question

TRUE

answer

Accountants divide the economic life of a business into artificial time periods because of the time period assumption.

question

ANNUALY

answer

Generally, an accounting period less than one year is referred to as an interim period. Which of the following time periods would not be referred to as an interim period?

question

the economic life of a business can be divided into artificial time periods.

answer

The time period assumption states that

question

FALSE

answer

The revenue recognition principle dictates that companies recognize revenue in the accounting period in which service is performed. The revenue recognition principle dictates that companies recognize revenue in the accounting period before the service is performed.

question

when services are performed.

answer

The revenue recognition principle dictates that revenue is recognized when services are performed. The revenue recognition principle dictates that revenue should be recognized in the accounting records

question

Revenue with expense

answer

The expense recognition principle states expenses incurred to generate revenue should be recorded in the period the revenue is generated. The expense recognition principle matches

question

TRUE

answer

A company must make adjusting entries every time it prepares financial statements

question

an income statement account and a balance sheet account.

answer

An adjusting entry always affects

question

an adjusting entry should be made recognizing the expense.

answer

If a resource has been consumed but a bill has not been received at the end of the accounting period,

question

false

answer

Prior to adjustment for prepaid expenses, assets are understated and expenses are overstated.

question

FALSE, it is an contra asset account

answer

Accumulated Depreciation is an asset account.

question

TRUE

answer

An adjusting entry for accrued expenses increases an expense and also increases a liability account.

question

FALSE

answer

TRUE OR FALSE, Prior to adjustment for unearned revenues, liabilities are understated and revenues are overstated.

question

a debit to Salaries and Wages Expense for $900.

answer

Cathy Cline, an employee of Merlin Company, will not receive her paycheck until April 2. Based on services performed from March 16 to March 31, her salary was $900. The adjusting entry for Merlin Company on March 31 includes

question

true

answer

Companies can prepare financial statements directly from an adjusted trial balance.

question

a debit to Salaries and Wages Expense for $900.

answer

Cathy Cline, an employee of Merlin Company, will not receive her paycheck until April 2. Based on services performed from March 16 to March 31, her salary was $900. The adjusting entry for Merlin Company on March 31 includes

question

after the adjusting entries are prepared and posted to the ledger.

answer

The adjusted trial balance is prepared

question

A credit to Accounts Receivable was posted as a credit to Cash.

answer

Which of the following errors will not cause a trial balance to be out of balance?

question

true

answer

The use of alternative adjusting entries does not apply to accrued revenues and accrued expenses.

question

the supplies on hand at the end of the period.

answer

If a company initially records the purchase of supplies to the Supplies Expense account, the amount of the adjusting entry made at the end of an accounting period will be equal to

question

revenues to be overstated.

answer

If cash received for future services is initially recorded in revenue accounts and the company has not yet performed all of the required services at the end of the accounting period, then failure to make an adjusting entry will cause

question

false

answer

Going concern is the qualitative characteristic of accounting information that allows a statement reader to compare a company's performance from one year to the next.

question

false

answer

A worksheet is a device that eliminates the need to prepare financial statements.

question

false

answer

Companies journalize the adjustments after they complete the worksheet but before preparing the financial statements.

question

true

answer

A worksheet is not a journal, and it cannot be used as a basis for posting to the ledger accounts.

question

true

answer

In closing the books, all temporary accounts are closed.

question

false

answer

The Owner's Drawings account is closed through the Income Summary account.

question

temporary accounts

answer

Closing entries are necessary for

question

true

answer

The post-closing trial balance will contain only permanent accounts.

question

prove the equality of the balance sheet account balances that are carried forward into the next accounting period.

answer

The purpose of the post-closing trial balance is to

question

permanent accounts.

answer

A post-closing trial balance will contain only

question

prepare a work sheet

answer

Which one of the following is an optional step in the accounting cycle of a business enterprise?

question

prepare a trial balance

answer

Which of the following steps in the accounting cycle may be performed more frequently than annually?

question

preparing a worksheet.

answer

All of the following are required steps in the accounting cycle except

question

false

answer

Correcting entries are only made at the end of an accounting period.

question

may involve any combination of accounts in need of correction.

answer

Correcting entries

question

debit Accounts Receivable $350 and credit Unearned Service Revenue $350.

answer

On September 23, Reese Company received a $350 check from Mike Moluf for services to be performed in the future. The bookkeeper for Reese Company incorrectly debited Cash for $350 and credited Accounts Receivable for $350. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should

question

False

answer

On the balance sheet, companies usually list current assets in the order of largest to smallest.

question

true

answer

Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities.

question

supplies

answer

All of the following are property, plant, and equipment except

question

are obligations that the company expects to pay within the coming year or the operating cycle, whichever is longer.

answer

Current liabilities

question

true

answer

Use of reversing entries is not a required step in the accounting cycle.

question

is the exact opposite of an adjusting entry made in a previous period.

answer

A reversing entry

question

simplifies the recording of subsequent transactions.

answer

Use of reversing entries

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