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Financial Accounting Mid Term
Questions with Detailed Verified
Answers
Question: The accounting system uses a device called an account. An
account..
Answer: accumulates the increases and decreases that occur during the
period for a single item
Question:If a corporation issues 1,000 shares of $1 par value common stock at
$5 per share, how should the transaction be accounted for?
Answer: debit cash for $5,000 and credit common stock for $1,000 and credit
additional paid in capital for $4,000
Question:A t-account is often used as an analysis tool. When looking at a T-
account, how would increases to liability account be recorded?
Answer: increase the right side of the account (called a credit)
Question:December 21, year 1, Delaware corporation has 5,000 shares of par
value common stock, additional paid in capital of 25,000, total shareholders
equity of 80,000, and retained earnings of 45,000. What is the par value per
share?
Answer: $2
Question:Under accrual accounting, revenue is recognized when..
, Page | 2
Answer: the firm has performed all services, the firm has received cash (both a
& b)
Question:Julia corp. purchases an insurance policy for three years beginning
Jan 1, year 2, and recorded the $6,000 premium in the prepaid insurance
account. What adjusting entry is required to the proper balances, in the
insurance-related accounts at year end on December 31 year 2?
Answer: Insurance expense: $2,000. Prepaid insurance: $2,000
Question:The income statement provides information for assessing the
operating profitability of a firm. One tool used for analysis is the common size
income statement that expresses...
Answer: each expense and net income as a percentage of revenues
Question:The sales manager of Beta company failed to record a valid sale on
account of the merchandise that had been shipped to a customer prior to the
end of the current year, however the merchandise has been properly excluded
from inventory at the end of the current year. As a result of this error, Beta
company's...
Answer: total assets are understated at the end of the current year
Question:Carlson company reports the following:
Contributed cap: 200
Total Revenues: 800
Total Liabilities: 1,200
Beginning retained earnings: 100
Total expenses: 500
Financial Accounting Mid Term
Questions with Detailed Verified
Answers
Question: The accounting system uses a device called an account. An
account..
Answer: accumulates the increases and decreases that occur during the
period for a single item
Question:If a corporation issues 1,000 shares of $1 par value common stock at
$5 per share, how should the transaction be accounted for?
Answer: debit cash for $5,000 and credit common stock for $1,000 and credit
additional paid in capital for $4,000
Question:A t-account is often used as an analysis tool. When looking at a T-
account, how would increases to liability account be recorded?
Answer: increase the right side of the account (called a credit)
Question:December 21, year 1, Delaware corporation has 5,000 shares of par
value common stock, additional paid in capital of 25,000, total shareholders
equity of 80,000, and retained earnings of 45,000. What is the par value per
share?
Answer: $2
Question:Under accrual accounting, revenue is recognized when..
, Page | 2
Answer: the firm has performed all services, the firm has received cash (both a
& b)
Question:Julia corp. purchases an insurance policy for three years beginning
Jan 1, year 2, and recorded the $6,000 premium in the prepaid insurance
account. What adjusting entry is required to the proper balances, in the
insurance-related accounts at year end on December 31 year 2?
Answer: Insurance expense: $2,000. Prepaid insurance: $2,000
Question:The income statement provides information for assessing the
operating profitability of a firm. One tool used for analysis is the common size
income statement that expresses...
Answer: each expense and net income as a percentage of revenues
Question:The sales manager of Beta company failed to record a valid sale on
account of the merchandise that had been shipped to a customer prior to the
end of the current year, however the merchandise has been properly excluded
from inventory at the end of the current year. As a result of this error, Beta
company's...
Answer: total assets are understated at the end of the current year
Question:Carlson company reports the following:
Contributed cap: 200
Total Revenues: 800
Total Liabilities: 1,200
Beginning retained earnings: 100
Total expenses: 500
