ACCY 200 EXAM 1 UIUC UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Revenues are - CORRECT ANSWER - increases in net assets from selling a product
Paid-in Capital represents - CORRECT ANSWER - the amount invested in the entity by the
stockholders
The Statement of Cash Flows - CORRECT ANSWER - shows how cash changed during the
period
Accrual accounting - CORRECT ANSWER - accomplishes much of the matching of revenues
and expenses
Stockholders' equity refers to - CORRECT ANSWER - the ownership right of the
stockholders of the entity
The effect of an adjustment is - CORRECT ANSWER - to increase the accuracy of the
financial statements
A credit entry will - CORRECT ANSWER - increase a liability account
The effect of an adjustment on the financial statement is usually to - CORRECT ANSWER -
increase the accuracy of both the balance sheet and income statement
Accounting equation: - CORRECT ANSWER - Assets = Liabilities + Paid-in Capital +
Beginning Retained Earnings + Revenues - Expenses - Dividends
, When a firm purchases supplies for its business - CORRECT ANSWER - an adjustment will
probably be required as suppliers are used
The accrual of interest on short-term marketable securities results in - CORRECT ANSWER -
an increase in current assets and an increase in net income
An organization's system of internal control is designed primarily to - CORRECT ANSWER -
provide an operating framework for all employees as they work to achieve the organization's
goals
When a firm used the LIFO inventory cost flow assumption - CORRECT ANSWER - better
matching of revenue and expense is achieved than under FIFO
Accounts receivable are reported at - CORRECT ANSWER - net realizable value
The inventory cost flow assumption describes the flow of product cost - CORRECT
ANSWER - from the asset (inventory) account and to the expense (cost of goods sold)
account
One inventory cost flow assumption will result in different cost of goods sold from another
inventory cost flow assumption only if - CORRECT ANSWER - the cost of inventory items
changes during the year
Merchandise inventory - CORRECT ANSWER - is NOT an example of an inventory account
a manufacturing firm might use
The balance sheet presentation of accounts receivable net of the allowance for doubtful accounts
has the effect of stating accounts receivable at - CORRECT ANSWER - net realizable value
The effect of an error resulting in an understatement of ending inventory is to - CORRECT
ANSWER - overstate cost of goods sold of the current period
ACTUAL Exam Questions and CORRECT
Answers
Revenues are - CORRECT ANSWER - increases in net assets from selling a product
Paid-in Capital represents - CORRECT ANSWER - the amount invested in the entity by the
stockholders
The Statement of Cash Flows - CORRECT ANSWER - shows how cash changed during the
period
Accrual accounting - CORRECT ANSWER - accomplishes much of the matching of revenues
and expenses
Stockholders' equity refers to - CORRECT ANSWER - the ownership right of the
stockholders of the entity
The effect of an adjustment is - CORRECT ANSWER - to increase the accuracy of the
financial statements
A credit entry will - CORRECT ANSWER - increase a liability account
The effect of an adjustment on the financial statement is usually to - CORRECT ANSWER -
increase the accuracy of both the balance sheet and income statement
Accounting equation: - CORRECT ANSWER - Assets = Liabilities + Paid-in Capital +
Beginning Retained Earnings + Revenues - Expenses - Dividends
, When a firm purchases supplies for its business - CORRECT ANSWER - an adjustment will
probably be required as suppliers are used
The accrual of interest on short-term marketable securities results in - CORRECT ANSWER -
an increase in current assets and an increase in net income
An organization's system of internal control is designed primarily to - CORRECT ANSWER -
provide an operating framework for all employees as they work to achieve the organization's
goals
When a firm used the LIFO inventory cost flow assumption - CORRECT ANSWER - better
matching of revenue and expense is achieved than under FIFO
Accounts receivable are reported at - CORRECT ANSWER - net realizable value
The inventory cost flow assumption describes the flow of product cost - CORRECT
ANSWER - from the asset (inventory) account and to the expense (cost of goods sold)
account
One inventory cost flow assumption will result in different cost of goods sold from another
inventory cost flow assumption only if - CORRECT ANSWER - the cost of inventory items
changes during the year
Merchandise inventory - CORRECT ANSWER - is NOT an example of an inventory account
a manufacturing firm might use
The balance sheet presentation of accounts receivable net of the allowance for doubtful accounts
has the effect of stating accounts receivable at - CORRECT ANSWER - net realizable value
The effect of an error resulting in an understatement of ending inventory is to - CORRECT
ANSWER - overstate cost of goods sold of the current period
