Accounting Financial Reporting Question Pool
COMPLETE EXAM LATEST VERSION 2026-2027
QUESTIONS AND 100% Verified ANSWERS
1. Which of the following business events would NOT be recorded in a company's accounting
records?
A. The company paid a monthly utility bill of $1,000
B. The company signed a contract to provide services in the next accounting period for $125,000
C. The company issued 100 ordinary shares for $75,000
D. The company purchased two acres of land for future plant expansion for $600,000 -
answer>>>B. The company signed a contract to provide services in the next accounting period for
$125,000
1. Purchasing inventory on account would:
A. Increase total assets and decrease total liabilities
B. Increase total liabilities and decrease total assets
C. Increase total assets and decrease shareholders' equity
D. Increase total assets and increase total liabilities - answer>>>D. Increase total assets and
increase total liabilities
1. Which accounts are increased by debits?
A. Assets and owners' equity
B. Assets and expenses
C. Assets, expenses and owners' equity
D. Expenses and owners' equity - answer>>>B. Assets and expenses
1. Double-entry accounting means that each transaction:
A. Increases at least one account and decreases at least one account
B. Debits at least one account and credits at least one account
C. Is recorded in both the journal and in the ledger
D. Affects both an income statement account and a balance sheet account - answer>>>B. Debits
at least one account and credits at least one account
1. The entry to record $1,000 cash received from a customer for services that were performed in
the previous accounting period is:
A. Debit Accounts Receivable 1,000; Credit Cash 1,000
B. Debit Service Revenue 1,000; Credit Accounts Receivable 1,000
,C. Debit Cash 1,000; Credit Accounts Receivable 1,000
D. Debit Cash 1,000; Credit Service Revenue 1,000 - answer>>>C. Debit Cash 1,000; Credit
Accounts Receivable 1,000
1. On 1 November 2016, Prepaid Rent was debited for $5,400 for three months of rent, paid in
advance. The amount of the adjusting entry on 31 December 2016 is:
A. $1,800
B. $5,400
C. $0
D. $3,600 - answer>>>D. $3,600
1. On 1 November 2016, Prepaid Rent was debited for $5,400 for three months of rent, paid in
advance. The adjusting entry that is recorded on 31 December 2016 includes a:
A. Debit to Cash
B. Credit to Prepaid Rent
C. Credit to Rent Expense
D. Debit to Prepaid Rent - answer>>>B. Credit to Prepaid Rent
1. A tired accountant forgot to adjust the Unearned Revenue account for work performed in the
current period. What is the effect on this error on the financial statements of the current period?
A. The assets will be understated and expenses will be understated
B. The assets will be overstated and liabilities will be overstated
C. The liabilities will be overstated and revenues will be understated
D. The liabilities will be understated and revenues will be overstated - answer>>>C. The liabilities
will be overstated and revenues will be understated
1. Increases in an account are recorded by debits and this account has a normal balance of a debit.
This account can be:
A. Either an expense account or an asset account
B. An expense account
C. An asset account
D. A liability account - answer>>>A. Either an expense account or an asset account
1. The entry to record the payment of salaries to employees would include a:
A. Credit to Salary Expense
B. Debit to Accounts Payable
C. Debit to Salary Expense
D. Credit to Accounts Receivable - answer>>>C. Debit to Salary Expense
,1. The normal balance of an expense account is a ____ because expenses decrease ____ . A.
Debit, shareholders' equity
B. Debit, assets
C. Credit, assets
D. Credit, shareholders' equity - answer>>>A. Debit, shareholders' equity
1. Which of the following transactions will increase an asset and increase a liability?
A. Buying equipment on account
B. Purchasing office equipment for cash
C. Paying an account payable
D. Issuing shares - answer>>>A. Buying equipment on account
1. On October 1, Seaview Apartments received $6,000 from a tenant for four months' rent. The
receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31
?
A. Debit 1,500 under Unearned Rent Revenue. Credit 1,500 under Rent Revenue
B. Debit 4,500 under Cash. Credit 4,500 under Rent Revenue
C. Debit 1,500 under Rent Revenue. Credit 1,500 under Unearned Rent Revenue
D. Debit 4,500 under Unearned Rent Revenue. Credit 4,500 under Rent Revenue - answer>>>D.
Debit 4,500 under Unearned Rent Revenue. Credit 4,500 under Rent Revenue
1. Equipment of $150,000, Accumulated depreciation equipment of $22,500 and Depreciation
expenses equipment of $7,500 appear on the adjusted trial balance of Park National Company.
