Question 1

The closing process transfers all income statement items to their related statement of financial position accounts (for example, salaries expense transfers to salaries payable).

Accepted Answer

A) True 
 B)False

Question 2

An unearned revenue can best be described as an amount

Accepted Answer

A)  collected and reported on the income statement.
B)  collected and not reported on the income statement.
C)  not collected and reported on the income statement.
D)  not collected and not reported on the income statement.E) All of the above
F) B) and C)

Question 3

Nominal accounts are also called

Accepted Answer

A)  temporary accounts.
B)  permanent accounts.
C)  real accounts.
D)  none of these.E) A) and D)
F) A) and C)

Question 4

Under International Financial Reporting Standards (IFRS) the dividends account is considered a real account.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statement is true regarding debits and credits?

Accepted Answer

A)  On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.
B)  Before adjustments, debits will not equal credits in the trial balance.
C)  The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities.
D)  On the income statement, revenues are increased by debit whereas on the statement of financial position retained earnings is increased by a credit.E) None of the above
F) A) and D)

Question 6

A document prepared to prove the equality of debits and credits after all adjustments have been prepared is the

Accepted Answer

A)  Adjusted statement of fianancial position.
B)  Adjusted trial balance.
C)  Adjusted financial statements.
D)  Post-closing trial balance.E) All of the above
F) A) and C)

Question 7

Reversing entries are made at the end of the accounting cycle to correct errors in the original recording of transactions.

Accepted Answer

A) True 
 B)False

Question 8

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Accepted Answer

A)  an unearned revenue.
B)  a prepaid expense.
C)  an accrued revenue.
D)  an accrued expense.E) A) and D)
F) A) and C)

Question 9

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

Accepted Answer

A)  Subtract ending accounts receivable.
B)  Subtract beginning unearned service revenue.
C)  Add ending accounts receivable.
D)  Add cash sales.E) B) and C)
F) A) and C)

Question 10

If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

Accepted Answer

A)  a liability account and an asset account.
B)  an asset or contra asset account and an expense account.
C)  a liability account and an expense account.
D)  a receivable account and a revenue account.E) None of the above
F) B) and C)

Question 11

A journal entry to record a receipt of rent revenue in advance will include a

Accepted Answer

A)  debit to rent revenue.
B)  credit to rent revenue.
C)  credit to cash.
D)  credit to unearned rent.E) C) and D)
F) B) and C)

Question 12

The closing entries

Accepted Answer

A)  Must debit or credit one income statement account and one statement of financial position account.
B)  Include closing the dividends account to income summary.
C)  Are posted to the appropriate general ledger accounts.
D)  All of the choices are correct regarding closing entries.E) C) and D)
F) B) and C)

Question 13

Which of the following would not be a correct form for an adjusting entry?

Accepted Answer

A)  A debit to a revenue and a credit to a liability
B)  A debit to an expense and a credit to a liability
C)  A debit to a liability and a credit to a revenue
D)  A debit to an asset and a credit to a liabilityE) None of the above
F) A) and C)

Question 14

Posting

Accepted Answer

A)  Accumulates the effects of ledger entries and transfers them to the general journal.
B)  Is done only for income statement activity; activity related to the statement of financial position does not require posting.
C)  Is done once per year.
D)  Transfers journal entries to the ledger accounts.E) B) and D)
F) A) and B)

Question 15

The post-closing trial balance consists of asset, liability, equity, revenue and expense accounts.

Accepted Answer

A) True 
 B)False

Question 16

Adjustments are often prepared

Accepted Answer

A)  after the statement of financial position date, but dated as of that date.
B)  after the statement of financial position date, and dated after that date.
C)  before the statement of financial position date, but dated as of that date.
D)  before the statement of financial position date, and dated after that date.E) All of the above
F) A) and C)

Question 17

The post-closing trial balance

Accepted Answer

A)  Consists of statement of financial position accounts only.
B)  Will balance if a transaction is not journalized and posted, or if a transaction is journalized and posted twice.
C)  Shows that the accounting equation is in balance at the end of the accounting period.
D)  All of the choices are correct regarding the post-closing trial balance.E) B) and C)
F) A) and D)

Question 18

Revenues are

Accepted Answer

A)  Impacted by debits and credits in the same way that expenses are impacted by debits and credits.
B)  A subdivision of equity, providing information about why equity increased.
C)  Reported on the statement of financial position as a current item.
D)  All of the choices are correct regarding revenues.E) A) and D)
F) B) and D)

Question 19

The debit and credit analysis of a transaction normally takes place

Accepted Answer

A)  before an entry is recorded in a journal.
B)  when the entry is posted to the ledger.
C)  when the trial balance is prepared.
D)  at some other point in the accounting cycle.E) C) and D)
F) None of the above

Question 20

Basic steps in the recording process include all of the following except

Accepted Answer

A)  Transfer the journal information to the appropriate account in the statement of financial postion.
B)  Analyze each transaction for its effect on the accounts.
C)  Enter the transaction information in a journal.
D)  All of the choices are corrrect regarding the basic steps in the recording process.E) All of the above
F) A) and D)

Exam 3: The Accounting Information System

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

Correct AnswerverifiedShow Answer

Reversing entries are made at the end of the accounting cycle to correct errors in the original recording of transactions.

Correct AnswerverifiedShow Answer

An unearned revenue can best be described as an amount

Correct AnswerverifiedShow Answer

The post-closing trial balance consists of asset, liability, equity, revenue and expense accounts.

Correct AnswerverifiedShow Answer

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Correct AnswerverifiedShow Answer

Basic steps in the recording process include all of the following except

Correct AnswerverifiedShow Answer

A journal entry to record a receipt of rent revenue in advance will include a

Correct AnswerverifiedShow Answer

The closing process transfers all income statement items to their related statement of financial position accounts (for example, salaries expense transfers to salaries payable).

Correct AnswerverifiedShow Answer

Adjustments are often prepared

Correct AnswerverifiedShow Answer

The debit and credit analysis of a transaction normally takes place

Correct AnswerverifiedShow Answer

Revenues are

Correct AnswerverifiedShow Answer

If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

Correct AnswerverifiedShow Answer

The post-closing trial balance

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Which of the following would not be a correct form for an adjusting entry?

Correct AnswerverifiedShow Answer

Nominal accounts are also called

Correct AnswerverifiedShow Answer

Which of the following statement is true regarding debits and credits?

Correct AnswerverifiedShow Answer

Posting

Correct AnswerverifiedShow Answer

Under International Financial Reporting Standards (IFRS) the dividends account is considered a real account.

Correct AnswerverifiedShow Answer

The closing entries

Correct AnswerverifiedShow Answer

A document prepared to prove the equality of debits and credits after all adjustments have been prepared is the

Correct AnswerverifiedShow Answer

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