NOCTI Accounting Foundation Quiz 3

What is depreciation?

• Loss of customers through bad marketing.

• Taking money out of a company for owner's use.

• Allowance for wear and tear or obsolescenes of equipment.

How does the depreciation of fixed assets affect the balance sheet?

• + assets, - liabilities

• - assets, - equity

• + liabilities, - equity

• + assets, + equity

How does Purchasing Assets on credit affect the balance sheet?

• + assets, + liabilities

• - assets, - liabilities

• + assets, + equity

• + liabilities, - equity

What are revenues or expenses that have been recorded but not yet earned or used (e.g., prepaid expenses and unearned revenues)?

• accruals

• deferrals

• estimates

• proposed expenses

You run a jelly of the month subscription business. A customer pays you $300 for a 12-month supply of jelly. Because the customer pays you before they receive all their jelly, not all the revenue is earned. How do you record the transaction?

• Debit - account receivable & Credit - equity

• Debit - deferred revenue & Credit - accounts payable

• Debit - cash & Credit - deferred revenue

• Debit - cash & Credit - revenue

What account is part of the closing entries?

• revenue

• expense

• dividends

• All of these

When is the post-closing trial balance performed?

• before closing entries

• after closing entries

On the Cash Flow Statement, what can be considered investing?

• increase in inventory

• loan repayment

• purchase equipment

• decrease in accounts receivables

On the Cash Flow Statement, what is considered financing?

• loan repayment

• purchase equipment

• depreciation

• increase inventories

Where do you find how much rent was paid last year?

• Balance Sheet

• Income Statement

• Cash Flow Statement