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GB 518 Unit 2 Quiz
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GB 518 Unit 2 Quiz

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GB 518 Quiz 2

 

 

 

 

 

GB518 Financial Accounting Principles and Analysis

 

1.         Question :        Financial statements are typically prepared in the following order:

 

                                     Balance sheet, statement of retained earnings, income statement

                                     Statement of retained earnings, balance sheet, income statement

                                     Income statement, balance sheet, statement of retained earnings

                                     Income statement, statement of retained earnings, balance sheet

 

 

Question 2.      Question :        A 10-column spreadsheet used to draft a company's unadjusted trial balance, adjusting entries, adjusted trial balance and financial statements and which is an optional tool in the accounting process is a(n):

 

                                     Adjusted trial balance

 

                                     Work sheet

 

                                     Post-closing trial balance

 

                                     Unadjusted trial balance

 

                                     General ledger

 

           

           

Question 3.      Question :        The Retained Earnings account has a credit balance of $17,000 before closing entries are made. If total revenues for the period are $55,200, total expenses are $39,800 and dividends are $9,000, what is the ending balance in the Retained Earnings account after all closing entries are made?

 

 

Question 4.      Question :        A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

 

Question 5.      Question :        A company pays each of its two office employees each Friday at the rate of $100 per day each for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

 

                                     Debit Unpaid Salaries $600 and credit Salaries Payable $600

 

                                     Debit Salaries Expense $400 and credit Salaries Payable $400

 

                                     Debit Salaries Expense $600 and credit Salaries Payable $600

 

                                     Debit Salaries Payable $400 and credit Salaries Expense $400

 

 

Question 6.      Question :        A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?

 

 

Question 7.      Question :        A company had no office supplies available at the beginning of the year. During the year, the company purchased $250 worth of office supplies. On December 31, $75 worth of office supplies remained. How much should the company report as office supplies expense for the year?

 

           

Question 8.      Question :        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):

 

Question 9.      Question :        The Income Summary account is used:

 

                                     To adjust and update asset and liability accounts

 

                                     To close the revenue and expense accounts

 

                                     To determine the appropriate dividend amount

 

                                     In some situations to replace the income statement

 

                                     To replace the retained earnings account in some businesses

 

 

Question 10.    Question :        The accrual basis of accounting:

 

                                     Is generally accepted for external reporting since it is more useful for most business decisions

                                     Is flawed because it gives complete information about cash flows

                                     Recognizes revenues when received in cash

 

                                     Recognizes expenses when paid in cash

 

                                     Eliminates the need for adjusting entries at the end of each period

 

 

Question 11.    Question :        On April 1, 2011, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2011?

 

 

Question 12.    Question :        The main purpose of adjusting entries is to:

 

                                     Record external transactions and events

 

                                     Record internal transactions and events

 

                                     Recognize assets purchased during the period

 

                                     Recognize debts paid during the period

 

                                     Correct errors

 

 

 

Question 13.    Question :        Unearned revenue is reported on the financial statements as:

 

                                     A revenue on the balance sheet

 

                                     A liability on the balance sheet

 

                                     An unearned revenue on the income statement

 

                                     An asset on the balance sheet

 

                                     An operating activity on the statement of cash flows

 

 

Question 14.    Question :        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

 

 

Question 15.    Question :        On April 30, 2011, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2011?

 

                                     $500

 

                                     $4,000

 

                                     $6,000

 

                                     $14,000

 

                                     $18,000

 

 

Question 16.    Question :        Based on the following information, what would be the beginning balance in the Retained Earnings Account, assuming all accounts have a normal balance?

Cash    $ 6,754            Dividends       $ 2,000

Accounts receivable    $ 13,733          Consulting fees earned           $ 13,718

Office supplies            $ 2,625            Rent expense   $ 3,673

Land    $ 37,153          Salaries expense          $ 6,642

Office equipment        $ 14,535          Telephone expense      $ 560

Accounts payable        $ 6,463            Miscellaneous expense            $ 280

Common stock            $ 54,490          Retained Earnings       ?

 

Question 17.    Question :        Which of the following statements is incorrect?

 

                                     An income statement reports revenues earned less expenses incurred

                                     An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments

                                     Interim financial reports can be based on one-month or three-month accounting periods

                                     Property, plant and equipment are referred to as plant assets

 

 

Question 18.    Question :        On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. What is the amount that should be recorded as depreciation on December 31?

 

           

Question 19.    Question :        A classified balance sheet:

 

                                     Measures a company's ability to pay its bills on time

 

                                     Organizes assets and liabilities into important subgroups

 

                                     Presents revenues, expenses and net income

 

                                     Reports operating, investing and financing activities

 

                                     Reports the effect of profit and dividends on retained earnings

 

 

Question 20.    Question :        The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the retained earnings account is the:

 

                                     Income Summary account

 

                                     Closing account

 

                                     Balance column account

 

                                     Contra account

 

Question 21.    Question :        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

 

 

Question 22.    Question :        Based on the following information, determine the current assets, assuming all accounts have a normal balance?

Cash    $ 6,754            Dividends       $ 2,000

Accounts receivable    $ 13,733          Consulting fees earned           $ 13,718

Office supplies            $ 2,625            Rent expense   $ 3,673

Land    $ 37,153          Salaries expense          $ 6,642

Office equipment        $ 14,535          Telephone expense      $ 560

Accounts payable        $ 6,463            Miscellaneous expense            $ 280

Common stock            $ 54,490          Retained Earnings       ?

 

 

 

Question 23.    Question :        On June 30, 2011, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.

The adjusting entry on December 31, 2011 for Apricot would include:

 

                                     A debit to an expense for $1,250

 

                                     A debit to a prepaid expense for $1,250

 

                                     A credit to an expense for $3,750

 

                                     A debit to a prepaid expense for $3,750

 

                                     A credit to a liability for $1,250

 

 

Question 24.    Question :        On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

 

                                     Debit Prepaid Insurance, $1,800; credit Cash, $1,800

 

                                     Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440

                                     Debit Prepaid Insurance, $360; credit Insurance Expense, $360

 

                                     Debit Insurance Expense, $360; credit Prepaid Insurance, $360

 

                                     Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440

 

 

Question 25.    Question :        The adjusted trial balance contains information pertaining to:

 

                                     Asset accounts only

 

                                     Balance sheet accounts only

 

                                     Income statement accounts only

 

                                     All general ledger accounts

 

                                     Revenue accounts only 

 

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