The carrying amount of the equipment is
A. $120,000
B. $127,500
C. $142,500
D. $150,000 - answer>>>B. $127,500
1. Pisces, Inc., purchased supplies for $1,300 during 20X6. At the year-end, Pisces had $800 of
supplies left. The adjusting entry should
A. Credit Supplies $800
B. Debit Supplies $500
C. Debit Supplies Expense $500
D. Debit Supplies Expense $800 - answer>>>C. Debit Supplies Expense $500
1. The accountant for Starter Corp. failed to make the adjusting entry to record depreciation for
the current year. The effect of this error is which of the following?
A. Assets are overstated; shareholders' equity and net income are understated
B. Assets, net income, and shareholders' equity are all overstated
, C. Assets and expenses are understated; net income is understated
D. Net income is overstated and liabilities are understated - answer>>>B. Assets, net income, and
shareholders' equity are all overstated
1. Interest earned on a note receivable at December 31 equals $400. What adjusting entry is
required to accrue this interest?
A. Debit 400 under Interest Receivable. Credit 400 under Interest Revenue
B. Debit 400 under Interest Expense. Credit 400 under Cash
C. Debit 400 under Interest Expense. Credit 400 under Interest Payable
D. Debit 400 under Interest Payable. Credit 400 under Interest Expense - answer>>>B. Debit 400
under Interest Expense. Credit 400 under Cash
1. If a real estate company fails to accrue commission revenue,
A. Revenues are understated and net income is overstated
B. Net income is understated and shareholders' equity is overstated
C. Liabilities are overstated and owners' equity is understated
D. Assets are understated and net income is understated - answer>>>D. Assets are understated
and net income is understated
1. All of the following statements are true expect one. Which statement is false?
A. Accrual-basis accounting produces better information than cash-basis accounting
B. Adjusting entries are required for a business that uses the cash-basis accounting
C. The matching concept directs accountants to identify and measure all expenses incurred and
deduct them from revenues earned during the same period.
D. A fiscal year is not always the same as a calendar year. - answer>>>B. Adjusting entries are
required for a business that uses the cash-basis accounting
1. The account Unearned Revenue is a(n)
A. Revenue
B. Asset
C. Liability
D. Expense - answer>>>C. Liability
1. Adjusting entries
A. Are needed to measure the period's net income or net loss accounts.
B. Usually do not debit or credit the cash account
C. Update the accounts
D. Apply to all of the above - answer>>>D. Apply to all of the above
1. An adjusting entry that debits an expense and credits a liability is which type of expense?
COMPLETE EXAM LATEST VERSION 2026-2027
QUESTIONS AND 100% Verified ANSWERS
1. Which of the following business events would NOT be recorded in a company's accounting
records?
A. The company paid a monthly utility bill of $1,000
B. The company signed a contract to provide services in the next accounting period for $125,000
C. The company issued 100 ordinary shares for $75,000
D. The company purchased two acres of land for future plant expansion for $600,000 -
answer>>>B. The company signed a contract to provide services in the next accounting period for
$125,000
1. Purchasing inventory on account would:
A. Increase total assets and decrease total liabilities
B. Increase total liabilities and decrease total assets
C. Increase total assets and decrease shareholders' equity
D. Increase total assets and increase total liabilities - answer>>>D. Increase total assets and
increase total liabilities
1. Which accounts are increased by debits?
A. Assets and owners' equity
B. Assets and expenses
C. Assets, expenses and owners' equity
D. Expenses and owners' equity - answer>>>B. Assets and expenses
1. Double-entry accounting means that each transaction:
A. Increases at least one account and decreases at least one account
B. Debits at least one account and credits at least one account
C. Is recorded in both the journal and in the ledger
D. Affects both an income statement account and a balance sheet account - answer>>>B. Debits
at least one account and credits at least one account
1. The entry to record $1,000 cash received from a customer for services that were performed in
the previous accounting period is:
A. Debit Accounts Receivable 1,000; Credit Cash 1,000
B. Debit Service Revenue 1,000; Credit Accounts Receivable 1,000
,C. Debit Cash 1,000; Credit Accounts Receivable 1,000
D. Debit Cash 1,000; Credit Service Revenue 1,000 - answer>>>C. Debit Cash 1,000; Credit
Accounts Receivable 1,000
1. On 1 November 2016, Prepaid Rent was debited for $5,400 for three months of rent, paid in
advance. The amount of the adjusting entry on 31 December 2016 is:
A. $1,800
B. $5,400
C. $0
D. $3,600 - answer>>>D. $3,600
1. On 1 November 2016, Prepaid Rent was debited for $5,400 for three months of rent, paid in
advance. The adjusting entry that is recorded on 31 December 2016 includes a:
A. Debit to Cash
B. Credit to Prepaid Rent
C. Credit to Rent Expense
D. Debit to Prepaid Rent - answer>>>B. Credit to Prepaid Rent
1. A tired accountant forgot to adjust the Unearned Revenue account for work performed in the
current period. What is the effect on this error on the financial statements of the current period?
