ACTG PRACTICE QUESTIONS AND ANSWERS RATED 100%
_________ revenue arises when a business receives cash in one period, but does not provide
all of the related goods or services until a later period - Correct Solution: Deferred
Adjusting entries ensure that ______ balances are reported at amounts representing the
economic benefits that remain at the end of the period - Correct Solution: Asset
adjusting entry for expiration of prepaid rent - Correct Solution: debit rent expense credit
prepaid rent
adjusting entry for supplies - Correct Solution: debit Supplies Expense; credit Supplies
An adjusting entry for accrued expenses involves: - Correct Solution: credit to a liability
debit to an expense
assets - Correct Solution: resources of a company
Assuming that prices rise over time, which inventory cost flow assumption will result in the
lowest ending inventory? - Correct Solution: LIFO
borrow 100,000 from bank and sign a 3 year notes (D/C) - Correct Solution: debit cash, credit
notes payable
borrow cash from bank - Correct Solution: cash increases notes payable (liabilities) increases
Clem Corporation issues 1,000 shares of common stock for $25,000. Clem purchased
equipment for $10,000 by borrowing from the bank. Clem's total assets are - Correct
Solution: $35,000
conceptual framework - Correct Solution: A written framework to guide the development,
preparation, and interpretation of financial accounting information.
Cost of goods sold is - Correct Solution: Reported in the income statement
, dividends - Correct Solution: distribution to owners
expenses - Correct Solution: costs of providing sales
GAAP - Correct Solution: Generally Accepted Accounting Principles. The standards and
rules that accountants follow while recording and reporting financial activities.
In financial accounting what are the three types of business activities of a company? - Correct
Solution: Financing activities
Operating activities
Investing activities
In financial accounting which of the following are the three types of business activities of a
company? - Correct Solution: Operating activities, Investing activities, Financing activities
initial investment by stockholders (D/C) - Correct Solution: debit cash, credit common stock
Issue Common Stock - Correct Solution: cash increases common stock increases
Liabilities - Correct Solution: Amounts owed by the company
Neumann Corporation, a company with total assets of $2.5 million purchases a tool for $55.
The tool represents a resource that will benefit the company for two years. Neumann's
accountant recognizes the $55 as an expense. Which of the following statements relating to
the accounting treatment is correct? - Correct Solution: Assets involving relatively small
amounts may be expensed because the amount is immaterial.
Nontrade receivables - Correct Solution: receivables that originate from sources other than
customers (tax refund claims, interest recivable etc)
Notes Receivable - Correct Solution: formal credit arrangements evidenced by written debt
instruments (or "notes")
_________ revenue arises when a business receives cash in one period, but does not provide
all of the related goods or services until a later period - Correct Solution: Deferred
Adjusting entries ensure that ______ balances are reported at amounts representing the
economic benefits that remain at the end of the period - Correct Solution: Asset
adjusting entry for expiration of prepaid rent - Correct Solution: debit rent expense credit
prepaid rent
adjusting entry for supplies - Correct Solution: debit Supplies Expense; credit Supplies
An adjusting entry for accrued expenses involves: - Correct Solution: credit to a liability
debit to an expense
assets - Correct Solution: resources of a company
Assuming that prices rise over time, which inventory cost flow assumption will result in the
lowest ending inventory? - Correct Solution: LIFO
borrow 100,000 from bank and sign a 3 year notes (D/C) - Correct Solution: debit cash, credit
notes payable
borrow cash from bank - Correct Solution: cash increases notes payable (liabilities) increases
Clem Corporation issues 1,000 shares of common stock for $25,000. Clem purchased
equipment for $10,000 by borrowing from the bank. Clem's total assets are - Correct
Solution: $35,000
conceptual framework - Correct Solution: A written framework to guide the development,
preparation, and interpretation of financial accounting information.
Cost of goods sold is - Correct Solution: Reported in the income statement
, dividends - Correct Solution: distribution to owners
expenses - Correct Solution: costs of providing sales
GAAP - Correct Solution: Generally Accepted Accounting Principles. The standards and
rules that accountants follow while recording and reporting financial activities.
In financial accounting what are the three types of business activities of a company? - Correct
Solution: Financing activities
Operating activities
Investing activities
In financial accounting which of the following are the three types of business activities of a
company? - Correct Solution: Operating activities, Investing activities, Financing activities
initial investment by stockholders (D/C) - Correct Solution: debit cash, credit common stock
Issue Common Stock - Correct Solution: cash increases common stock increases
Liabilities - Correct Solution: Amounts owed by the company
Neumann Corporation, a company with total assets of $2.5 million purchases a tool for $55.
The tool represents a resource that will benefit the company for two years. Neumann's
accountant recognizes the $55 as an expense. Which of the following statements relating to
the accounting treatment is correct? - Correct Solution: Assets involving relatively small
amounts may be expensed because the amount is immaterial.
Nontrade receivables - Correct Solution: receivables that originate from sources other than
customers (tax refund claims, interest recivable etc)
Notes Receivable - Correct Solution: formal credit arrangements evidenced by written debt
instruments (or "notes")
