1. Under the accrual basis of accounting, expenses are reported in the accounting period when the -
a. Product is used
b. The AP invoice is paid
c. The Product is ordered
2. Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as
a. Liabilities
b. Assets
c. Owner's equity
3. Unearned Revenues is what type of account?
a. Asset
b. Liability
c. Owner's equity
4. When cash is received, the GL account Cash will be
a. Debited
b. Credited
5. The financial statement that reports revenues and expenses for a period of time such as a year or a month is the
a. Balance Sheet
b. Income Statement
c. Statement of Cash Flows
6. A typical entry in the account Wages Expense will be a
a. Debit
b. Credit
7. What is the normal balance for an asset account?
a. Debit
b. Credit
8. Under the accrual basis of accounting, revenues are reported in the accounting period when
a. Cash is received
b. Services or goods have been delivered
c. An AR invoice is generated
9. What is the normal balance for liability accounts?
a. Debit
b. . Credit
10. Every journal entry transaction will affect how many accounts?
a. Only one
b. only two
c. two or more
11. Entries to revenue accounts such as Catering Revenues are usually
a. Debits
b. Credits
12. Adjusting entries are usually dated the last day of the accounting period and they convert accounts from the cash basis of accounting to the basis of accounting.
a. Deferral
b. Accrual
c. Month-end
13. Adjusting entries are often categorized into two groups: and deferrals.
a. Cash
b. Transfers
c. Accruals
14. On December 1, Compass paid its insurance agent $2,400 for the annual insurance premium covering the twelvemonth period beginning on December 1. The $2,400 payment was recorded on December 1 with a debit to Prepaid Insurance and a credit to Accounts Payable. Compass prepares monthly financial statements at the end of each calendar month. Please answer each of the questions below pertaining to the adjusting entry that will be written by the company.
i. What date should be used to record the December adjusting entry?
ii. How many accounts are involved in the adjusting entry?
iii. What is the name of the account(s) that will be debited?
iv. What is the name of the account(s) that will be credited?
v. What is the amount of the debit(s) and the credit(s)?
vi. What would be the effect on the financial statements if the company fails to make the adjusting entry?
15. Compass received money in advance of providing services to UNCC. The money received before it is earned is an increase to Compass' cash. The offsetting GL account should be
a. An asset GL Account
b. A liability GL Account
c. A revenue GL Account
16. During close, a Compass location submits an entry to increase their ending inventory. After receiving inventory count sheets and verifying it should be increased, what is the correcting entry?
a. Dr product cost Cr inventory
b. Dr inventory Cr product cost
c. Dr receivable Cr product cost