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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 note payable. |
| | C) | A debit to cash and a credit to note payable. |
| | D) | All of these answer choices are incorrect. |
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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) | All of these answer choices are incorrect. |
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| 4 | |
The Esquire Clothing Company borrowed a sum of cash on October 1, 2016, and signed a note payable. The annual interest rate was 12% and the company's year 2016 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 causes a decrease in assets? |
| | A) | Recognizing the 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 causes 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, 2016, balance sheet was $900. On July 1, 2017, the company paid an additional insurance premium of $600. In the December 31, 2017, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2017 income statement is: |
| | A) | $1,500 |
| | B) | $1,400 |
| | C) | $1,000 |
| | D) | $600 |
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| 10 | |
The Wazoo Times Newspaper Company reported an $11,200 liability in its 2016 balance sheet for subscription revenue received in advance. During 2017, $62,000 was received from customers for subscriptions and the 2017 income statement reported subscription revenue of $63,700. What is the liability amount for deferred subscription revenue that will appear in the 2017 balance sheet? |
| | A) | $0 |
| | B) | $11,200 |
| | C) | $12,900 |
| | D) | $9,500 |
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| 11 | |
In a classified balance sheet, supplies would be classified among: |
| | A) | Noncurrent assets. |
| | B) | Current liabilities. |
| | C) | Current assets. |
| | D) | Noncurrent liabilities. |
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| 12 | |
In a statement of cash flows, cash received from the issuance of common 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) | All of these answer choices are incorrect. |
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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) | All of these answer choices are incorrect. |
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