ACG 2071 Exam Questions with Correct Answers
Question 1:
Materiality is a characteristic or aspect of relevance. An item is considered to be material if its
size is likely to influence the decision of an investor or creditorTo prepare financial statements,
you must understand the sequence in which amounts are determined and how each statement
impacts the next. All of the following are interrelationships that are important to understand
when preparing financial statements except
Answer:
the total expenses on the income statement should be equal to the cash payments for
operating activities on the statement of cash flows
Question 2:
A company began the year with total assets of $230,000 and total liabilities of $160,000. During
the year, the company did the following:Recognized revenues, $420,000 Incurred expenses,
$240,000 Declared and paid dividends, $50,000 Issued common stock, $30,000What is the
stockholder's equity by the end of the year
Answer:
$230,000
Question 3:
Debits
Answer:
increase assets and decrease liabilitiesA company's financial records report the following:
Accounts payable $4,000 Accounts receivable $5,000Cash $14,400 Common stock $5,800
Dividends $2,500Interest expense $18,700 Notes payable $5,400 Prepaid insurance $3,000
Retained earnings $3,200 Service revenue $25,200
Question 4:
What would the company show as its total credits on its trial balance
Answer:
$43,600
Question 5:
A journal
Answer:
provides a chronological record of transactions
, Question 6:
Materiality is a characteristic or aspect of relevance. An item is considered to be material if its
size is likely to influence the decision of an investor or creditor
To prepare financial statements, you must understand the sequence in which amounts are
determined and how each statement impacts the next. All of the following are
interrelationships that are important to understand when preparing financial statements
except
Answer:
the total expenses on the income statement should be equal to the cash payments for
operating activities on the statement of cash flows
Question 7:
On December 31, a company's prepaid insurance account had a balance of $2,400 before
recording adjusting entries. The company determined that $900 of the prepaid insurance had
expired before year-end. The insurance expense for the year would be
Answer:
$900During the adjusting process two transactions were neglected or omitted. The first is for
unearned rent revenue of which $415 was earned during the period, the second was for
accrued interest payable of which $275 is owed for the period. As a result of these
omissionsexpenses are understated by $275
Question 8:
Companies prepare various types of trial balances. Which trial balance likely lists the largest
number of accounts for a given company
Answer:
The adjusted trial balance
Question 9:
Which of the following best identifies a company's ability to pay its obligations that will become
due within the next year or operating cycle
Answer:
Current assets divided by current liabilities
Question 1:
Materiality is a characteristic or aspect of relevance. An item is considered to be material if its
size is likely to influence the decision of an investor or creditorTo prepare financial statements,
you must understand the sequence in which amounts are determined and how each statement
impacts the next. All of the following are interrelationships that are important to understand
when preparing financial statements except
Answer:
the total expenses on the income statement should be equal to the cash payments for
operating activities on the statement of cash flows
Question 2:
A company began the year with total assets of $230,000 and total liabilities of $160,000. During
the year, the company did the following:Recognized revenues, $420,000 Incurred expenses,
$240,000 Declared and paid dividends, $50,000 Issued common stock, $30,000What is the
stockholder's equity by the end of the year
Answer:
$230,000
Question 3:
Debits
Answer:
increase assets and decrease liabilitiesA company's financial records report the following:
Accounts payable $4,000 Accounts receivable $5,000Cash $14,400 Common stock $5,800
Dividends $2,500Interest expense $18,700 Notes payable $5,400 Prepaid insurance $3,000
Retained earnings $3,200 Service revenue $25,200
Question 4:
What would the company show as its total credits on its trial balance
Answer:
$43,600
Question 5:
A journal
Answer:
provides a chronological record of transactions
, Question 6:
Materiality is a characteristic or aspect of relevance. An item is considered to be material if its
size is likely to influence the decision of an investor or creditor
To prepare financial statements, you must understand the sequence in which amounts are
determined and how each statement impacts the next. All of the following are
interrelationships that are important to understand when preparing financial statements
except
Answer:
the total expenses on the income statement should be equal to the cash payments for
operating activities on the statement of cash flows
Question 7:
On December 31, a company's prepaid insurance account had a balance of $2,400 before
recording adjusting entries. The company determined that $900 of the prepaid insurance had
expired before year-end. The insurance expense for the year would be
Answer:
$900During the adjusting process two transactions were neglected or omitted. The first is for
unearned rent revenue of which $415 was earned during the period, the second was for
accrued interest payable of which $275 is owed for the period. As a result of these
omissionsexpenses are understated by $275
Question 8:
Companies prepare various types of trial balances. Which trial balance likely lists the largest
number of accounts for a given company
Answer:
The adjusted trial balance
Question 9:
Which of the following best identifies a company's ability to pay its obligations that will become
due within the next year or operating cycle
Answer:
Current assets divided by current liabilities
