Solution Manual For Financial and Managerial Accounting, 9th Edition
By John Wild
1. The primary objective of financial accounting is to:
A) Provide information to internal management for decision-making.
B) Report the financial position and performance of the company to external users.
C) File tax returns with the government.
D) Track day-to-day operational efficiency.
ANSWER: B) Report the financial position and performance of the company to external users.
2. Which of the following is *not* one of the four primary financial statements?
A) Statement of Retained Earnings
B) Statement of Cash Flows
C) Statement of Managerial Performance
D) Balance Sheet
ANSWER: C) Statement of Managerial Performance
3. The accounting equation is expressed as:
A) Assets = Liabilities + Equity
B) Revenues - Expenses = Net Income
C) Assets = Revenues + Expenses
D) Liabilities = Assets + Equity
ANSWER: A) Assets = Liabilities + Equity
4. An expense:
A) Increases assets and increases equity.
B) Decreases assets and decreases liabilities.
C) Decreases equity and is incurred to generate revenue.
,D) Increases liabilities and decreases revenue.
ANSWER: C) Decreases equity and is incurred to generate revenue.
5. The principle that requires every business to be accounted for separately from its owner(s) is the:
A) Going concern assumption
B) Monetary unit assumption
C) Business entity assumption
D) Time period assumption
ANSWER: C) Business entity assumption
6. A company performs a service for a customer on account. This transaction will:
A) Increase assets and increase equity.
B) Increase assets and increase liabilities.
C) Increase liabilities and increase equity.
D) Decrease assets and decrease liabilities.
ANSWER: A) Increase assets and increase equity.
7. Deferred Revenue (Unearned Revenue) is classified as a(n):
A) Asset
B) Expense
C) Liability
D) Equity
ANSWER: C) Liability
8. The process of recording transactions in the journal is called:
A) Posting
B) Journalizing
C) Adjusting
D) Balancing
,ANSWER: B) Journalizing
9. A debit signifies an increase in which of the following?
A) Revenues
B) Liabilities
C) Assets
D) Equity
ANSWER: C) Assets
10. A company purchases equipment for $15,000 cash. The journal entry to record this will include a:
A) Debit to Cash and Credit to Equipment.
B) Debit to Equipment and Credit to Cash.
C) Debit to Equipment and Credit to Accounts Payable.
D) Debit to Expense and Credit to Cash.
ANSWER: B) Debit to Equipment and Credit to Cash.
11. The purpose of an adjusted trial balance is to:
A) Verify that total debits equal total credits after adjustments.
B) Replace the financial statements.
C) List accounts before adjustments are made.
D) Close temporary accounts.
ANSWER: A) Verify that total debits equal total credits after adjustments.
12. Accrual basis accounting:
A) Records revenues when cash is received and expenses when cash is paid.
B) Records revenues when earned and expenses when incurred, regardless of cash flow.
C) Is used only by small businesses.
D) Violates the matching principle.
ANSWER: B) Records revenues when earned and expenses when incurred, regardless of cash flow.
, 13. An adjusting entry for accrued salaries would include a:
A) Debit to Salaries Expense and Credit to Cash.
B) Debit to Salaries Payable and Credit to Salaries Expense.
C) Debit to Salaries Expense and Credit to Salaries Payable.
D) Debit to Cash and Credit to Salaries Expense.
ANSWER: C) Debit to Salaries Expense and Credit to Salaries Payable.
14. Prepaid Insurance is an example of a(n):
A) Accrued expense
B) Accrued revenue
C) Prepaid expense (deferred expense)
D) Unearned revenue
ANSWER: C) Prepaid expense (deferred expense)
15. The purpose of closing entries is to:
A) Update permanent accounts for the next period.
B) Transfer the balances of temporary accounts (revenues, expenses, dividends) to permanent equity.
C) Correct errors in the ledger.
D) Prepare the adjusted trial balance.
ANSWER: B) Transfer the balances of temporary accounts (revenues, expenses, dividends) to permanent
equity.
16. Which of the following accounts is *not* closed at the end of the period?
A) Salaries Expense
B) Service Revenue
C) Dividends
D) Retained Earnings
ANSWER: D) Retained Earnings
By John Wild
1. The primary objective of financial accounting is to:
A) Provide information to internal management for decision-making.
