Question 1. Question : Depreciation Expense and Accumulated Depreciation are classified, respectively, as

• expense and contra asset
• asset and contra liability
• revenue and asset
• contra asset and expense

Question 2. Question : Which type(s) of adjustments are the financial statements affected by?

• Deferrals
• Accruals
• Both deferrals and accruals
• Neither deferrals nor accruals

Question 3. Question : Accumulated depreciation is __________ to get the carrying value.

• added to equipment
• subtracted from equipment
• added to accounts payable
• subtracted from accounts payable

Question 4. Question : The accounting equation is the basis for analyzing, summarizing, and recording transactions in accounting. The accounting equation is:

• Assets =Liabilities
• Assets = Liabilities + Stockholders Equity
• Liabilities = Assets + Stockholders Equity
• Stockholders Equity = Liabilities + Assets

Question 5. Question : Accrual accounting records revenue when:

• Earned
• Cash is received
• Products are completed
• Salaries are paid

Question 6. Question : On the balance sheet, Accrued expenses are ordinarily reported as:

• Fixed assets
• Prepaid expenses
• Assets
• Liabilities

Question 7. Question : What are the four timing differences between recognizing revenues and expenses between accrual basis and cash basis accounting?

• Accrued revenue, accrued expenses, deferred revenue, deferred expenses
• Cash, revenue, expenses and liabilities
• Accounts receivable, accounts payable, long term liabilities, intangible assets
• Revenue, expenses, assets, retained earnings

Question 8. Question : When cash is received in payment of an account receivable, which section of the Statement of Cash Flows is affected?

• Cash Flow from Operating Activities
• Cash Flow from Investing Activities
• Cash Flow from Financing Activities
• There is no effect on the Statement of Cash Flows.

Question 9. Question : After recording transactions for the accounting period, which financial statement does a company prepares statement first?

• Income statement
• Balance sheet
• Retained earnings statement
• Statement of cash flows

Question 10. Question : X&M Co. provided services of $2,000,000 to clients on account. How does this transaction affect A&M's accounts?

• Increase accounts receivable and cash by $2,000,000 each
• Increase accounts receivable and unearned revenues by $2,000,000 each
• Increase cash and decrease accounts receivable by $2,000,000 each
• Increase accounts receivable and revenues by $2,000,000 each

Question 11. Question : Cash receipts from interest and dividends are classified as

• investing activities
• operating activities
• either financing or investing activities
• financing activities

Question 12. Question : ___________ is an example of a deferred expense.

• Unearned revenue
• Accounts payable
• Prepaid advertising
• Accounts receivable

Question 13. Question : Using accrual accounting, expenses are recorded and reported only

• When they are incurred and paid at the same time
• When they are incurred, whether or not cash is paid
• If they are paid before they are incurred
• If they are paid after they are incurred

Question 14. Question : Which of the following is an example of a deferred expense?

• Prepaid advertising
• Unearned revenue
• Accounts payable
• Accounts receivable

Question 15. Question : Which transaction would be recorded in a cash basis system of accounting?

• Purchase of equipment on credit
• Purchase of supplies on credit
• Sale of goods on credit
• Sale of goods for cash

Question 16. Question : Accrued revenues would appear on the balance sheet as

• assets
• liabilities
• stockholders' equity
• prepaid expenses

Question 17. Question : Using accrual accounting, expenses are recorded and reported only when they are incurred, whether or not cash is paid, under the cash basis expenses are recorded:

• When they are incurred and paid at the same time
• If they are paid before they are incurred
• If they are paid after they are incurred
• When they are paid

Question 18. Question : When preparing an adjustment under accrual accounting, what would be the proper amount of the adjusting entry if the end of the period balance in the supply account is $4,000 and the amount of supplies on hand is $1650?

• 3,350
• 2,350
• 3,050
• 5,650

Question 19. Question : __________ is/are created when a revenue or expense has NOT been recorded by the end of the accounting period.

• Prepaid advertising
• Premiums received in advance
• Unearned revenue
• Accruals

Question 20. Question : If prepaid insurance expires over time, this asset account becomes a (n)

• liability
• another asset
• revenue
• expense