Reference no: EM13584039

1. XYZ Co. received $3,000 in payments from clients for services billed in a previous month. Which accounts will be affected and by what amounts under the accrual basis of accounting?

• Cash will increase by $3,000 and accounts receivable decrease by $3,000.
• Cash will increase by $3,000 and revenues will increase $3,000.
• Accounts receivable will increase by $3,000 and revenue will increase by $3,000.
• Accounts receivable will increase by $3,000 and cash will increase by $3,000.

2. Which of the following is an example of an intangible asset?

• Goodwill
• Patents
• Copyrights
• All of these

3. X&Y Co. received $4,000 in payments from clients for services billed in a previous month. What effect does this transaction have on the accounts under the accrual basis of accounting?

• Total assets increase by $4,000.
• Assets will increase by $4,000 and revenues will increase $4,000.
• Total assets will be decrease by $4,000.
• The net effect on assets is zero.

4. The matching concept requires expenses to be recorded in the same period that the related revenue is recorded.

• True
• False

5. Unearned revenue is what type of an account?

• Asset
• Revenue
• Stockholders' equity
• Liability

6. When cash is received in payment of an account receivable, which section of the Statement of Cash Flows is affected?

• Cash Flow from Operating Activities
• Cash Flow from Investing Activities
• Cash Flow from Financing Activities
• There is no effect on the Statement of Cash Flows.

7. St. Nick Corporation's Toy-Making Supplies account showed a beginning balance of $200 and supplies purchased of $800. There were $400 of supplies on hand at year-end. The year-end adjustment would include an increase in Toy-Making Supplies Expense for

• $1,000.
• $800.
• $600.
• $400.

8. Flyer Co. billed a client for flying lessons given in January. The payment was received in February. Under the accrual basis of accounting, when should Jedi record the revenue?

• January
• February
• Some in January and some in February
• Jedi should not record any revenue

9. Under the cash basis of accounting, expenses are recorded when paid.

• True
• False

10. An adjusting entry would adjust an expense account so that the expense is reported when incurred.

• True
• False

11. If the seller is to pay the delivery expense of delivering merchandise, the delivery terms are stated as

• FOB shipping point.
• FOB destination.
• FOB n/30.
• FOB seller.

12. The amount of the total cash paid to the seller for merchandise purchased would normally include

• only the list price.
• only the sales tax.
• the list price plus the sales tax.
• the list price less the sales tax.

13. If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as

• FOB shipping point.
• FOB destination.
• FOB n/30.
• FOB buyer.

14. Sales Returns and Allowances is a contra-asset account.

• True
• False

15. The form of income statement that derives its name from the fact that the total of all expenses is deducted from the total of all revenues is called a

• multiple-step statement.
• revenue statement.
• report-form statement.
• single-step statement.

16. When merchandise is purchased to resell to customers, it is recorded in the account entitled

• Supplies.
• Cost of Goods Sold.
• Merchandise Inventory.
• Sales.

17. Cost of Merchandise Sold is used in accounting for transactions by sellers of merchandise.

• True
• False