1
TTU ACCT 2300 Exam 2 Questions with Correct
Answers | Updated (100% Correct Answers)
According to U.S. GAAP, when should revenue be recognized? Answer: When
the service is performed or the goods have been delivered to the customer
On January 1 of the current year, Aladdin Company paid $1,800 in rent to cover
six months (January—June). Aladdin recorded this transaction as follows:
Answer: a credit to Prepaid Rent for $300.
A major purpose of preparing closing entries is to Answer: update the Retained
Earnings account.
Which of the following transactions would be recorded if using the accrual basis
of accounting but not if using the cash basis of accounting? Answer: Purchasing
inventory on account
A journal entry would need to be made for which of the following adjustments
on a bank reconciliation? Answer: Bank service charges
In a bank reconciliation, an EFT cash payment is Answer: deducted from the
book balance.
What is the effect on the financial statements of recording depreciation on
equipment? Answer: Net income, assets, and stockholders' equity are all
decreased.
In a bank reconciliation, interest revenue earned on your bank balance is
Answer: added to the book balance.
© 2026 All rights reserved
, 2
How are the assets and liabilities ordered on the balance sheet? Answer: Based
on liquidity (most liquid to least liquid)
Which of the following assets are not included in "cash equivalents" in a typical
balance sheet? Answer: Certain very low-risk equity securities
What type of account is Unearned Revenue? Answer: Liability
An adjusting entry recorded June salary expense that will be paid in July. Which
statement best describes the effect of this adjusting entry on the company's
accounting equation? Answer: Assets are not affected, liabilities are increased,
and stockholders' equity is decreased.
Salary Payable at the beginning of the month totals $30,000. During the month,
salaries of $125,000 were accrued as expense. If ending Salary Payable is $15,000,
what amount of cash did the company pay for salaries during the month?
Answer: $140,000
Jenna Newbury began a music business in July 2018. Newbury prepares monthly
financial statements and uses the accrual basis of accounting. The following
transactions are Newbury Company's only activities during July through October:
Jul 14 - Bought music on account for $65, with payment to the supplier due in 90
days.
Aug 3 - Performed a job on account for Alanna Turner for $55, collectible from
her in 30 days. Used up all the music purchased on July 14.
Sep 16 - Collected the $55 receivable from Turner.
© 2026 All rights reserved
TTU ACCT 2300 Exam 2 Questions with Correct
Answers | Updated (100% Correct Answers)
According to U.S. GAAP, when should revenue be recognized? Answer: When
the service is performed or the goods have been delivered to the customer
On January 1 of the current year, Aladdin Company paid $1,800 in rent to cover
six months (January—June). Aladdin recorded this transaction as follows:
Answer: a credit to Prepaid Rent for $300.
A major purpose of preparing closing entries is to Answer: update the Retained
Earnings account.
Which of the following transactions would be recorded if using the accrual basis
of accounting but not if using the cash basis of accounting? Answer: Purchasing
inventory on account
A journal entry would need to be made for which of the following adjustments
on a bank reconciliation? Answer: Bank service charges
In a bank reconciliation, an EFT cash payment is Answer: deducted from the
book balance.
What is the effect on the financial statements of recording depreciation on
equipment? Answer: Net income, assets, and stockholders' equity are all
decreased.
In a bank reconciliation, interest revenue earned on your bank balance is
Answer: added to the book balance.
© 2026 All rights reserved
, 2
How are the assets and liabilities ordered on the balance sheet? Answer: Based
on liquidity (most liquid to least liquid)
Which of the following assets are not included in "cash equivalents" in a typical
balance sheet? Answer: Certain very low-risk equity securities
What type of account is Unearned Revenue? Answer: Liability
An adjusting entry recorded June salary expense that will be paid in July. Which
statement best describes the effect of this adjusting entry on the company's
accounting equation? Answer: Assets are not affected, liabilities are increased,
and stockholders' equity is decreased.
Salary Payable at the beginning of the month totals $30,000. During the month,
salaries of $125,000 were accrued as expense. If ending Salary Payable is $15,000,
what amount of cash did the company pay for salaries during the month?
Answer: $140,000
Jenna Newbury began a music business in July 2018. Newbury prepares monthly
financial statements and uses the accrual basis of accounting. The following
transactions are Newbury Company's only activities during July through October:
Jul 14 - Bought music on account for $65, with payment to the supplier due in 90
days.
Aug 3 - Performed a job on account for Alanna Turner for $55, collectible from
her in 30 days. Used up all the music purchased on July 14.
Sep 16 - Collected the $55 receivable from Turner.
© 2026 All rights reserved
