INTERMEDIATE ACCOUNTING 1- D103: UNITS 2-4 PRE-ASSESSMENT
EXAM 2025 |150 QUESTIONS WITH ACCURATE ANSWERS
1. What is the classification of accumulated depreciation on the balance
sheet?
Equity
Contra asset
Current liability
Long-term liability
2. If a company purchased supplies on account for $1,200 and later paid off
the account, what would be the journal entries for both transactions?
Debit accounts payable $1,200; credit supplies $1,200 for the
purchase, then debit cash $1,200; credit accounts payable $1,200
for the payment.
Debit cash $1,200; credit supplies $1,200 for the purchase, then
debit accounts payable $1,200; credit cash $1,200 for the payment.
Debit supplies $1,200; credit accounts payable $1,200 for the
purchase, then debit accounts payable $1,200; credit cash
$1,200 for the payment.
Debit supplies expense $1,200; credit cash $1,200 for the
purchase, then debit cash $1,200; credit accounts payable $1,200
for the payment.
3. Describe the purpose of adjusting entries for accrued revenues in
financial accounting.
Adjusting entries for accrued revenues are made to record
expenses that have been incurred but not yet paid.
Adjusting entries for accrued revenues are necessary for tax
reporting purposes.
, Adjusting entries for accrued revenues ensure that revenue is
recognized in the period it is earned, even if cash has not yet
been received.
Adjusting entries for accrued revenues are used to decrease
liabilities on the balance sheet.
4. What type of activity is the payment of dividends classified as in the
statement of cash flows?
Operating
Non-operating
Investing
Financing
5. If an additional $1,000 in salaries is accrued but not yet paid by the end
of January, what would the new balance in Salaries and Wages Payable
be?
$8,000
$5,000
$7,000
$6,000
6. Describe how the sale of land and the purchase of equipment affect the
net cash used for investing activities.
The purchase of equipment increases cash inflows, while the sale
of land decreases cash outflows.
Both transactions have no impact on cash flows.
The sale of land increases cash inflows, while the purchase of
equipment results in cash outflows, affecting the net cash used.
, Both transactions only affect operating activities, not investing
activities.
7. Why is relevance considered a fundamental quality of useful accounting
information?
Relevance is important because it simplifies the accounting
process.
Relevance is important because it guarantees the accuracy of
financial reports.
Relevance is important as it relates to the historical cost of assets.
Relevance is important because it ensures that the information
provided can influence decision-making.
8. Describe the significance of classifying accounts payable as current
liabilities in financial statements.
Classifying accounts payable as current liabilities indicates that
these obligations are due within one year, reflecting the
company's short-term financial obligations.
Classifying accounts payable as current liabilities indicates they
are investments in the company.
Classifying accounts payable as current liabilities means they are
not expected to be paid within the year.
Classifying accounts payable as current liabilities shows that they
are part of the company's equity.
9. In the statement of cash flows, how is Accounts Receivable classified in
relation to operating activities?
Zero
Positive
Neutral
, Negative
10. Describe how operating activities impact a company's net income.
Operating activities are limited to investing in long-term assets.
Operating activities are unrelated to net income and focus solely
on financing.
Operating activities include only non-cash transactions.
Operating activities directly affect net income through cash
transactions related to the core business operations.
11. If a company fails to disclose a significant liability in its financial
statements, which aspect of accounting information is compromised?
Relevance
Understandability
Comparability
Faithful representation
12. Select the statement below that correctly describes the qualitative
characteristic of verifiability.
Users of accounting information can comprehend the information
within the context of the decisions that they are making.
Accounting information is free from error.
Accounting information is disclosed in a timely manner.
This characteristic is indicated when independent measures
obtain similar results.
13. Rule 203 of the Code of Professional Conduct addresses:
advertising to obtain clients
financial statements being based on GAAP
EXAM 2025 |150 QUESTIONS WITH ACCURATE ANSWERS
1. What is the classification of accumulated depreciation on the balance
sheet?
Equity
Contra asset
Current liability
Long-term liability
2. If a company purchased supplies on account for $1,200 and later paid off
the account, what would be the journal entries for both transactions?
Debit accounts payable $1,200; credit supplies $1,200 for the
purchase, then debit cash $1,200; credit accounts payable $1,200
for the payment.
Debit cash $1,200; credit supplies $1,200 for the purchase, then
debit accounts payable $1,200; credit cash $1,200 for the payment.
Debit supplies $1,200; credit accounts payable $1,200 for the
purchase, then debit accounts payable $1,200; credit cash
$1,200 for the payment.
Debit supplies expense $1,200; credit cash $1,200 for the
purchase, then debit cash $1,200; credit accounts payable $1,200
for the payment.
3. Describe the purpose of adjusting entries for accrued revenues in
financial accounting.
Adjusting entries for accrued revenues are made to record
expenses that have been incurred but not yet paid.
Adjusting entries for accrued revenues are necessary for tax
reporting purposes.
, Adjusting entries for accrued revenues ensure that revenue is
recognized in the period it is earned, even if cash has not yet
been received.
Adjusting entries for accrued revenues are used to decrease
liabilities on the balance sheet.
4. What type of activity is the payment of dividends classified as in the
statement of cash flows?
Operating
Non-operating
Investing
Financing
5. If an additional $1,000 in salaries is accrued but not yet paid by the end
of January, what would the new balance in Salaries and Wages Payable
be?
$8,000
$5,000
$7,000
$6,000
6. Describe how the sale of land and the purchase of equipment affect the
net cash used for investing activities.
The purchase of equipment increases cash inflows, while the sale
of land decreases cash outflows.
Both transactions have no impact on cash flows.
The sale of land increases cash inflows, while the purchase of
equipment results in cash outflows, affecting the net cash used.
, Both transactions only affect operating activities, not investing
activities.
7. Why is relevance considered a fundamental quality of useful accounting
information?
Relevance is important because it simplifies the accounting
process.
Relevance is important because it guarantees the accuracy of
financial reports.
Relevance is important as it relates to the historical cost of assets.
Relevance is important because it ensures that the information
provided can influence decision-making.
8. Describe the significance of classifying accounts payable as current
liabilities in financial statements.
Classifying accounts payable as current liabilities indicates that
these obligations are due within one year, reflecting the
company's short-term financial obligations.
Classifying accounts payable as current liabilities indicates they
are investments in the company.
Classifying accounts payable as current liabilities means they are
not expected to be paid within the year.
Classifying accounts payable as current liabilities shows that they
are part of the company's equity.
9. In the statement of cash flows, how is Accounts Receivable classified in
relation to operating activities?
Zero
Positive
Neutral
, Negative
10. Describe how operating activities impact a company's net income.
Operating activities are limited to investing in long-term assets.
Operating activities are unrelated to net income and focus solely
on financing.
Operating activities include only non-cash transactions.
Operating activities directly affect net income through cash
transactions related to the core business operations.
11. If a company fails to disclose a significant liability in its financial
statements, which aspect of accounting information is compromised?
Relevance
Understandability
Comparability
Faithful representation
12. Select the statement below that correctly describes the qualitative
characteristic of verifiability.
Users of accounting information can comprehend the information
within the context of the decisions that they are making.
Accounting information is free from error.
Accounting information is disclosed in a timely manner.
This characteristic is indicated when independent measures
obtain similar results.
13. Rule 203 of the Code of Professional Conduct addresses:
advertising to obtain clients
financial statements being based on GAAP