B) Report the financial position and performance of the company to external users.
C) File tax returns with the government.
D) Track day-to-day operational efficiency.
ANSWER: B) Report the financial position and performance of the company to external users.
2. Which of the following is *not* one of the four primary financial statements?
A) Statement of Retained Earnings
B) Statement of Cash Flows
C) Statement of Managerial Performance
D) Balance Sheet
ANSWER: C) Statement of Managerial Performance
3. The accounting equation is expressed as:
A) Assets = Liabilities + Equity
B) Revenues - Expenses = Net Income
C) Assets = Revenues + Expenses
D) Liabilities = Assets + Equity
ANSWER: A) Assets = Liabilities + Equity
4. An expense:
A) Increases assets and increases equity.
B) Decreases assets and decreases liabilities.
C) Decreases equity and is incurred to generate revenue.
,D) Increases liabilities and decreases revenue.
ANSWER: C) Decreases equity and is incurred to generate revenue.
5. The principle that requires every business to be accounted for separately from its owner(s) is the:
A) Going concern assumption
B) Monetary unit assumption
C) Business entity assumption
D) Time period assumption
ANSWER: C) Business entity assumption
6. A company performs a service for a customer on account. This transaction will:
A) Increase assets and increase equity.
B) Increase assets and increase liabilities.
C) Increase liabilities and increase equity.
D) Decrease assets and decrease liabilities.
ANSWER: A) Increase assets and increase equity.
7. Deferred Revenue (Unearned Revenue) is classified as a(n):
A) Asset
B) Expense
C) Liability
D) Equity
ANSWER: C) Liability
8. The process of recording transactions in the journal is called:
A) Posting
B) Journalizing
C) Adjusting
D) Balancing
,ANSWER: B) Journalizing
9. A debit signifies an increase in which of the following?
A) Revenues
B) Liabilities
C) Assets
D) Equity
ANSWER: C) Assets
10. A company purchases equipment for $15,000 cash. The journal entry to record this will include a:
A) Debit to Cash and Credit to Equipment.
B) Debit to Equipment and Credit to Cash.
C) Debit to Equipment and Credit to Accounts Payable.
D) Debit to Expense and Credit to Cash.
ANSWER: B) Debit to Equipment and Credit to Cash.
11. The purpose of an adjusted trial balance is to:
A) Verify that total debits equal total credits after adjustments.
B) Replace the financial statements.
C) List accounts before adjustments are made.
D) Close temporary accounts.
ANSWER: A) Verify that total debits equal total credits after adjustments.
12. Accrual basis accounting:
A) Records revenues when cash is received and expenses when cash is paid.
B) Records revenues when earned and expenses when incurred, regardless of cash flow.
C) Is used only by small businesses.
D) Violates the matching principle.
ANSWER: B) Records revenues when earned and expenses when incurred, regardless of cash flow.
, 13. An adjusting entry for accrued salaries would include a:
A) Debit to Salaries Expense and Credit to Cash.
B) Debit to Salaries Payable and Credit to Salaries Expense.
C) Debit to Salaries Expense and Credit to Salaries Payable.
D) Debit to Cash and Credit to Salaries Expense.
ANSWER: C) Debit to Salaries Expense and Credit to Salaries Payable.
14. Prepaid Insurance is an example of a(n):
A) Accrued expense
B) Accrued revenue
C) Prepaid expense (deferred expense)
D) Unearned revenue
ANSWER: C) Prepaid expense (deferred expense)
15. The purpose of closing entries is to:
A) Update permanent accounts for the next period.
B) Transfer the balances of temporary accounts (revenues, expenses, dividends) to permanent equity.
C) Correct errors in the ledger.
D) Prepare the adjusted trial balance.
ANSWER: B) Transfer the balances of temporary accounts (revenues, expenses, dividends) to permanent
equity.
16. Which of the following accounts is *not* closed at the end of the period?
A) Salaries Expense
B) Service Revenue
C) Dividends
D) Retained Earnings
ANSWER: D) Retained Earnings
