WorksheetsBAINTEL-DIFFICULT-ACT233
Total questions: 15
Worksheet time: 11mins
If a business has received cash in advance of services performed and credits a liability
account, the adjusting entry needed after the services are performed will be
debit Unearned Revenue and credit Cash.
debit Unearned Revenue and credit Service Revenue.
debit Unearned Revenue and credit Prepaid Expense.
debit Unearned Revenue and credit Accounts Receivable.
A
B
C
D
Under accrual-basis accounting
cash must be received before revenue is recognized.
net income is calculated by matching cash outflows against cash inflows.
c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
the ledger accounts must be adjusted to reflect a cash basis of accounting before
financial statements are prepared under generally accepted accounting principles.
Adjusting entries are required
a. yearly.
b. quarterly.
c. monthly.
d. every time financial statements are prepared
a. $114,000
b. $134,000
c. $82,000
d. $150,000
Which one of the following is not a justification for adjusting entries?
a. Adjusting entries are necessary to ensure that revenue recognition principles are followed.
b. Adjusting entries are necessary to ensure that the matching principle is followed.
c. Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.
d. Adjusting entries are necessary to bring the general ledger accounts in line with the
budget.
Hardy Company purchased a computer for $4,800 on December 1. It is estimated that
annual depreciation on the computer will be $960. If financial statements are to be
prepared on December 31, the company should make the following adjusting entry:
a. Debit Depreciation Expense, $960; Credit Accumulated Depreciation, $960.
b. Debit Depreciation Expense, $80; Credit Accumulated Depreciation, $80.
c. Debit Depreciation Expense, $3,840; Credit Accumulated Depreciation, $3,840.
d. Debit Office Equipment, $4,800; Credit Accumulated Depreciation, $4,800.
n computing depreciation, the number of years of useful life of the asset is
a. known with certainty.
b. an estimate.
c. always fixed at 5 years.
d. always fixed at 3 years.
Southeastern Louisiana University sold season tickets for the 2008 football season for
$160,000. A total of 8 games will be played during September, October and November.
Assuming all the games are played, the Unearned Revenue balance that will be reported
on the December 31 balance sheet will be
a. $0.
b. $60,000.
c. $100,000.
d. $160,000.
If prepaid expenses are initially recorded in expense accounts and have not all been used
at the end of the accounting period, then failure to make an adjusting entry will cause
a. assets to be understated.
b. assets to be overstated.
c. expenses to be understated.
d. contra-expenses to be overstated.
Which one of the following items is not generally used in preparing a statement of cash
flows?
a. Adjusted trial balance
b. Comparative balance sheets
c. Current income statement
d. Additional information
A company would be expected to generate small amounts of cash from operations
during the
a. introductory phase.
b. growth phase.
c. maturity phase.
d. decline phase
Which one of the following items is not necessary in preparing a statement of cash
flows?
a. Determine the change in cash
b. Determine the cash provided by operations
c. Determine cash from financing and investing activities
d. Determine the cash in each of the bank accounts
Accounts receivable arising from sales to customers amounted to Php35,000 and
Php40,000 at the beginning and end of the year, respectively. Income reported on the
income statement for the year was Php120,000. Exclusive of the effect of other
adjustments, the cash flows from operating activities to be reported on the statement of
cash flows is
a. Php120,000.
b. Php125,000.
c. Php155,000.
d. Php115,000.
Which one of the following affects cash during a period?
a. Recording depreciation expense
b. Declaration of a cash dividend
c. Write-off of an uncollectible account receivable
d. Payment of an accounts payable
