Question 1

Abacus Corporation purchased equipment costing $48,000. It paid $8,000 in cash and signed a note payable for $40,000. This transaction ________.

Accepted Answer

A)   increased assets by $48,000, liabilities by $40,000 and shareholders' equity by $8,000
B)   increased assets by $48,000 and liabilities by $40,000
C)   increased assets and liabilities each by $40,000
D)   increased assets and shareholders' equity each by $48,000E) A) and B)
F) C) and D)

Question 2

Which of the following accounts is a permanent account?

Accepted Answer

A)   Interest Expense
B)   Gain on Sale of Equipment
C)   Patents
D)   Bad Debt ExpenseE) B) and D)
F) B) and C)

Question 3

Adjusting journal entries are normally not necessary when cash-basis accounting is used.

Accepted Answer

A) True 
 B)False

Question 4

The post-closing trial balance contains only permanent accounts.

Accepted Answer

A) True 
 B)False

Question 5

What are the common errors that a trial balance will not reveal?

Accepted Answer

1. A transaction that is not journalized...

Question 6

Each of the following accounts has a normal credit balance except ________.

Accepted Answer

A)   Sales Revenue
B)   Accumulated Depreciation
C)   Investments
D)   Accounts PayableE) C) and D)
F) A) and C)

Question 7

The first four steps in the accounting cycle, in proper sequence, are ________.

Accepted Answer

A)   journalize, analyze the transactions, post to the general ledger, prepare an unadjusted trial balance
B)   analyze the transactions, journalize, post to the general ledger, prepare an unadjusted trial balance
C)   analyze the transactions, prepare an unadjusted trial balance, post to the general ledger, prepare an adjusted trial balance
D)   prepare an unadjusted trial balance, journalize, post to the general ledger, prepare an adjusted trial balanceE) B) and C)
F) A) and B)

Question 8

The adjusted trial balance proves the accuracy of the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

The normal balance of an account is the side on which an increase in the account balance is recorded.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following accounts has a normal credit balance?

Accepted Answer

A)   Interest Expense
B)   Deferred Revenue
C)   Investments
D)   Loss on Sale of EquipmentE) All of the above
F) A) and D)

Question 11

Unearned revenues may be initially recorded as liabilities or revenues.

Accepted Answer

A) True 
 B)False

Question 12

The first step in preparing a worksheet is to ________.

Accepted Answer

A)   place adjusted trial balance amounts in appropriate income statement and balance sheet columns
B)   compute the adjusted balance in the adjusted trial balance columns
C)   enter the adjusting journal entries in the adjustments columns
D)   prepare an unadjusted trial balanceE) A) and B)
F) A) and C)

Question 13

An entry to record depreciation in the current period will be recorded after the unadjusted trial balance is prepared.

Accepted Answer

A) True 
 B)False

Question 14

The adjusted trial balance is used to prepare the financial statements for an organization.

Accepted Answer

A) True 
 B)False

Question 15

Reversing entries are used in connection with accrued revenues and accrued expenses.

Accepted Answer

A) True 
 B)False

Question 16

If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.

Accepted Answer

A) True 
 B)False

Question 17

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.

Accepted Answer

A)   debit to Equipment for $19,000
B)   credit to Accounts Payable for $15,000
C)   debit to Expense for $19,000
D)   credit to Cash for $19,000E) A) and B)
F) A) and C)

Question 18

The posting reference in the general ledger is the general journal page number.

Accepted Answer

A) True 
 B)False

Question 19

If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the expired portion.

Accepted Answer

A) True 
 B)False

Question 20

Permanent accounts do not include ________.

Accepted Answer

A)   Rent Expense
B)   Taxes Payable
C)   Prepaid Insurance
D)   Interest ReceivableE) A) and C)
F) A) and D)

Exam 4: Review of the Accounting Cycle

Adjusting journal entries are normally not necessary when cash-basis accounting is used.

Correct AnswerverifiedShow Answer

Reversing entries are used in connection with accrued revenues and accrued expenses.

Correct AnswerverifiedShow Answer

If a prepaid expense is initially recorded as an asset, the end-of-period adjusting entry records the expired portion.

Correct AnswerverifiedShow Answer

The first step in preparing a worksheet is to ________.

Correct AnswerverifiedShow Answer

Abacus Corporation purchased equipment costing $48,000. It paid $8,000 in cash and signed a note payable for $40,000. This transaction ________.

Correct AnswerverifiedShow Answer

What are the common errors that a trial balance will not reveal?

Correct Answerverified1. A transaction that is not journalized...View AnswerShow Answer

The posting reference in the general ledger is the general journal page number.

Correct AnswerverifiedShow Answer

The adjusted trial balance is used to prepare the financial statements for an organization.

Correct AnswerverifiedShow Answer

The post-closing trial balance contains only permanent accounts.

Correct AnswerverifiedShow Answer

An entry to record depreciation in the current period will be recorded after the unadjusted trial balance is prepared.

Correct AnswerverifiedShow Answer

Unearned revenues may be initially recorded as liabilities or revenues.

Correct AnswerverifiedShow Answer

Permanent accounts do not include ________.

Correct AnswerverifiedShow Answer

If a prepaid expense is initially recorded as an expense, the end-of-period adjusting entry records the expired portion.

Correct AnswerverifiedShow Answer

Cameron Diaz Corporation purchased a computer system for $19,000. The company paid $4,000 cash and issued a $15,000 note payable for the entire balance. The journal entry to record this transaction includes a ________.

Correct AnswerverifiedShow Answer

Which of the following accounts has a normal credit balance?

Correct AnswerverifiedShow Answer

Each of the following accounts has a normal credit balance except ________.

Correct AnswerverifiedShow Answer

The normal balance of an account is the side on which an increase in the account balance is recorded.

Correct AnswerverifiedShow Answer

The adjusted trial balance proves the accuracy of the financial statements.

Correct AnswerverifiedShow Answer

Which of the following accounts is a permanent account?

Correct AnswerverifiedShow Answer

The first four steps in the accounting cycle, in proper sequence, are ________.

Correct AnswerverifiedShow Answer

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1. A transaction that is not journalized...
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