Reference no: EM132466891
Question 1: Every journal entry:
A) is recorded in either the journal or the ledger.
B) affects both an income statement account and a balance sheet account.
C) must debit at least one account and credit at least one account.
D) must increase at least one account and decrease at least one account.
Question 2: The financial statements are prepared from which columns of the trial balance worksheet?
A) adjusted trial balance columns
B) unadjusted trial balance columns
C) closing entries columns
D) adjustment columns
Question 3: Which of the following is a CORRECT statement about the two bases of accounting?
A) Only the largest companies in the United States use accrual accounting.
B) Cash-basis accounting records expenses only at the end of the month.
C) Cash-basis accounting records revenues when they are earned.
D) GAAP requires accrual accounting.
Question 4: An expense occurred in 2018, but it is not paid until 2019. Using accrual accounting, the expense should appear on:
A) the 2019 income statement.
B) the 2018 income statement.
C) whichever income statement the business prefers.
D) both the 2018 and 2019 income statements.
Question 5: nder accrual-basis accounting, if a company fails to record a sale on account:
A) revenue will be understated. B) assets will be understated. C) net income will still be correct. D) A and B.
Question 6: Winter Company earned revenues of $150,000 in cash and $200,000 on account during 2018. Of the $200,000 on account, $63,000 was collected in cash in 2018 and the rest in 2019. The company incurred expenses of $115,000 in 2018 and made payments of $70,000 towards the expenses in 2018. What is net income in 2018 under accrual accounting? (hint: all revenues and expenses cash or accrual should be recorded for Accrual accounting purposes)
A) $85,000
B) $350,000
C) $280,000
D) $235,000
Question 7: On December 15, 2019, a company receives an order from a customer for services to be performed on December 28, 2019. Due to a backlog of orders, the company does not perform the services until January 3, 2020. The customer pays for the services on January 6, 2020. The revenue principle requires the revenue to be recorded by the company on:
A) December 15, 2019.
B) January 3, 2020.
C) January 6, 2020.
D) December 28, 2019.