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.........a.........3....0....5

University

51 Qs

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Assessment

Quiz

Other

University

Easy

Created by

l w

Used 2+ times

FREE Resource

51 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

The reason we post journal entries is to

provide a chronological record of all economic events affecting the firm

ensure that all accounts are up to date prior to preparing financial statements

ensure that debits equal credits in the trial balance

reflect the information in journal entries in ledger accounts

2.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following is most likely an accrued liability?

Depreciation

Interest on borrowing

Cost of goods sold

Office supplies

Answer explanation

Accrued liability: an expense incurred, but not yet paid

3.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

A prepaid expense:

occurs when an expense is recorded in the current period but not paid until a future period

occurs when a company receives cash from customers prior to providing goods and services to those customers

occurs when an asset is acquired in the current period but not expensed until a future period

All of these answer choices are incorrect

4.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

If the required adjusting entry for prepaid rent that has expired for the period is omitted:

assets will be understated and net income understated

assets will be understated and net income overstated

assets will be overstated and net income understated

assets will be overstated and net income overstated

Answer explanation

The adjusting entry for prepaid rent that has expired includes a debit to rent expense and a credit to prepaid rent. By not recording the expense, net income will be overstated. By not recording the decrease to prepaid rent, the asset will be overstated.

5.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

On July 1, Year 1, a company paid $48,000 for 24 months of advance rent on its warehouse. Assuming the company has a December year end, what would be the amount of rent expense in Year 1 under cash basis versus accrual accounting?

Cash basis = $24,000; Accrual = $24,000

Cash basis = $48,000; Accrual = $12,000

Cash basis = $12,000; Accrual = $36,000

Cash basis = $48,000; Accrual = $24,000

Answer explanation

Cash-basis: full amount of $48,000 is paid in Year 1, so the full amount is expensed in Year 1

Accrual-basis: Monthly rent = $48,000/24 months = $2,000

Year 1 rent expense = $2,000 * 6 months = $12,000

6.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

Which of the following are the accounting standards issued by the FASB?

Accounting Principal Board Opinions

Accounting Research Board Bulletins

Accounting Standards Updates

Conceptual Framework

7.

MULTIPLE CHOICE QUESTION

15 mins • 1 pt

If a company has declared bankruptcy, its financial statements likely violate the:

Going concern assumption

Fair value measurement approach

Stable monetary unit assumption

Present value measurement approach

Answer explanation

Going concern assumption: assumes a business will be in operation indefinitely

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