Financial Accounting 15th Edition Carl Warren James M Reeve Jonathan Duchac- Test Bank

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Financial Accounting 15th Edition Carl Warren James M Reeve Jonathan Duchac- Test Bank

 Sample Questions

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1. Accounts are records of increases and decreases in individual financial statement items.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose ACCT.ACBSP.APC.02 – GAAP ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

2. A chart of accounts is a listing of accounts that make up the journal.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose ACCT.ACBSP.APC.02 – GAAP ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

3. The chart of accounts should be the same for each business.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

4. Accounts payable are accounts that you expect will be paid to you.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – OH – FN-Measurement ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

5. Consuming goods and services in the process of generating revenues results in expenses.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

6. Prepaid expenses are an example of an expense.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-04-Cash vs. Accrual ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

7. The unearned revenue account is an example of a liability.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-04-Cash vs. Accrual ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

8. The drawing account is an expense.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

9. Accounts in the ledger are usually maintained in alphabetical order.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

10. Depending on the account title, the right side of the account is referred to as the credit side.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

11. To determine the balance in an account, always subtract credits from debits.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

12. An account in its simplest form has three parts to it: a title, an increase side, and a decrease side.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

13. The T account got its name because it resembles the letter “T.”   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

14. The right-hand side of a T account is known as a debit and the left-hand side is known as a credit.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

15. Debiting the cash account will increase the account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

16. A credit to the cash account will increase the account.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

17. The cash account will always be debited.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

18. The recording of cash receipts to the cash account will be done by debiting the account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

19. The recording of cash payments from the cash account is done by entering the amount as a credit.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

20. The balance of an account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.   a. True   b. False   ANSWER:   False DIFFICULTY:   Challenging Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

21. Liabilities are debts owed by the business entity.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-03-Business Forms ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

22. The accounts payable account is listed in the chart of accounts as an asset.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-16-Current Liabilities Repor – APC-16-Current Liabilities Reporting ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

23. A drawing account represents the amount of withdrawals made by the owner.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-03-Business Forms ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

24. Revenues are equal to the difference between cash receipts and cash payments.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-04-Cash vs. Accrual ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

25. Expenses result from using up assets or consuming services in the process of generating revenues.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

26. Owner’s equity will be reduced by the amount in the drawing account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-03-Business Forms ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

27. When an owner invests assets in the business, the capital account increases due to revenue being earned.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

28. When an account receivable is collected in cash, the total assets of the business increase.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-16-Current Assets Reporting ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

29. When an account payable is paid with cash, the owner’s equity in the business decreases.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-01 – 02-01 ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-16-Current Liabilities Repor – APC-16-Current Liabilities Reporting ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

30. For a month’s transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

31. A debit is abbreviated as Db and a credit is abbreviated as Cr.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-05-Accounting Cycle ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

32. When a business receives a bill from the utility company, no entry should be made until the invoice is paid.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-16-Current Liabilities Repor – APC-16-Current Liabilities Reporting ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

33. For a month’s transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

34. Withdrawals decrease owner’s equity and are listed on the income statement as a deduction from revenue.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-09-Financial Statements ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

35. The normal balance of revenue accounts is a credit.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

36. The normal balance of an expense account is a credit.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

37. The normal balance of the drawing account is a debit.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

38. Expense accounts are increased by credits.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

39. The normal balance of a capital account is a debit.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.2-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

40. Revenue accounts are increased by credits.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

41. Liability accounts are increased by debits.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

42. Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

43. Transactions are listed in the journal chronologically.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

44. Journalizing is the process of entering amounts in the ledger.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

45. The process of recording a transaction in the journal is called journalizing.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

46. Transactions are initially entered into a record called a journal.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

47. The double-entry accounting system records each transaction twice.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

48. The increase side of an account is also the side of the normal balance.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

49. Journal entries include both debit and credit accounts for each transaction.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

50. A transaction that is recorded in the journal is called a journal entry.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

51. Assets are increased with debits and decreased with credits.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

52. Liabilities are increased with debits and decreased with credits.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

53. Debits will increase unearned revenues and revenues.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-04-Cash vs. Accrual ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.04 – Cash vs. Accrual ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

54. All owner’s equity accounts record increases to the accounts with credits.   a. True   b. False   ANSWER:   False DIFFICULTY:   Challenging Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

55. Journalizing always eliminates fraudulent activity.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-01-Purpose ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

56. Journal entries can have more than two accounts as long as the debits equal the credits.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

57. Normal account balances are on the increase side of the accounts.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.02-02 – 02-02 STATE STANDARDS:   United States – IN – APC-06-Recording Transactions ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

Chapter_4_Completing_the_Accounting_Cycle     True / False

 

1. Cross-referencing is useful in assuring that the debits and credits are in balance.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-01 – 04-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

2. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the Account Title column.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-01 – 04-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

3. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-01 – 04-01 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

