GB 518 Unit 2 Quiz

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GB 518 Quiz 2

GB518 Financial Accounting Principles and Analysis

1. Question : Financial statements are typically prepared in the following order: Balance sheet, statement of retained earnings, income statement Statement of retained earnings, balance sheet, income statement Income statement, balance sheet, statement of retained earnings Income statement, statement of retained earnings, balance sheet</code></pre></li>

Question 2. Question : A 10-column spreadsheet used to draft a company’s unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n):

                                 Adjusted trial balance



                                 Work sheet



                                 Post-closing trial balance



                                 Unadjusted trial balance



                                 General ledger

Question 3. Question : The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

Question 4. Question : A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Question 5. Question : A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

                                 Debit Unpaid Salaries $600 and credit Salaries Payable $600



                                 Debit Salaries Expense $400 and credit Salaries Payable $400



                                 Debit Salaries Expense $600 and credit Salaries Payable $600



                                 Debit Salaries Payable $400 and credit Salaries Expense $400

Question 6. Question : A company’s Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

Question 7. Question : A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

Question 8. Question : An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

Question 9. Question : The Income Summary account is used:

                                 To adjust and update asset and liability accounts



                                 To close the revenue and expense accounts



                                 To determine the appropriate dividend amount



                                 In some situations to replace the income statement



                                 To replace the retained earnings account in some businesses

Question 10. Question : The accrual basis of accounting:

                                 Is generally accepted for external reporting since it is more useful for most business decisions

                                 Is flawed because it gives complete information about cash flows

                                 Recognizes revenues when received in cash



                                 Recognizes expenses when paid in cash



                                 Eliminates the need for adjusting entries at the end of each period

Question 11. Question : On April 1, 2011, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2011?

Question 12. Question : The main purpose of adjusting entries is to:

                                 Record external transactions and events



                                 Record internal transactions and events



                                 Recognize assets purchased during the period



                                 Recognize debts paid during the period



                                 Correct errors

Question 13. Question : Unearned revenue is reported on the financial statements as:

                                 A revenue on the balance sheet



                                 A liability on the balance sheet



                                 An unearned revenue on the income statement



                                 An asset on the balance sheet



                                 An operating activity on the statement of cash flows

Question 14. Question : The length of time covered by a set of periodic financial statements is referred to as the:

                                 Fiscal cycle



                                 Natural business year



                                 Accounting period



                                 Business cycle



                                 Operating cycle

Question 15. Question : On April 30, 2011, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company’s income statement for the year ended December 31, 2011?

                                 $500



                                 $4,000



                                 $6,000



                                 $14,000



                                 $18,000

Question 16. Question : Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?

Cash $ 6,754 Dividends $ 2,000

Accounts receivable $ 13,733 Consulting fees earned $ 13,718

Office supplies $ 2,625 Rent expense $ 3,673

Land $ 37,153 Salaries expense $ 6,642

Office equipment $ 14,535 Telephone expense $ 560

Accounts payable $ 6,463 Miscellaneous expense $ 280

Common stock $ 54,490 Retained Earnings ?

Question 17. Question : Which of the following statements is incorrect?

                                 An income statement reports revenues earned less expenses incurred

                                 An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments

                                 Interim financial reports can be based on one-month or three-month accounting periods

                                 Property, plant and equipment are referred to as plant assets

Question 18. Question : On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. What is the amount that should be recorded as depreciation on December 31?

Question 19. Question : A classified balance sheet:

                                 Measures a company's ability to pay its bills on time



                                 Organizes assets and liabilities into important subgroups



                                 Presents revenues, expenses and net income



                                 Reports operating, investing and financing activities



                                 Reports the effect of profit and dividends on retained earnings

Question 20. Question : The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

                                 Income Summary account



                                 Closing account



                                 Balance column account



                                 Contra account

Question 21. Question : The difference between the cost of an asset and the accumulated depreciation for that asset is called

                                 Depreciation Expense



                                 Unearned Depreciation



                                 Prepaid Depreciation



                                 Depreciation Value



                                 Book Value

Question 22. Question : Based on the following information, determine the current assets, assuming all accounts have a normal balance?

Cash $ 6,754 Dividends $ 2,000

Accounts receivable $ 13,733 Consulting fees earned $ 13,718

Office supplies $ 2,625 Rent expense $ 3,673

Land $ 37,153 Salaries expense $ 6,642

Office equipment $ 14,535 Telephone expense $ 560

Accounts payable $ 6,463 Miscellaneous expense $ 280

Common stock $ 54,490 Retained Earnings ?

Question 23. Question : On June 30, 2011, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.

The adjusting entry on December 31, 2011 for Apricot would include:

                                 A debit to an expense for $1,250



                                 A debit to a prepaid expense for $1,250



                                 A credit to an expense for $3,750



                                 A debit to a prepaid expense for $3,750



                                 A credit to a liability for $1,250

Question 24. Question : On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

                                 Debit Prepaid Insurance, $1,800; credit Cash, $1,800



                                 Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440

                                 Debit Prepaid Insurance, $360; credit Insurance Expense, $360



                                 Debit Insurance Expense, $360; credit Prepaid Insurance, $360



                                 Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440

Question 25. Question : The adjusted trial balance contains information pertaining to:

                                 Asset accounts only



                                 Balance sheet accounts only



                                 Income statement accounts only



                                 All general ledger accounts



                                 Revenue accounts only