Accounting Chapter 3-5

Assets are listed on the balance sheet in order of their

• liquidity

• purchase date.

• adjustments.

• balance.

Which situation indicates a net loss within the Income Statement section of the​ worksheet?

• Total debits exceed total credits

• Total credits exceed total debits

• Total debits equal total credits

• None of the above

Which of the following accounts is not​ closed?

• Accumulated Depreciation

• Depreciation Expense

• ​Owner, Withdrawals

• Service Revenue

What do closing entries​ accomplish?

• Zero out the​ revenues, expenses, and​ Owner, Withdrawals

• Brings the​ Owner, Capital account to its correct ending balance

• Transfer​ revenues, expenses, and​ Owner, Withdrawals to the​ Owner, Capital account

• All of the above

Which of the following is true of accrual basis accounting and cash basis​ accounting?

• Accrual accounting is not allowed under GAAP.

• Accrual accounting records revenue only when it is earned.

• Cash basis accounting records all transactions.

• All of the above are true.

The revenue recognition principle requires

• time to be divided into annual periods to measure revenue properly

• revenue to be recorded only after the business has satisfied its performance obligation

• expenses to be matched with revenue of the period.

• revenue to be recorded only after the cash is received.

Which of the following is an example of a deferral​ (or prepaid) adjusting​ entry?

• Recording the usage of office supplies during the period.

• Recording revenue that has been earned but not yet received.

• Recording interest expense incurred on a notes payable not due until next year.

• Recording salaries expense for employees not yet paid.

Which account does a merchandiser use that a service company does not​ use?

• Sales Revenue

• Merchandise Inventory

• Cost of Goods Sold

• All of the above

The two main inventory accounting systems are the

• returns and allowances.

• cash and accrual.

• perpetual and periodic.

• purchase and sale.

Which of the following accounts would be closed at the end of the year using the perpetual inventory​ system?

• Merchandise Inventory

• Accounts Payable

• Accounts Receivable

• Cost of Goods Sold