acc1 exam2

On November 1, Jovel Company loaned another company $100,000 at a 6% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company's annual accounting period ends on December 31. The amount of interest revenue that should be reported in the first year is:

• $0.

• $6,000.

• $5,000.

• $16,667.

• $1,000.

Answer explanation

A contra account is an account linked with another account, and is reported as an addition to the other account’s balance.

• True

• False

Accrued revenues:

• At the end of one accounting period result in cash receipts in a future period.

• At the end of one accounting period often result in cash payments in the next period.

• Are also called unearned revenues.

• Are listed on the balance sheet as liabilities.

• Are recorded at the end of an accounting period because cash has already been received for revenues earned.

Financial statements can be prepared directly from a(n):

• Adjusted trial balance.

• Source document.

• Journal entry.

• Cash sheet.

• Asset sheet.

If a company failed to make the end-of-period adjustment to move the amount of revenue that was earned from the Unearned Revenue account to the Revenue account, this omission would cause:

• An overstatement of net income.

• An overstatement of assets.

• An overstatement of liabilities.

• An overstatement of equity.

• An understatement of liabilities.

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

• True

• False

Which of the following is classified as a plant asset?

• Equipment.

• Accounts receivable.

• Cash.

• Supplies.

• Merchandise inventory.

After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $33,000. The entry to close the income summary account will be:

• Debit Owner Withdrawals $33,000; credit Income Summary $33,000.

• Debit Income Summary $33,000; credit Owner Withdrawals $33,000.

• Debit Income Summary $33,000; credit Owner Capital $33,000.

• Debit Owner Capital $33,000; credit Income Summary $33,000.

• Debit Owner Withdrawals $33,000; Credit Owner Capital $33,000.

The temporary account used only for the closing process that contains a credit for total revenues (and gains) and a debit for total expenses (and losses) is the:

• Income Summary account.

• Closing account.

• Balance column account.

• Contra account.

• Real account.

Which of the following accounts would be included in a post-closing trial balance?

• Accounts Receivable.

• S. Stills, Withdrawal.

• Services revenue.

• Depreciation Expense—Equipment.

• Salaries Expense.