Intermediate Accounting II Final Exam - Exam Prep, Practice Questions & Verified Answers
Collection on an account receivable will increase both cash False
and accounts receivable.
If total assets are increased, there must be a False
corresponding increase in liabilities or a decrease in
stockholders' equity.
An increase in an asset is recorded by a debit. True
Dividends are classified as an expense. False - Temporary Liability
Under the double-entry system, revenues must always False
equal expenses.
Unearned Service Revenue is classified as a liability on True
the balance sheet.
Income will always be greater under the cash basis of False
accounting than under the accrual basis of accounting.
An adjusting entry to a prepaid expense is required to True
recognize expired expenses.
An expense decreases stockholders' equity. True
If a company buys a $700 machine on credit, this balance sheet only.
transaction will affect the
Crawford Company started the year with $60000 in its 72,000 = 44,000+48,000-20,000
Common Stock account and a credit balance in Retained
Earnings of $44000. During the year, the company earned Beg RE + NI - DIV
net income of $48000 and declared and paid $20000 of
dividends. In addition, the company sold additional
common stock amounting to $28000. As a result, the
amount of its retained earnings at the end of the year
would be
The normal balance of any account is the side which increases the account.
Receiving payment of a portion of an account receivable not affect total assets.
will
During February 2017, its first month of operations, the 85,000 = 100,000+20,000-35,000
owner of Schwenn Enterprises invested cash of $100,000.
Schwenn had cash sales of $20,000 and paid expenses of
$35,000. Assuming no other transactions impacted the
cash account, what is the balance in Cash at February 28?
Stuvia 2026-2027
, Intermediate Accounting II Final Exam - Exam Prep, Practice Questions & Verified Answers
When a company receives a utility bill but will not pay it debit Utilities Expense and credit Accounts Payable.
right away, it should
One of the accounting concepts upon which adjustments expense recognition.
for prepayments and accruals are based is:
Otto services a car on August 31. The customer picks up August 31st
the vehicle on September 1 and mails the payment to Otto
on September 5. Otto receives the check in the mail on Revenue is recognized when event happens not when payment is received
September 6. When should Otto show that the revenue
was recognized?
The Vintage Laundry Company purchased $8,500 worth of debit Supplies Expense, $7,000; credit Supplies, $7,000.
laundry supplies on June 2 and recorded the purchase as
an asset. On June 30, an inventory of the laundry supplies 8,500 - 1,500
indicated only $1,500 on hand. The adjusting entry that
should be made by the company on June 30 is:
Depreciation is the process of: allocating the cost of an asset to the periods in which it is used.
Jill Clown earned a salary of $500 for the last week of Salaries and Wages Expense 500
October. She will be paid on November 1. The adjusting Salaries and Wages Payable 500
entry for Jill's employer October 31 is:
A zero-interest-bearing note payable that is issued at a False
discount will not result in any interest expense being
recognized.
A company discloses gain contingencies in the notes only True
when a high probability exists for realizing them.
The revenue from a service-type warranty that covers False
several years should all be recognized in the period the
warranty is sold.
The cause for litigation must have occurred on or before True
the date of the financial statements to report a liability in
the financial statements.
Paying a current liability with cash will always reduce the False
current ratio.
Current Ratio = Current Assets/ Current Liabilities
Why is the liability section of the balance sheet of primary To assist in understanding the entity's liquidity
importance to bankers?
Which of the following is not a correct statement about Sales taxes are an expense of the seller.
sales taxes?
Which of these is not included in an employer's payroll tax Federal income taxes
expense?
Stuvia 2026-2027
Collection on an account receivable will increase both cash False
and accounts receivable.
If total assets are increased, there must be a False
corresponding increase in liabilities or a decrease in
stockholders' equity.
An increase in an asset is recorded by a debit. True
Dividends are classified as an expense. False - Temporary Liability
Under the double-entry system, revenues must always False
equal expenses.
Unearned Service Revenue is classified as a liability on True
the balance sheet.
Income will always be greater under the cash basis of False
accounting than under the accrual basis of accounting.
An adjusting entry to a prepaid expense is required to True
recognize expired expenses.
An expense decreases stockholders' equity. True
If a company buys a $700 machine on credit, this balance sheet only.
transaction will affect the
Crawford Company started the year with $60000 in its 72,000 = 44,000+48,000-20,000
Common Stock account and a credit balance in Retained
Earnings of $44000. During the year, the company earned Beg RE + NI - DIV
net income of $48000 and declared and paid $20000 of
dividends. In addition, the company sold additional
common stock amounting to $28000. As a result, the
amount of its retained earnings at the end of the year
would be
The normal balance of any account is the side which increases the account.
Receiving payment of a portion of an account receivable not affect total assets.
will
During February 2017, its first month of operations, the 85,000 = 100,000+20,000-35,000
owner of Schwenn Enterprises invested cash of $100,000.
Schwenn had cash sales of $20,000 and paid expenses of
$35,000. Assuming no other transactions impacted the
cash account, what is the balance in Cash at February 28?
Stuvia 2026-2027
, Intermediate Accounting II Final Exam - Exam Prep, Practice Questions & Verified Answers
When a company receives a utility bill but will not pay it debit Utilities Expense and credit Accounts Payable.
right away, it should
One of the accounting concepts upon which adjustments expense recognition.
for prepayments and accruals are based is:
Otto services a car on August 31. The customer picks up August 31st
the vehicle on September 1 and mails the payment to Otto
on September 5. Otto receives the check in the mail on Revenue is recognized when event happens not when payment is received
September 6. When should Otto show that the revenue
was recognized?
The Vintage Laundry Company purchased $8,500 worth of debit Supplies Expense, $7,000; credit Supplies, $7,000.
laundry supplies on June 2 and recorded the purchase as
an asset. On June 30, an inventory of the laundry supplies 8,500 - 1,500
indicated only $1,500 on hand. The adjusting entry that
should be made by the company on June 30 is:
Depreciation is the process of: allocating the cost of an asset to the periods in which it is used.
Jill Clown earned a salary of $500 for the last week of Salaries and Wages Expense 500
October. She will be paid on November 1. The adjusting Salaries and Wages Payable 500
entry for Jill's employer October 31 is:
A zero-interest-bearing note payable that is issued at a False
discount will not result in any interest expense being
recognized.
A company discloses gain contingencies in the notes only True
when a high probability exists for realizing them.
The revenue from a service-type warranty that covers False
several years should all be recognized in the period the
warranty is sold.
The cause for litigation must have occurred on or before True
the date of the financial statements to report a liability in
the financial statements.
Paying a current liability with cash will always reduce the False
current ratio.
Current Ratio = Current Assets/ Current Liabilities
Why is the liability section of the balance sheet of primary To assist in understanding the entity's liquidity
importance to bankers?
Which of the following is not a correct statement about Sales taxes are an expense of the seller.
sales taxes?
Which of these is not included in an employer's payroll tax Federal income taxes
expense?
Stuvia 2026-2027
