Acct 211 homework 1 quiz 1

Acct 211 homework 1 quiz 1

Acct 211 homework 1 quiz 1

 

1.

All of the following are true regarding ethics except:

                Ethics are beliefs that separate right from wrong.

                Ethics rules are often set for CPAs.

Ethics do not affect the operations or outcome of a company.

                Are critical in accounting.

                Ethics can be hard to apply.

 

2.

To include the personal assets and transactions of a business’s owner in the records and reports of the business would be in conflict with the:

                Objectivity principle.

                Monetary unit assumption.

                Business entity assumption.

                Going-concern assumption.

                Revenue recognition principle.

 

3.

The question of when revenue should be recognized on the income statement (according to GAAP) is addressed by the:

 

Revenue recognition principle.

Going-concern assumption.

Objectivity principle

Business entity assumption

Cost principle

 

4.

Revenue is properly recognized:

                When the customer’s order is received.

                Only if the transaction creates an account receivable.

                At the end of the accounting period.

Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price.

                When cash from a sale is received.

5.

A payment to an owner is called a(n):

                Liability.

                Withdrawal.

                Expense.

                Contribution.

                Investment.

 

6.

The statement of cash flows reports all of the following except:

                Cash flows from operating activities.

                Cash flows from investing activities.

                Cash flows from financing activities.

                The net increase or decrease in assets for the period reported.

                The net increase or decrease in cash for the period reported.

 

 

7.

The statement of owner’s equity:

                Reports how equity changes at a point in time.

                Reports how equity changes over a period of time.

                Reports on cash flows for operating, financing, and investing activities over a period of time.

                Reports on cash flows for operating, financing, and investing activities at a point in time.

                Reports on amounts for assets, liabilities, and equity at a point in time.

 

8.

The financial statement that identifies where a company’s cash came from and where it went during the period is the:

                Statement of financial position.

                Statement of cash flows.

                Balance sheet.

                Income statement.

                Statement of changes in owner’s equity.

 

9.

Cash investments by owners are listed on which of the following statements?

                Balance sheet.

                Income statement.

                Statement of owner’s equity only.

                Statement of cash flows only.

                Statement of owner’s equity and statement of cash flows

 

10

Rent expense that is paid with cash appears on which of the following statements?

                Balance sheet.

                Income statement.

                Statement of owner’s equity.

                Income statement and statement of cash flows.

                Statement of cash flows only.

 

11

 

An account used to record the owner’s investments in the business is called a(n):

                Withdrawals account.

                Capital account.

                Revenue account.

                Expense account.

                Liability account.

 

12.

A list of all accounts and the identification number assigned to each account used by a company is called a:

                Source document.

                Journal.

                Trial balance.

                Chart of accounts.

                General Journal.

13.

Which of the following statements is incorrect?

                The normal balance of accounts receivable is a debit.

                The normal balance of owner’s withdrawals is a debit.

                The normal balance of unearned revenues is a credit.

                The normal balance of an expense account is a credit.

                The normal balance of the owner’s capital account is a credit.

 

14

Which of the following statements is correct?

                The left side of a T-account is the credit side.

                Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.

                The left side of a T-account is the debit side.

                Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts.

                In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

 

15.

Double-entry accounting is an accounting system:

                That records each transaction twice.

                That records the effects of transactions and other events in at least two accounts with equal debits and credits.

                In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.

                That may only be used if T-accounts are used.

                That insures that errors never occur.

16.

Which of the following statements is incorrect?

                Higher financial leverage involves higher risk.

                Risk is higher if a company has more liabilities.

                Risk is higher if a company has higher assets.

                The debt ratio is one measure of financial risk.

                Lower financial leverage involves lower risk.

 

17.

The process of transferring general journal information to the ledger is:

                Double-entry accounting.

                Posting.

                Balancing an account.

                Journalizing.

                Not required unless debits do not equal credits.

18.

A balance column ledger account is:

                An account entered on the balance sheet.

                An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted.

                Another name for the withdrawals account.

                An account used to record the transfers of assets from a business to its owner.

                A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

 

19.

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

                Account.

                Trial balance.

                Journal.

                T-account.

                Balance column account.

20.

Of the following errors, which one by itself will cause the trial balance to be out of balance?

                A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.

                A $100 cash receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.

                A $75 cash receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash.

                A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.

                An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.

 

21.

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.

22.

Adjusting entries made at the end of an accounting period accomplish all of the following except:

                Updating liability and asset accounts to their proper balances.

                Assigning revenues to the periods in which they are earned.

                Assigning expenses to the periods in which they are incurred.

                Assuring that financial statements reflect the revenues earned and the expenses incurred.

                Assuring that external transaction amounts remain unchanged.

 

23.

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

                Cash basis accounting.

                The matching principle.

                The time period assumption.

                Accrual basis accounting.

                Revenue basis accounting.

 

24.

An adjusting entry could be made for each of the following except:

                Prepaid expenses.

                Depreciation.

                Owner withdrawals.

                Unearned revenues.

                Accrued revenues.

 

25.

All of the following statements regarding profit margin are true except:

                Profit margin reflects the percent of profit in each dollar of revenue.

                Profit margin is also called return on sales.

                Profit margin can be used to compare a firm’s performance to its competitors.

                Profit margin is calculated by dividing net income by net sales.

                Profit margin is not a useful measure of a company’s operating results.

 

26.

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):

                Accrued expense.

                Contra account.

                Accrued revenue.

                Intangible asset.

                Adjunct account.

 

27.

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.

 

28.

A balance sheet that places the assets above the liabilities and equity is called a(n):

                Report form balance sheet.

                Account form balance sheet.

                Classified balance sheet.

                Unadjusted balance sheet.

                Unclassified balance sheet.

29.

Which of the following statements related to U.S. GAAP and IFRS is incorrect:

                Both U.S. GAAP and IFRS include guidance for adjusting entries.

                Both U.S. GAAP and IFRS prepare the same four financial statements.

                U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.

                U.S. GAAP balance sheets report current items first.

                IFRS balance sheets normally present noncurrent items first.

 

30.

Assuming unearned revenues are originally recorded in balance sheet accounts, the adjusting entry to record earning of unearned revenue is:

                Increase an expense; increase a liability.

                Increase an asset; increase revenue.

                Decrease a liability; increase revenue.

                Increase an expense; decrease an asset.

                Increase an expense; decrease a liability.