Question 4 question the accounting equation is the basis


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

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Financial Accounting: Question 4 question the accounting equation is the basis
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