Question 1

Accrued expenses are expenses that have been incurred and paid.

Accepted Answer

A) True 
 B)False

Question 2

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Accepted Answer

A) True 
 B)False

Question 3

If land costing $75,000 was sold for $135,000,the amount reported in the investing activities section of the statement of cash flows would be $135,000.

Accepted Answer

A) True 
 B)False

Question 4

Depreciation Expense and Accumulated Depreciation are classified,respectively,as:

Accepted Answer

A)  expense and contra asset.
B)  asset and contra liability.
C)  revenue and asset.
D)  contra asset and expense.E) B) and C)
F) A) and D)

Question 5

The accrual basis of accounting requires revenue to be recorded when the service is performed.

Accepted Answer

A) True 
 B)False

Question 6

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Accepted Answer

Item: Expense Deferral Assets = Liabilities + Stockholders' Equity Cash Supplies Office Equipment Accounts Payable Common Stock Retained Earnings Beg.Bal. -700 -700 ­400- Supplies expense Adjustment -400 End.Bal. -700 300 -400

Question 7

Unearned rent,representing rent for the next six months' occupancy,would be reported on the landlord's balance sheet as a(n) :

Accepted Answer

A)  asset.
B)  liability.
C)  capital stock.
D)  revenue.E) C) and D)
F) B) and D)

Question 8

Cash receipts from interest and dividends are classified as:

Accepted Answer

A)  investing activities.
B)  operating activities.
C)  either financing or investing activities.
D)  financing activities.E) B) and D)
F) C) and D)

Question 9

To determine cash payments for operating expenses for the cash flow statement using the direct method,depreciation expense is added to net income.

Accepted Answer

A) True 
 B)False

Question 10

On the statement of cash flows,the cash flows from operating activities section would include:

Accepted Answer

A)  receipts from the issuance of capital stock.
B)  receipts from the sale of investments.
C)  payments for the acquisition of investments.
D)  cash receipts from sales activities.E) A) and D)
F) A) and C)

Question 11

Why is a physical count of supplies necessary at the end of the accounting period?

Accepted Answer

The beginning balance in supplies will b...

Question 12

The unearned rent account has a balance of $60,000.If $4,000 of the $60,000 is unearned at the end of the accounting period,the amount of the adjusting entry is:

Accepted Answer

A)  $64,000.
B)  $56,000.
C)  $60,000.
D)  $4,000.E) B) and D)
F) B) and C)

Question 13

Land is an example of a current asset.

Accepted Answer

A) True 
 B)False

Question 14

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

Accepted Answer

A) True 
 B)False

Question 15

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Accepted Answer

Item: Accrued Expense Assets = Liabilities + Stockholders' Equity Cash Office Equipment Accumulated Depreciation Interest Payable Common Stock Retained Earnings Adjustment 180 -180- Interest expense End.Bal. 180 -180

Question 16

The fixed asset section of a balance sheet may also be labeled as property,plant,and equipment.

Accepted Answer

A) True 
 B)False  True

Question 17

Electrodo Co.purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable.What effect does this transaction have on the accounts under the accrual basis of accounting?

Accepted Answer

A)  Net increase in assets and liabilities of $55,000
B)  Net increase in assets of $35,000 and a net increase in liabilities of $35,000
C)  Net increase in assets of $55,000 and a net decrease in liabilities of $35,000
D)  Net increase in assets of $75,000 and a net decrease in liabilities of $30,000E) A) and B)
F) All of the above

Question 18

As time passes,fixed assets,other than land,lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called:

Accepted Answer

A)  equipment allocation.
B)  depreciation.
C)  accumulation.
D)  matching.E) A) and C)
F) B) and C)

Question 19

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Accepted Answer

Item: Accrued Expense Assets = Liabiliti...

Question 20

Physical assets of a long-term nature are referred to as fixed assets.

Accepted Answer

A) True 
 B)False

Exam 3: Accrual Accounting Concepts

Accrued expenses are expenses that have been incurred and paid.

Correct AnswerverifiedShow Answer

Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.

Correct AnswerverifiedShow Answer

If land costing $75,000 was sold for $135,000,the amount reported in the investing activities section of the statement of cash flows would be $135,000.

Correct AnswerverifiedShow Answer

Depreciation Expense and Accumulated Depreciation are classified,respectively,as:

Correct AnswerverifiedShow Answer

The accrual basis of accounting requires revenue to be recorded when the service is performed.

Correct AnswerverifiedShow Answer

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Correct AnswerverifiedItem: Expense Deferral Assets = Liabilities + Stockholders' Equity Cash Supplies Office Equipment Accounts Payable Common Stock Retained Earnings Beg.Bal. -700 -700 ­400- Supplies expense Adjustment -400 End.Bal. -700 300 -400

Unearned rent,representing rent for the next six months' occupancy,would be reported on the landlord's balance sheet as a(n) :

Correct AnswerverifiedShow Answer

Cash receipts from interest and dividends are classified as:

Correct AnswerverifiedShow Answer

To determine cash payments for operating expenses for the cash flow statement using the direct method,depreciation expense is added to net income.

Correct AnswerverifiedShow Answer

On the statement of cash flows,the cash flows from operating activities section would include:

Correct AnswerverifiedShow Answer

Why is a physical count of supplies necessary at the end of the accounting period?

Correct AnswerverifiedThe beginning balance in supplies will b...View AnswerShow Answer

The unearned rent account has a balance of $60,000.If $4,000 of the $60,000 is unearned at the end of the accounting period,the amount of the adjusting entry is:

Correct AnswerverifiedShow Answer

Land is an example of a current asset.

Correct AnswerverifiedShow Answer

An adjusting entry would adjust an expense account so that the expense is reported when incurred.

Correct AnswerverifiedShow Answer

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Correct AnswerverifiedItem: Accrued Expense Assets = Liabilities + Stockholders' Equity Cash Office Equipment Accumulated Depreciation Interest Payable Common Stock Retained Earnings Adjustment 180 -180- Interest expense End.Bal. 180 -180

The fixed asset section of a balance sheet may also be labeled as property,plant,and equipment.

Correct AnswerverifiedTrue

Electrodo Co.purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable.What effect does this transaction have on the accounts under the accrual basis of accounting?

Correct AnswerverifiedShow Answer

As time passes,fixed assets,other than land,lose their capacity to provide useful services.To account for this decrease in usefulness,the cost of fixed assets is systematically allocated to expense through a process called:

Correct AnswerverifiedShow Answer

Identify the type of adjustment necessary (the type of item involved)and record the transaction for the event.Make sure to include the ending balances after adjustment.

Correct AnswerverifiedItem: Accrued Expense Assets = Liabiliti...View AnswerShow Answer

Physical assets of a long-term nature are referred to as fixed assets.

Correct AnswerverifiedShow Answer

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Item: Expense Deferral Assets = Liabilities + Stockholders' Equity Cash Supplies Office Equipment Accounts Payable Common Stock Retained Earnings Beg.Bal. -700 -700 400- Supplies expense Adjustment -400 End.Bal. -700 300 -400

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The beginning balance in supplies will b...
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Item: Accrued Expense Assets = Liabilities + Stockholders' Equity Cash Office Equipment Accumulated Depreciation Interest Payable Common Stock Retained Earnings Adjustment 180 -180- Interest expense End.Bal. 180 -180

Correct Answer
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True

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Item: Accrued Expense Assets = Liabiliti...
View Answer

Correct Answer
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