Financial Reporting #2 Questions With Complete Solutions
Accrued revenue or unbilled revenue
arises when a company has earned revenue but has not yet
recognized the revenue at the end of the period
Prepaid expenses
when a company makes a cash payment prior to recognizing an
expense
Accrued expenses
when a company incurs an expense that has not been paid
Journal entries and adjusting entries
a journal is a document in which business transactions are
recorded in which they occur. They are dated, show accounts
affected, and the amounts. Sometimes they will have an
explanation.
General ledger and T accounts
A ledger is a document that shows all business transactions by
account. This contains all the same entries posted to the journal
but ledger is organized by account.
Trial balance and adjusted trial balance
A document that lists account balances at a particular point in
time. This shows only end balances.
Financial Statements
,These are a final product of the accounting system, and are
prepared based on the account totals from an adjusted trial
balance
Debits
an increase in assets or a decrease in liabilities or equity
Credit
a decrease in assets or an increase in liabilities or equities
1. Which of the following items would most likely be classified
as an operating activity?
a. Issuance of debt.
b. Acquisition of a competitor.
c. Sale of automobiles by an automobile dealer.
c
2. Which of the following items would most likely be classified
as a financing activity?
a. Issuance of debt.
b. Payment of income taxes.
c. Investments in the stock of a supplier.
a
, 3. Which of the following elements represents an economic
resource?
a. Asset.
b. Liability.
c. Owners' equity.
a
4. Which of the following elements represents a residual claim?
a. Asset.
b. Liability.
c. Owners' equity.
c
5. An analyst has projected that a company will have assets of
€2,000 at year-end and liabilities of €1,200. The analyst's
projection of total owners' equity should be closest to:
a. €800.
b. €2,000.
c. €3,200.
a
Accrued revenue or unbilled revenue
arises when a company has earned revenue but has not yet
recognized the revenue at the end of the period
Prepaid expenses
when a company makes a cash payment prior to recognizing an
expense
Accrued expenses
when a company incurs an expense that has not been paid
Journal entries and adjusting entries
a journal is a document in which business transactions are
recorded in which they occur. They are dated, show accounts
affected, and the amounts. Sometimes they will have an
explanation.
General ledger and T accounts
A ledger is a document that shows all business transactions by
account. This contains all the same entries posted to the journal
but ledger is organized by account.
Trial balance and adjusted trial balance
A document that lists account balances at a particular point in
time. This shows only end balances.
Financial Statements
,These are a final product of the accounting system, and are
prepared based on the account totals from an adjusted trial
balance
Debits
an increase in assets or a decrease in liabilities or equity
Credit
a decrease in assets or an increase in liabilities or equities
1. Which of the following items would most likely be classified
as an operating activity?
a. Issuance of debt.
b. Acquisition of a competitor.
c. Sale of automobiles by an automobile dealer.
c
2. Which of the following items would most likely be classified
as a financing activity?
a. Issuance of debt.
b. Payment of income taxes.
c. Investments in the stock of a supplier.
a
, 3. Which of the following elements represents an economic
resource?
a. Asset.
b. Liability.
c. Owners' equity.
a
4. Which of the following elements represents a residual claim?
a. Asset.
b. Liability.
c. Owners' equity.
c
5. An analyst has projected that a company will have assets of
€2,000 at year-end and liabilities of €1,200. The analyst's
projection of total owners' equity should be closest to:
a. €800.
b. €2,000.
c. €3,200.
a
