EXAM #1- INTERMEDIATE ACCOUNTING
TEST QUESTIONS WITH COMPLETE
ANSWERS
What two primary qualitative characteristics make accounting information useful? -
Answer-Faithful representation and relevance.
Which of the following statements is true regarding the FASB Accounting Standards
Codification (ASC)? - Answer-Only the FASB and the SEC may issue pronouncements
which lead to changes in the ASC.
Conceptually, interim financial statements can be described as emphasizing which of
the following?
I. Timeliness
II. Relevance
III. Verifiability - Answer-I and II only.
The entry to record a sale on account would include: - Answer-Cash- Debit: No, Credit:
No
Accounts Receivable: Debit: Yes, Credit: No
The correct amount of prepaid insurance shown on a company's December 31, 2018,
balance sheet was $900. On July 1, 2019, the company paid an additional insurance
premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid
insurance was correctly shown as $500. The amount of insurance expense that should
appear in the company's 2019 income statement is: - Answer-$1,000
When Castle Corporation pays insurance premiums, the transaction is recorded as a
debit to prepaid insurance. Additional information for the year ended December 31 is as
follows:
Prepaid insurance at January 1: $52,500
Insurance expense recognized during the year: 218,750
Prepaid insurance at December 31: 61,250
What was the total amount of cash paid by Castle for insurance premiums during the
year? - Answer-$227,500
Adjusting entries are needed primarily for: - Answer-Accrual accounting.
Which of the following is most likely an accrued liability? - Answer-Interest
TEST QUESTIONS WITH COMPLETE
ANSWERS
What two primary qualitative characteristics make accounting information useful? -
Answer-Faithful representation and relevance.
Which of the following statements is true regarding the FASB Accounting Standards
Codification (ASC)? - Answer-Only the FASB and the SEC may issue pronouncements
which lead to changes in the ASC.
Conceptually, interim financial statements can be described as emphasizing which of
the following?
I. Timeliness
II. Relevance
III. Verifiability - Answer-I and II only.
The entry to record a sale on account would include: - Answer-Cash- Debit: No, Credit:
No
Accounts Receivable: Debit: Yes, Credit: No
The correct amount of prepaid insurance shown on a company's December 31, 2018,
balance sheet was $900. On July 1, 2019, the company paid an additional insurance
premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid
insurance was correctly shown as $500. The amount of insurance expense that should
appear in the company's 2019 income statement is: - Answer-$1,000
When Castle Corporation pays insurance premiums, the transaction is recorded as a
debit to prepaid insurance. Additional information for the year ended December 31 is as
follows:
Prepaid insurance at January 1: $52,500
Insurance expense recognized during the year: 218,750
Prepaid insurance at December 31: 61,250
What was the total amount of cash paid by Castle for insurance premiums during the
year? - Answer-$227,500
Adjusting entries are needed primarily for: - Answer-Accrual accounting.
Which of the following is most likely an accrued liability? - Answer-Interest