A. The assets will be understated and expenses will be understated
B. The assets will be overstated and liabilities will be overstated
C. The liabilities will be overstated and revenues will be understated
D. The liabilities will be understated and revenues will be overstated - answer>>>C. The liabilities
will be overstated and revenues will be understated
1. Increases in an account are recorded by debits and this account has a normal balance of a debit.
This account can be:
A. Either an expense account or an asset account
B. An expense account
C. An asset account
D. A liability account - answer>>>A. Either an expense account or an asset account
1. The entry to record the payment of salaries to employees would include a:
A. Credit to Salary Expense
B. Debit to Accounts Payable
C. Debit to Salary Expense
D. Credit to Accounts Receivable - answer>>>C. Debit to Salary Expense
,1. The normal balance of an expense account is a ____ because expenses decrease ____ . A.
Debit, shareholders' equity
B. Debit, assets
C. Credit, assets
D. Credit, shareholders' equity - answer>>>A. Debit, shareholders' equity
1. Which of the following transactions will increase an asset and increase a liability?
A. Buying equipment on account
B. Purchasing office equipment for cash
C. Paying an account payable
D. Issuing shares - answer>>>A. Buying equipment on account
1. On October 1, Seaview Apartments received $6,000 from a tenant for four months' rent. The
receipt was credited to Unearned Rent Revenue. What adjusting entry is needed on December 31
?
A. Debit 1,500 under Unearned Rent Revenue. Credit 1,500 under Rent Revenue
B. Debit 4,500 under Cash. Credit 4,500 under Rent Revenue
C. Debit 1,500 under Rent Revenue. Credit 1,500 under Unearned Rent Revenue
D. Debit 4,500 under Unearned Rent Revenue. Credit 4,500 under Rent Revenue - answer>>>D.
Debit 4,500 under Unearned Rent Revenue. Credit 4,500 under Rent Revenue
1. Equipment of $150,000, Accumulated depreciation equipment of $22,500 and Depreciation
expenses equipment of $7,500 appear on the adjusted trial balance of Park National Company.
The carrying amount of the equipment is
A. $120,000
B. $127,500
C. $142,500
D. $150,000 - answer>>>B. $127,500
1. Pisces, Inc., purchased supplies for $1,300 during 20X6. At the year-end, Pisces had $800 of
supplies left. The adjusting entry should
A. Credit Supplies $800
B. Debit Supplies $500
C. Debit Supplies Expense $500
D. Debit Supplies Expense $800 - answer>>>C. Debit Supplies Expense $500
1. The accountant for Starter Corp. failed to make the adjusting entry to record depreciation for
the current year. The effect of this error is which of the following?
A. Assets are overstated; shareholders' equity and net income are understated
B. Assets, net income, and shareholders' equity are all overstated
, C. Assets and expenses are understated; net income is understated
D. Net income is overstated and liabilities are understated - answer>>>B. Assets, net income, and
shareholders' equity are all overstated
1. Interest earned on a note receivable at December 31 equals $400. What adjusting entry is
required to accrue this interest?
A. Debit 400 under Interest Receivable. Credit 400 under Interest Revenue
B. Debit 400 under Interest Expense. Credit 400 under Cash
C. Debit 400 under Interest Expense. Credit 400 under Interest Payable
D. Debit 400 under Interest Payable. Credit 400 under Interest Expense - answer>>>B. Debit 400
under Interest Expense. Credit 400 under Cash
1. If a real estate company fails to accrue commission revenue,
A. Revenues are understated and net income is overstated
B. Net income is understated and shareholders' equity is overstated
C. Liabilities are overstated and owners' equity is understated
D. Assets are understated and net income is understated - answer>>>D. Assets are understated
and net income is understated
1. All of the following statements are true expect one. Which statement is false?
A. Accrual-basis accounting produces better information than cash-basis accounting
B. Adjusting entries are required for a business that uses the cash-basis accounting
C. The matching concept directs accountants to identify and measure all expenses incurred and
deduct them from revenues earned during the same period.
D. A fiscal year is not always the same as a calendar year. - answer>>>B. Adjusting entries are
required for a business that uses the cash-basis accounting
1. The account Unearned Revenue is a(n)
A. Revenue
B. Asset
C. Liability
D. Expense - answer>>>C. Liability
1. Adjusting entries
A. Are needed to measure the period's net income or net loss accounts.
B. Usually do not debit or credit the cash account
C. Update the accounts
D. Apply to all of the above - answer>>>D. Apply to all of the above
1. An adjusting entry that debits an expense and credits a liability is which type of expense?
