Reference no: EM13914586

Question 1: A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters or years is the:

Student Answer:
Operating cycle of a business

Time period principle

Going-concern principle

Matching principle

Accrual basis of accounting

Question 2. Interim financial statements refer to financial reports:

Student Answer:
That cover less than one year, usually spanning one, three or six-month periods

That are prepared before any adjustments have been recorded

That show the assets above the liabilities and the liabilities above the equity

Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid

Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues

Question 3. Western Company has an annual reporting period that runs from July 1st through
June 30th. Based on this information which of the following is a true statement?

Student Answer:
Western probably has little seasonal variation in their sales

Western has violated the time period principle

Western must prepare financial statements as of December 31 each year

Western has adopted a fiscal year

Western does not have an accountant

Question 4. The accounting principle that requires revenue to be reported when earned is the:

Student Answer:
Matching principle

Revenue recognition principle

Time period principle

Accrual reporting principle

Going-concern principle

Question 5. Adjusting entries:

Student Answer:
Affect only income statement accounts

Affect only balance sheet accounts

Affect both income statement and balance sheet accounts

Affect only cash flow statement accounts

Affect only equity accounts

Question 6. The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Student Answer:
Recognition principle

Cost principle

Cash basis of accounting

Matching principle

Question 7. Which of the following accounts would not be impacted by adjusting journal entries?

Student Answer:
Accounts Receivable

Consulting Fee Earned

Unearned Consulting Fees

Cash

Wages Payable

Question 8. Prepaid expenses, depreciation, accrued expenses, unearned revenues and accrued revenues are all examples of:

Student Answer:
Items that require contra accounts

Items that require adjusting entries

Asset and equity

Asset accounts

Income statement accounts