FNU ACG2003 2022 October Week 4 Midterm Quiz Latest

ACG2003 Principles of Accounting

Week 4 Midterm Quiz

Question 1Revenues are reported when

a contract is signed

cash is received from the customer

work is begun on the job

work is completed on the job

Question 2Debts owed by a business are referred to as

accounts receivables

equities

owner’s equity

liabilities

Question 3The unit of measure concept:

is only used in the financial statements of manufacturing companies.

is not important when applying the cost concept.

requires that different units be used for assets and liabilities.

requires that economic data be reported in yen in Japan or dollars in the U.S.

 

Question 4The Sarbanes-Oxley Act of 2002 prohibits employment of auditors by their clients for what period after their last audit of the client?

Indefinitely

One year

Two years

There is no such prohibition.

Question 5Which of the following is not an asset?

Investments

Cash

Inventory

Owner’s Equity

Question 6The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or year, is called a(n)

prior period statement

statement of owner's equity

income statement

balance sheet

Question 7A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to

increase one asset, decrease another asset

decrease an asset, decrease a liability

increase an asset, increase a liability

increase an asset, increase owner's equity

Question 8Which of the following best describes accounting?

records economic data but does not communicate the data to users according to any specific rules.

is an information system that provides reports to users regarding economic activities and condition of a business.

is of no use by individuals outside of the business.

is used only for filling out tax returns and for financial statements for various type of governmental reporting requirements.

Question 9Financial reports are used by

management

creditors

investors

all are correct

Question 10Which of the following entries records the payment of an account payable?

debit Cash; credit Accounts Payable

debit Accounts Receivable; credit Cash

debit Cash; credit Supplies Expense

debit Accounts Payable; credit Cash

Question 11April23Cash

14,000

         Jim Xu, Capital 

14,000

   Invest cash in Xu Co.  

The journal entry will:

Increase Capital and decrease Cash

Increase Cash and decrease Capital

Increase Cash and increase Capital

Decrease Cash and decrease Capital

Question 12March10Accounts Payable 3,300         Cash  3,300   Paid creditors on account  

What effect does this journal entry have on the accounts?

Decrease accounts payable, increase cash

Increase cash, decrease accounts payable

Increase accounts payable, increase cash

Decrease accounts payable, decrease cash

Question 13The process of recording a transaction in the journal is called

recording

journalizing

posting

summarizing

Question 14he debit side of an account

 

 depends on whether the account is an asset, liability or owner's equity

can be either side of the account depending on how the accountant set up the system

is the right side of the account

is the left side of the account

Question 15A debit may signify a(n)

decrease in asset accounts

decrease in liability accounts

increase in the capital account

decrease in the drawing account

Question 16Revenue should be recognized when

cash is received

the service is performed

the customer places an order

the customer charges an order

Question 17Which of the following entries records the payment of rent for the current month?

Cash, debit; Rent Expense, credit

Rent Expense, debit; Cash, credit

Rent Expense, debit; Accounts Receivable, credit

Accounts Payable, debit; Rent Expense, credit

Question 18A chart of accounts is

the same as a balance sheet

usually a listing of accounts in alphabetical order

usually a listing of accounts in financial statement order

used in place of a ledger

Question 19Using accrual accounting, revenue is recorded and reported only

when cash is received without regard to when the services are rendered

when the services are rendered without regard to when cash is received

when cash is received at the time services are rendered

if cash is received after the services are rendered

Question 20The matching concept

addresses the relationship between the journal and the balance sheet

determines whether the normal balance of an account is a debit or credit

requires that the dollar amount of debits equal the dollar amount of credits on a trial balance

determines that expenses related to revenue be reported at the same time the revenue is reported

Question 21Which of the accounting steps in the accounting process below would be completed last?

preparing the adjusted trial balance

posting

preparing the financial statements

journalizing

Question 22Deferred expenses have

not yet been recorded as expenses or paid

been recorded as expenses and paid

been incurred and paid

not yet been recorded as expenses

Question 23Deferred revenue is revenue that is

earned and the cash has been received

earned but the cash has not been received

not earned and the cash has not been received

not earned but the cash has been received

Question 24By matching revenues and expenses in the same period in which they incur

net income or loss will always be underestimated.

net income or loss will always be overestimated.

net income or loss will be properly reported on the income statement

net income or loss will not be determined.

Question 25The adjusting entry to record the depreciation of equipment for the fiscal period is

debit Depreciation Expense; credit Equipment

debit Depreciation Expense; credit Accumulated Depreciation

debit Accumulated Depreciation; credit Depreciation Expense

debit Equipment; credit Depreciation Expense

 

Question 26The account type and normal balance of Prepaid Expense is

revenue, credit

expense, debit

liability, credit

asset, debit

Question 27Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company’s monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:

$2,100

$700

$3,500

$1,400

Question 28The Statement of Owner’s Equity should be prepared

before the income statement and after the balance sheet

before the income statement and balance sheet

after the income statement and balance sheet

after the income statement and before the balance sheet

Question 29Closing entries

need not be journalized if adjusting entries are prepared

need not be posted if the financial statements are prepared from the work sheet

are not needed if adjusting entries are prepared

must be journalized and posted

Question 30The classified Balance Sheet will divide its Liabilities Section as the following subsections

Current Liabilities and Long-Term Liabilities

Current Liabilities and Other Liabilities

Other Liabilities and Long-Term Liabilities

Present Liabilities and Tomorrow’s Liabilities

Question 31The following are steps to the accounting cycle. Of the following, which step should be done first?

Closing entries are journalized and posted to the ledger.

Transactions are posted to the ledger.

Adjusting entries are journalized and posted to the ledger.

Financial statements are prepared.

Question 32In the accounting cycle, the last step is

preparing the financial statements

journalizing and posting the adjusting entries

preparing a post-closing trial balance

journalizing and posting the closing entries

Question 33The Balance Sheet should be prepared

before the income statement and the statement of owner’s equity

before the income statement and after the statement of owner’s equity

after the income statement and the statement of owner’s equity

after the income statement and before the statement of owner’s equity

Question 34Short-term liabilities are those liabilities that

will be paid in less than one year

are due to paid in 5 to 10 years

are due to be paid in more than one year

are liabilities owed to the owner and will never be paid

Question 35The income statement should be prepared

before the statement of owner’s equity and balance sheet

after the statement of owner’s equity and before the balance sheet

after the statement of owner’s equity and balance sheet

after the balance sheet and before the statement of owner’s equity

Question 36The worksheet

is an integral part of the accounting cycle

eliminates the need to rewrite the financial statements

is a working paper that is required

is used to summarize account balances and adjustments for the financial statements

Question 37A company, using the periodic inventory system, has merchandise inventory costing $175 on hand at the beginning of the period. During the period, merchandise costing $635 is purchased. At year-end, merchandise inventory costing $160 is on hand. The cost of merchandise sold for the year is

$970

$650

$300

$620

Question 38Multiple-step income statements show

gross profit but not income from operations

neither gross profit nor income from operations

both gross profit and income from operations

income from operations but not gross profit

Question 39Inventory shortage is recorded when

merchandise is returned by a buyer.

merchandise purchased from a seller is incomplete or short.

merchandise is returned to a seller.

there is a difference between a physical count of inventory and inventory records.

Question 40The primary difference between a periodic and perpetual inventory system is that a

periodic system determines the inventory on hand only at the end of the accounting period

periodic system keeps a record showing the inventory on hand at all times

periodic system provides an easy means to determine inventory shrinkage

periodic system records the cost of the sale on the date the sale is made