cash and other resources that are expected to be sold,collected or used within one year or the company's operating cycle whichever is longer.

Accepted Answer

A) True 
 B)False

Question 4

Flo's Flowers' current ratio is 1.3.The industry average for the current ratio is 1.2.This indicates that Flo's can cover its short term liabilities with its short term assets.

Accepted Answer

A) True 
 B)False

Question 5

The assets section of a classified balance sheet usually includes the subgroups:

Accepted Answer

A)   Current assets, long-term investments, plant assets, and intangible assets.
B)   Current assets, long-term assets, revenues, and intangible assets.
C)   Current assets, long-term investments, plant assets, and equity.
D)   Current liabilities, long-term investments, plant assets, and intangible assets.
E)   Current assets, liabilities, plant assets, and intangible assets.F) A) and E)
G) A) and D)

Question 6

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Accepted Answer

A) True 
 B)False

Question 7

The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements,and recording closing and adjusting entries.

Accepted Answer

A) True 
 B)False

Question 8

Match the following terms with the appropriate definition.
-A journal entry made at the end of an accounting period to reflect a transaction or event that is not yet recorded; affects one or more income statement account and one or more balance sheet account,but never cash.

Accepted Answer

A)  Adjusting entry
B)  Unadjusted trial balance
C)  Prepaid expenses
D)  Natural business year
E)  Accrued expensesF) Adjusted trial balanceG) Report form balance sheetH) Accounting periodI) Profit marginJ) Contra accountK) A) and B)
L) C) and H)

Question 9

A company entered into a 2-month contract for $50,000 on April 1.It earned $25,000 of the contract services in April and billed the customer.The company should recognize the revenue when it receives the customer's check.

Accepted Answer

A) True 
 B)False

Question 10

Permanent accounts carry their balances into the next accounting period.

Accepted Answer

A) True 
 B)False

Question 11

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Accepted Answer

A) True 
 B)False

Question 12

An unclassified balance sheet provides more information to users than a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following accounts would be included in a post-closing trial balance?

Accepted Answer

A)   Accounts Receivable.
B)   Dividends.
C)   Consulting Fees Earned.
D)   Depreciation Expense-Equipment.
E)   Salaries Expense.F) None of the above
G) All of the above

Question 14

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

Accepted Answer

A)   Fiscal year.
B)   Natural business year.
C)   Accounting period.
D)   Business cycle.
E)   Calendar year.F) None of the above
G) A) and B)

Question 15

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column.The Balance Sheet columns will balance on completing the work sheet but with the wrong net income,if the amount sorted in error is:

Accepted Answer

A)   An expense amount placed in the Balance Sheet Credit column.
B)   A revenue amount placed in the Balance Sheet Debit column.
C)   A liability amount placed in the Income Statement Credit column.
D)   An asset amount placed in the Balance Sheet Credit column.
E)   A liability amount placed in the Balance Sheet Debit column.F) All of the above
G) B) and C)

Question 16

Explain the difference between temporary and permanent accounts.

Accepted Answer

Temporary,or nominal,accounts accumulate...

Question 17

An annual reporting period consisting of any twelve consecutive months is known as:

Accepted Answer

A)   Fiscal year.
B)   Calendar year.
C)   Interim financial period.
D)   Natural business year.
E)   Seasonal year.F) B) and C)
G) A) and E)

Question 18

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

Accepted Answer

The financial statements are prepared in...

Question 19

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Accepted Answer

A) True 
 B)False

Question 20

All of the following statements regarding profit margin are true except:

Accepted Answer

A)   Profit margin reflects the percent of profit in each dollar of revenue.
B)   Profit margin is also called return on sales.
C)   Profit margin can be used to compare a firm's performance to its competitors.
D)   Profit margin is calculated by dividing net income by net sales.
E)   Profit margin is not a useful measure of a company's operating results.F) C) and E)
G) D) and E)

Exam 3: Adjusting Accounts for Financial Statements

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Correct AnswerverifiedShow Answer

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

Correct AnswerverifiedThe financial statements are prepared in...View AnswerShow Answer

An annual reporting period consisting of any twelve consecutive months is known as:

Correct AnswerverifiedShow Answer

Explain the difference between temporary and permanent accounts.

Correct AnswerverifiedTemporary,or nominal,accounts accumulate...View AnswerShow Answer

Match the following terms with the appropriate definition. -A journal entry made at the end of an accounting period to reflect a transaction or event that is not yet recorded; affects one or more income statement account and one or more balance sheet account,but never cash.

Correct AnswerverifiedShow Answer

An unclassified balance sheet provides more information to users than a classified balance sheet.

Correct AnswerverifiedShow Answer

All of the following statements regarding profit margin are true except:

Correct AnswerverifiedShow Answer

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Correct AnswerverifiedShow Answer

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Correct AnswerverifiedShow Answer

A company entered into a 2-month contract for $50,000 on April 1.It earned $25,000 of the contract services in April and billed the customer.The company should recognize the revenue when it receives the customer's check.

Correct AnswerverifiedShow Answer

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

Correct AnswerverifiedShow Answer

Flo's Flowers' current ratio is 1.3.The industry average for the current ratio is 1.2.This indicates that Flo's can cover its short term liabilities with its short term assets.

Correct AnswerverifiedShow Answer

Permanent accounts carry their balances into the next accounting period.

Correct AnswerverifiedShow Answer

The last four steps in the accounting cycle include preparing the adjusted trial balance,preparing financial statements,and recording closing and adjusting entries.

Correct AnswerverifiedShow Answer

Current liabilities are cash and other resources that are expected to be sold,collected or used within one year or the company's operating cycle whichever is longer.

Correct AnswerverifiedShow Answer

In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column.The Balance Sheet columns will balance on completing the work sheet but with the wrong net income,if the amount sorted in error is:

Correct AnswerverifiedShow Answer

Which of the following accounts would be included in a post-closing trial balance?

Correct AnswerverifiedShow Answer

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Correct AnswerverifiedShow Answer

The assets section of a classified balance sheet usually includes the subgroups:

Correct AnswerverifiedShow Answer

A post-closing trial balance is a list of permanent accounts and their balances from the ledger after all closing entries are journalized and posted.

Correct AnswerverifiedShow Answer

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The financial statements are prepared in...
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Temporary,or nominal,accounts accumulate...
View Answer

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