ACG 4101 EXAM 2 CHAPTER 5 7 FIU TEST
BANK SOLVED QUESTIONS AND VERIFIED
RESPONSES GRADED A+
⩥ The closing process involves:
a. recording year-end adjusting entries
b. Transferring revenue and expense balances to retained earnings.
c. Closing out the permanent account balances
d. All of these answer choices are incorrect..
Answer: b; Revenues, expenses and other temporary equity accounts are
closed, reduced to $0, with the balances transferred to retained earnings.
⩥ If revenues exceed expenses for the accounting period, the retained
earnings account:
a. Will have a lower balance after closing.
b. Will have a debit balance prior to closing.
c. Will have a higher balance after to closing
d. All of these answer choices are incorrect..
Answer: c; Revenues are debited to reduce them to zero and the retained
earnings account is credited. Expenses are credited to reduce them to
zero and the retained earnings account is debited. So, a net credit to
retained earnings results from revenues for the period exceeding
expenses, increasing retained earnings.
,⩥ True or false: The objective of an Enterprise Resource Planning (ERP)
system is to create a customized software program that integrates the
information of departments and functions of a company into a single
computer system..
Answer: True
⩥ Which of the following are economic events? (Select all that apply.)
a. A proposal to purchase $1,000 of inventory from supplier
b. The payment of employee salaries for the week
c. Borrowing $10,000 from the bank..
Answer: b & c only
⩥ Which of the following are external events? (Select all that apply.)
a. Using supplies purchased in the previous month.
b. Collecting on a customer account.
c. Paying employee salaries.
d. Borrowing from the bank..
Answer: b, c, & d only
⩥ An internal event (Select all that apply)
a. involves an exchange transaction with another entity.
b. does not involve an exchange transaction with another entity.
, c. does not affect the company's financial position.
d. affects the company's financial position..
Answer: b & d only
⩥ Classification of elements:
Assets = Liabilities + Shareholder's Equity.
Answer: Assets
Current Assets
- Cash & Cash Equivalents (money orders, commercial papers, money
market funds, and U.S. military bills w/maturity date less than 3 months;
if more than 3 months, it's an investment)
- Account Receivable
- Prepaid Expenses
- Inventory
- Short-term investments
Long-term Assets:
- Investments
- Property, plant, & Equipment
- Intangible Assets
- Other assets
Liabilities
- Current Liabilities
BANK SOLVED QUESTIONS AND VERIFIED
RESPONSES GRADED A+
⩥ The closing process involves:
a. recording year-end adjusting entries
b. Transferring revenue and expense balances to retained earnings.
c. Closing out the permanent account balances
d. All of these answer choices are incorrect..
Answer: b; Revenues, expenses and other temporary equity accounts are
closed, reduced to $0, with the balances transferred to retained earnings.
⩥ If revenues exceed expenses for the accounting period, the retained
earnings account:
a. Will have a lower balance after closing.
b. Will have a debit balance prior to closing.
c. Will have a higher balance after to closing
d. All of these answer choices are incorrect..
Answer: c; Revenues are debited to reduce them to zero and the retained
earnings account is credited. Expenses are credited to reduce them to
zero and the retained earnings account is debited. So, a net credit to
retained earnings results from revenues for the period exceeding
expenses, increasing retained earnings.
,⩥ True or false: The objective of an Enterprise Resource Planning (ERP)
system is to create a customized software program that integrates the
information of departments and functions of a company into a single
computer system..
Answer: True
⩥ Which of the following are economic events? (Select all that apply.)
a. A proposal to purchase $1,000 of inventory from supplier
b. The payment of employee salaries for the week
c. Borrowing $10,000 from the bank..
Answer: b & c only
⩥ Which of the following are external events? (Select all that apply.)
a. Using supplies purchased in the previous month.
b. Collecting on a customer account.
c. Paying employee salaries.
d. Borrowing from the bank..
Answer: b, c, & d only
⩥ An internal event (Select all that apply)
a. involves an exchange transaction with another entity.
b. does not involve an exchange transaction with another entity.
, c. does not affect the company's financial position.
d. affects the company's financial position..
Answer: b & d only
⩥ Classification of elements:
Assets = Liabilities + Shareholder's Equity.
Answer: Assets
Current Assets
- Cash & Cash Equivalents (money orders, commercial papers, money
market funds, and U.S. military bills w/maturity date less than 3 months;
if more than 3 months, it's an investment)
- Account Receivable
- Prepaid Expenses
- Inventory
- Short-term investments
Long-term Assets:
- Investments
- Property, plant, & Equipment
- Intangible Assets
- Other assets
Liabilities
- Current Liabilities