4. There is really no benefit in preparing financial statements in any particular order.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

5. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

6. The usual presentation of the statement of owner’s equity is (1) Beginning capital, (2) Net income or loss, (3) Drawing, (4) Owner’s contributions, and (5) Ending capital.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

7. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

8. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

9. Prepaid Insurance is an example of a current asset.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

10. Land is an example of a plant asset.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.13 – Long-term Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

11. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

12. The amount of the net income for a period appears on both the income statement and the balance sheet for that period.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

13. Accrued taxes payable are generally reported on the balance sheet as a current liability.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

14. Office Equipment is an example of a current asset account.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

15. Capital and drawing are reported in the owner’s equity section of the balance sheet.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

16. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current assets.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

17. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

18. Accrued expenses are ordinarily listed on the balance sheet as current assets.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

19. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-02 – 04-02 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

20. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.02 – GAAP ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

21. Accumulated Depreciation is a permanent account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

22. The drawing account is a temporary account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

23. The balance sheet accounts are referred to as real or permanent accounts.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

24. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

25. Net income is closed to the owner’s capital account.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

26. The accumulated depreciation account is closed to the drawing account.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

27. The drawing account is debited in the closing entry.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

28. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

29. Entries required to close the balances of the temporary accounts at the end of the period are called final entries.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

30. Journalizing and posting closing entries must be completed before financial statements can be prepared.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

31. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

32. Closing entries are entered directly on to the work sheet.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

33. The post-closing trial balance will generally have fewer accounts than the trial balance.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

34. A post-closing trial balance contains only asset and liability accounts.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

35. A post-closing trial balance should be prepared before the financial statements are prepared.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

36. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

37. All income statement accounts will be closed at the end of the period.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

38. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

39. Balance sheet accounts are not considered real accounts.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

40. Real accounts are not permanent accounts.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

41. It is not necessary to post the closing entries to the general ledger.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

42. The closing process is sometimes referred to as closing the books.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

43. Once an account has been closed for the period, inserting a line in the balance columns zeros out the account, making it ready for the following period.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-03 – 04-03 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

44. After analyzing transactions, the next step would be to post the transactions in the ledger.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

45. The last step of the accounting cycle is to prepare a post-closing trial balance.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

46. The most important output of the accounting cycle is the financial statements.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

47. The accounting cycle begins with preparing an unadjusted trial balance.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

48. Financial statements should be prepared before the closing entries are journalized and posted.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

49. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-04 – 04-04 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

50. Any 12-month accounting period adopted by a company is known as its fiscal year.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-06 – 04-06 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.BB.01 – Industry ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

51. A fiscal year that ends when business activities have reached their lowest point is called the natural business year.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-06 – 04-06 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.BB.01 – Industry ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

52. All companies must use a calendar year as their fiscal year.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-06 – 04-06 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.BB.01 – Industry ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

53. The majority of businesses end their fiscal year on December 31.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-06 – 04-06 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.BB.01 – Industry ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

54. The ability to convert assets into cash is called liquidity.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

55. The ability of a business to pay its debts is called solvency.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

56. Working capital is the excess of the current liabilities of a business over its current assets.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

57. The current ratio is computed by dividing current liabilities by current assets.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

58. The current ratio is more useful than working capital in making comparisons across companies.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

59. Current assets and current liabilities for Brayden Company are as follows: ​    20Y9  20Y8  Current Assets  $498,600 $532,400  Current Liabilities 269,300 301,500 ​ The change in the current ratio from 20Y8 to 20Y9 was favorable.   a. True   b. False   ANSWER:   True DIFFICULTY:   Moderate Bloom’s: Applying LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

60. Current assets and current liabilities for Brayden Company are as follows: ​    20Y9  20Y8  Current assets  $498,600 $532,400  Current liabilities 269,300 301,500 ​ The change in working capital from 20Y8 to 20Y9 indicates that Brayden will no longer be solvent.     a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Applying LEARNING OBJECTIVES:   ACCT.WARD.18.04-07 – 04-07 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

61. The income statement is prepared from the adjusted trial balance or the Income Statement columns on the work sheet.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT. WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

62. The balances of the capital accounts from the Adjusted Trial Balance columns of the work sheet are extended to the Statement of Owner’s Equity columns.   a. True   b. False   ANSWER:   False DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

63. The work sheet is not considered a part of the formal accounting records.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

64. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.09 – Financial Statements ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

65. The trial balance may be listed on the work sheet instead of being prepared separately.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

66. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals.   a. True   b. False   ANSWER:   False DIFFICULTY:   Moderate Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

67. A work sheet heading is dated for a period of time.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

68. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.   a. True   b. False   ANSWER:   True DIFFICULTY:   Easy Bloom’s: Remembering LEARNING OBJECTIVES:   ACCT.WARD.18.04-APP1 – 04-APP1 ACCREDITING STANDARDS:   ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.ACBSP.APC.08 – Closing Entries ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic