Accounting I – Week 2

• Question 1

1 out of 1 points

	Which of the following accounts would not need to be adjusted at year end?
	Selected Answer: land   Response Feedback: Correct! Land would not need to be adjusted at year end. The historical costs of property, plant, and equipment are never adjusted.

• Question 2

1 out of 1 points

	The following information is available for Crandall Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Crandall, Capital account? Total revenues $500,000 Total expenses $385,000 Crandall, capital $110,000 Crandall, withdrawals $  39,000
	Selected Answer: $186,000   Response Feedback: Correct! $186,000 will be the balance in the Crandall, capital account.

• Question 3

1 out of 1 points

	A company recorded 2 days of accrued salaries of $1,950 for its employees on January 31. On February 9, it paid its employees $8,100 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:
	Selected Answer: d. 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100   Response Feedback: Correct! The table showing the correct journal entries is: 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100

• Question 4

1 out of 1 points

	Retailers often end their fiscal years ______.
	Selected Answer: during the slack season   Response Feedback: Correct! Retailers often end their fiscal years during the slack season. Since inventory needs to be physically counted at the end of the year, it’s better to end the year when inventory is lower and there are fewer transactions taking place.

• Question 5

1 out of 1 points

	Which of the following statements about a company’s operating cycle is not true?
	Selected Answer: Non-current items are those expected to come due within one year or within the company’s operating cycle.   Response Feedback: Correct! Non-current items are also known as long-term items, which are defined as remaining on the balance sheet for longer than the operating cycle.

• Question 6

1 out of 1 points

	Which of the following statements is true?
	Selected Answer: A post-closing trial balance should include only permanent accounts.   Response Feedback: Correct! A post-closing trial balance should include only permanent accounts.

• Question 7

0 out of 1 points

	Which of the following statements regarding reporting under GAAP and IFRS is not true?
	Selected Answer: The definition of an asset under GAAP and IFRS involves three basic criteria.   Response Feedback: Try again! Both U.S. GAAP and the International Financial Reporting Standards (IFRS) record the initial purchase of an asset at cost or historical value and not replacement value. Assets and liabilities both involve three different criteria. Review the Global View, Closing Process and Reporting Assets and Liabilities sections in Chapter 4 of the textbook for more information.

• Question 8

1 out of 1 points

	On which financial statement does the income summary appear?
	Selected Answer: no financial statement   Response Feedback: Correct! The income summary does not appear on a financial statement. The income summary is an account that is used for the closing process only. It is opened and closed during the closing process.

• Question 9

1 out of 1 points

	The process of posting is associated most closely with the _____.
	Selected Answer: ledger   Response Feedback: Correct! The process of posting is associated most closely with ledger. Figures are taken from the journal and posted to the ledger.

• Question 10

1 out of 1 points

	Which of the following is an application of accrual accounting?
	Selected Answer: recording a utilities expense in the accounting period covered by the monthly bill   Response Feedback: Correct! Recording a utilities expense in the accounting period covered by the monthly bill is an application of accrual accounting. An expense that has occurred, but hasn’t been billed yet, would need to be accrued for.

 

• Question 1

1 out of 1 points

	Which of the following accounts would not need to be adjusted at year end?
	Selected Answer: land   Response Feedback: Correct! Land would not need to be adjusted at year end. The historical costs of property, plant, and equipment are never adjusted.

• Question 2

1 out of 1 points

	On the completed worksheet, which set of columns should usually be out of balance after the initial footing?
	Selected Answer: both the income statement and balance sheet columns   Response Feedback: Correct! Both the income statement and balance sheet columns should usually be out of balance after the initial footing.

• Question 3

1 out of 1 points

	All of the following statements regarding the income statement columns on the worksheet are true except for which one?
	Selected Answer: The balances in the income statement credit column are unearned revenues.   Response Feedback: Correct! Unearned revenue is a liability account and, therefore, a balance sheet account.

• Question 4

1 out of 1 points

	A company recorded 2 days of accrued salaries of $1,950 for its employees on January 31. On February 9, it paid its employees $8,100 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:
	Selected Answer: d. 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100   Response Feedback: Correct! The table showing the correct journal entries is: 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100

• Question 5

0 out of 1 points

	Which of the following accounts will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns?
	Selected Answer: owner’s capital   Response Feedback: Try again! Depreciation expense – machinery will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns. Usually, a depreciation expense is added during the adjustment process. Review the Use of a Worksheet and Worksheet Application and Analysis sections in Chapter 4 of the textbook for more information.

• Question 6

1 out of 1 points

	Which of the following is an application of accrual accounting?
	Selected Answer: recording a utilities expense in the accounting period covered by the monthly bill   Response Feedback: Correct! Recording a utilities expense in the accounting period covered by the monthly bill is an application of accrual accounting. An expense that has occurred, but hasn’t been billed yet, would need to be accrued for.

• Question 7

1 out of 1 points

	On which financial statement does the income summary appear?
	Selected Answer: no financial statement   Response Feedback: Correct! The income summary does not appear on a financial statement. The income summary is an account that is used for the closing process only. It is opened and closed during the closing process.

• Question 8

1 out of 1 points

	Which of the following statements about a company’s operating cycle is not true?
	Selected Answer: Non-current items are those expected to come due within one year or within the company’s operating cycle.   Response Feedback: Correct! Non-current items are also known as long-term items, which are defined as remaining on the balance sheet for longer than the operating cycle.

• Question 9

1 out of 1 points

	Retailers often end their fiscal years ______.
	Selected Answer: during the slack season   Response Feedback: Correct! Retailers often end their fiscal years during the slack season. Since inventory needs to be physically counted at the end of the year, it’s better to end the year when inventory is lower and there are fewer transactions taking place.

• Question 10

0 out of 1 points

	A company’s Office Supplies account shows a beginning balance of $620 and an ending balance of $440. If the office supplies expense for the year is $3,200, what amount of office supplies was purchased during the period?
	Selected Answer: $2,760   Response Feedback: Try again! The formula for supply inventory is: beginning balance + purchases = sold + ending balance. In this problem, the calculation is: $620 + X = $3,200 + $440, where X = $3,020. The other choices are incorrectly calculated. Review the Prepaid (Deferred) Expenses and Supplies section in Chapter 3 of the textbook for more information.

 

• Question 1

1 out of 1 points

	Retailers often end their fiscal years ______.
	Selected Answer: during the slack season   Response Feedback: Correct! Retailers often end their fiscal years during the slack season. Since inventory needs to be physically counted at the end of the year, it’s better to end the year when inventory is lower and there are fewer transactions taking place.

• Question 2

1 out of 1 points

	Expenses are incurred ______.
	Selected Answer: to generate revenue   Response Feedback: Correct! Expenses are incurred to generate revenue. You have to spend money to make money.

• Question 3

1 out of 1 points

	The main purpose of adjusting entries is to _____.
	Selected Answer: record internal transactions and events   Response Feedback: Correct! The main purpose of adjusting entries is to record internal transactions and events.

• Question 4

0 out of 1 points

	Which of the following statements regarding reporting under GAAP and IFRS is not true?
	Selected Answer: Both GAAP and IFRS define the initial asset value as historical cost for nearly all assets.   Response Feedback: Try again! Both U.S. GAAP and the International Financial Reporting Standards (IFRS) record the initial purchase of an asset at cost or historical value and not replacement value. Assets and liabilities both involve three different criteria. Review the Global View, Closing Process and Reporting Assets and Liabilities sections in Chapter 4 of the textbook for more information.

• Question 5

1 out of 1 points

	A company recorded 2 days of accrued salaries of $1,950 for its employees on January 31. On February 9, it paid its employees $8,100 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:
	Selected Answer: d. 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100   Response Feedback: Correct! The table showing the correct journal entries is: 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100

• Question 6

1 out of 1 points

	Use the information in the adjusted trial balance presented below to calculate the current ratio for Jones Company: Account Title Debit Credit Cash $23,000   Accounts receivable $16,000   Prepaid insurance $6,600   Equipment $100,000   Accumulated depreciation – equipment   $50,000 Land $95,000   Accounts payable   $17,000 Interest payable   $2,400 Unearned revenue   $5,000 Long-term notes payable   $30,000 J. Jones, capital   $132,600 Totals $240,600 $240,600
	Selected Answer: 1.87   Response Feedback: Correct! The correct ratio is 1.87.

• Question 7

1 out of 1 points

	Which of the following accounts is not closed during the closing process?
	Selected Answer: owner’s capital   Response Feedback: Correct! Owner’s capital is not closed during the closing process. Only income, expenses, and withdrawals (dividends) are closed. Balance sheet accounts are never closed.

• Question 8

1 out of 1 points

	Which of the following accounts will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns?
	Selected Answer: depreciation expense – machinery   Response Feedback: Correct! Depreciation expense – machinery will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns. Usually, a depreciation expense is added during the adjustment process.

• Question 9

1 out of 1 points

	Which of the following statements about a company’s operating cycle is not true?
	Selected Answer: Non-current items are those expected to come due within one year or within the company’s operating cycle.   Response Feedback: Correct! Non-current items are also known as long-term items, which are defined as remaining on the balance sheet for longer than the operating cycle.

• Question 10

1 out of 1 points

	Which of the following is an application of accrual accounting?
	Selected Answer: recording a utilities expense in the accounting period covered by the monthly bill   Response Feedback: Correct! Recording a utilities expense in the accounting period covered by the monthly bill is an application of accrual accounting. An expense that has occurred, but hasn’t been billed yet, would need to be accrued for.

• Question 1

1 out of 1 points

	The main purpose of adjusting entries is to _____.
	Selected Answer: record internal transactions and events   Response Feedback: Correct! The main purpose of adjusting entries is to record internal transactions and events.

• Question 2

1 out of 1 points

	All of the following statements regarding the income statement columns on the worksheet are true except for which one?
	Selected Answer: The balances in the income statement credit column are unearned revenues.   Response Feedback: Correct! Unearned revenue is a liability account and, therefore, a balance sheet account.

• Question 3

1 out of 1 points

	The following information is available for Crandall Company before closing the accounts. After all of the closing entries are made, what will be the balance in the Crandall, Capital account? Total revenues $500,000 Total expenses $385,000 Crandall, capital $110,000 Crandall, withdrawals $  39,000
	Selected Answer: $186,000   Response Feedback: Correct! $186,000 will be the balance in the Crandall, capital account.

• Question 4

1 out of 1 points

	Use the information in the adjusted trial balance presented below to calculate the current ratio for Jones Company: Account Title Debit Credit Cash $23,000   Accounts receivable $16,000   Prepaid insurance $6,600   Equipment $100,000   Accumulated depreciation – equipment   $50,000 Land $95,000   Accounts payable   $17,000 Interest payable   $2,400 Unearned revenue   $5,000 Long-term notes payable   $30,000 J. Jones, capital   $132,600 Totals $240,600 $240,600
	Selected Answer: 1.87   Response Feedback: Correct! The correct ratio is 1.87.

• Question 5

1 out of 1 points

	Expenses are incurred ______.
	Selected Answer: to generate revenue   Response Feedback: Correct! Expenses are incurred to generate revenue. You have to spend money to make money.

• Question 6

1 out of 1 points

	On March 31, Phoenix, Inc. paid Melanie Publishing Company $26,280 for 3-year subscriptions for five different magazines. The subscriptions started immediately. What is the adjusting entry that should be recorded by Melanie Publishing Company on December 31 of the first year if the credit to record the collection was made to unearned fees?
	Selected Answer: debit unearned fees, $6,570; credit fees earned, $6,570   Response Feedback: Correct! Debit unearned fees is $6,570 and credit fees earned is $6,570.

• Question 7

1 out of 1 points

	Which of the following is an application of accrual accounting?
	Selected Answer: recording a utilities expense in the accounting period covered by the monthly bill   Response Feedback: Correct! Recording a utilities expense in the accounting period covered by the monthly bill is an application of accrual accounting. An expense that has occurred, but hasn’t been billed yet, would need to be accrued for.

• Question 8

1 out of 1 points

	Which of the following statements about a company’s operating cycle is not true?
	Selected Answer: Non-current items are those expected to come due within one year or within the company’s operating cycle.   Response Feedback: Correct! Non-current items are also known as long-term items, which are defined as remaining on the balance sheet for longer than the operating cycle.

• Question 9

1 out of 1 points

	Which of the following statements is true?
	Selected Answer: A post-closing trial balance should include only permanent accounts.   Response Feedback: Correct! A post-closing trial balance should include only permanent accounts.

• Question 10

0 out of 1 points

	Which of the following accounts will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns?
	Selected Answer: owner’s capital   Response Feedback: Try again! Depreciation expense – machinery will have an amount in the adjustments columns of the worksheet, but probably not in the trial balance columns. Usually, a depreciation expense is added during the adjustment process. Review the Use of a Worksheet and Worksheet Application and Analysis sections in Chapter 4 of the textbook for more information.

• Question 1

1 out of 1 points

	A company’s Office Supplies account shows a beginning balance of $620 and an ending balance of $440. If the office supplies expense for the year is $3,200, what amount of office supplies was purchased during the period?
	Selected Answer: $3,020   Response Feedback: Correct! $3,020 worth of office supplies was purchased during the period.

• Question 2

1 out of 1 points

	All of the following statements regarding the income statement columns on the worksheet are true except for which one?
	Selected Answer: The balances in the income statement credit column are unearned revenues.   Response Feedback: Correct! Unearned revenue is a liability account and, therefore, a balance sheet account.

• Question 3

1 out of 1 points

	Use the information in the adjusted trial balance presented below to calculate the current ratio for Jones Company: Account Title Debit Credit Cash $23,000   Accounts receivable $16,000   Prepaid insurance $6,600   Equipment $100,000   Accumulated depreciation – equipment   $50,000 Land $95,000   Accounts payable   $17,000 Interest payable   $2,400 Unearned revenue   $5,000 Long-term notes payable   $30,000 J. Jones, capital   $132,600 Totals $240,600 $240,600
	Selected Answer: 1.87   Response Feedback: Correct! The correct ratio is 1.87.

• Question 4

1 out of 1 points

	Which of the following is an application of accrual accounting?
	Selected Answer: recording a utilities expense in the accounting period covered by the monthly bill   Response Feedback: Correct! Recording a utilities expense in the accounting period covered by the monthly bill is an application of accrual accounting. An expense that has occurred, but hasn’t been billed yet, would need to be accrued for.

• Question 5

1 out of 1 points

	Retailers often end their fiscal years ______.
	Selected Answer: during the slack season   Response Feedback: Correct! Retailers often end their fiscal years during the slack season. Since inventory needs to be physically counted at the end of the year, it’s better to end the year when inventory is lower and there are fewer transactions taking place.

• Question 6

1 out of 1 points

	Which of the following statements is true?
	Selected Answer: A post-closing trial balance should include only permanent accounts.   Response Feedback: Correct! A post-closing trial balance should include only permanent accounts.

• Question 7

1 out of 1 points

	Expenses are incurred ______.
	Selected Answer: to generate revenue   Response Feedback: Correct! Expenses are incurred to generate revenue. You have to spend money to make money.

• Question 8

1 out of 1 points

	Which of the following accounts is not closed during the closing process?
	Selected Answer: owner’s capital   Response Feedback: Correct! Owner’s capital is not closed during the closing process. Only income, expenses, and withdrawals (dividends) are closed. Balance sheet accounts are never closed.

• Question 9

1 out of 1 points

	A company recorded 2 days of accrued salaries of $1,950 for its employees on January 31. On February 9, it paid its employees $8,100 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:
	Selected Answer: d. 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100   Response Feedback: Correct! The table showing the correct journal entries is: 1/31   Salaries expense $1,950            Salaries payable   $1,950         2/9   Salaries expense $6,150       Salaries payable $1,950            Cash   $8,100

• Question 10

1 out of 1 points

	On March 31, Phoenix, Inc. paid Melanie Publishing Company $26,280 for 3-year subscriptions for five different magazines. The subscriptions started immediately. What is the adjusting entry that should be recorded by Melanie Publishing Company on December 31 of the first year if the credit to record the collection was made to unearned fees?
	Selected Answer: debit unearned fees, $6,570; credit fees earned, $6,570   Response Feedback: Correct! Debit unearned fees is $6,570 and credit fees earned is $6,570.