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1 | |
The journal entry to record the borrowing of cash and the signing of a note payable involves: |
| | A) | A debit to note payable and a credit to cash. |
| | B) | Debits to cash and interest expense and a credit to cash. |
| | C) | A debit to cash and a credit to note payable. |
| | D) | None of the above. |
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2 | |
Which of the following is most likely an accrued liability? |
| | A) | Depreciation. |
| | B) | Interest. |
| | C) | Cost of goods sold. |
| | D) | Office supplies. |
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3 | |
A prepaid expense is an expense: |
| | A) | Incurred before the cash is paid. |
| | B) | Incurred and paid. |
| | C) | Paid but not yet incurred. |
| | D) | None of the above. |
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4 | |
The Esquire Clothing Company borrowed a sum of cash on October 1, 2000, and signed a note payable. The annual interest rate was 12% and the company's year 2000 income statement reported interest expense of $1,260 related to this note. What was the amount borrowed? |
| | A) | $22,000 |
| | B) | $31,500 |
| | C) | $10,500 |
| | D) | $42,000 |
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5 | |
Which of the following adjusting entries creates a decrease in assets? |
| | A) | Recording the earned portion of revenue collected in advance. |
| | B) | Recording depreciation expense. |
| | C) | Accruing unrecorded salaries expense. |
| | D) | Accruing unrecorded interest revenue. |
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6 | |
Which of the following adjusting entries creates an increase in liabilities? |
| | A) | Accruing unrecorded interest expense. |
| | B) | Recording the amount of expired prepaid insurance. |
| | C) | Accruing unrecorded interest revenue. |
| | D) | Recording depreciation expense. |
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7 | |
If the required adjusting entry for depreciation expense is omitted: |
| | A) | Assets will be overstated and income understated. |
| | B) | Assets will be overstated and income overstated. |
| | C) | Assets will be understated and income overstated. |
| | D) | Assets will be understated and income understated. |
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8 | |
The accumulated depreciation account is a contra (valuation) account to: |
| | A) | Owner's equity account. |
| | B) | Expense account. |
| | C) | Asset account. |
| | D) | Liability account. |
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9 | |
The correct amount of prepaid insurance shown on a company's December 31, 2000 balance sheet was $900. On July 1, 2001, the company paid an additional insurance premium of $600. On the December 31, 2001 balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear on the company's 2001 income statement is: |
| | A) | $1,500. |
| | B) | $1,400. |
| | C) | $1,000. |
| | D) | $600. |
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10 | |
The Wazoo Times Newspaper Company showed a $11,200 liability on its 2000 balance sheet for subscription revenue received in advance. During 2001, $62,000 was received from customers for subscriptions and the 2001 income statement reported subscription revenue of $63,700. What is the liability amount for subscription revenue received in advance that will appear on the 2001 balance sheet? |
| | A) | $0 |
| | B) | $11,200 |
| | C) | $12,900 |
| | D) | $9,500 |
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11 | |
On a classified balance sheet, allowance for uncollectible accounts would be classified among: |
| | A) | Noncurrent assets. |
| | B) | Current liabilities. |
| | C) | Current assets. |
| | D) | Noncurrent liabilities. |
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12 | |
On a statement of cash flows, cash received from the issuance of capital stock would be classified as a: |
| | A) | Financing activity. |
| | B) | Investing activity. |
| | C) | Operating activity. |
| | D) | Non-cash activity. |
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13 | |
The closing process involves: |
| | A) | Recording year-end adjusting entries. |
| | B) | Transferring revenue and expense balances to retained earnings. |
| | C) | Closing out the permanent account balances. |
| | D) | None of the above. |
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14 | |
If revenues exceed expenses for the accounting period, the income summary account |
| | A) | Will have a debit balance after closing. |
| | B) | Will have a debit balance prior to closing. |
| | C) | Will have a credit balance prior to closing. |
| | D) | None of the above. |
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2001 McGraw-Hill Higher Education