The reason we post journal entries is to

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1.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
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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