Reference no: EM132677677

Problem 1: A ___________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

Option 1: Transaction

Option 2: Framework

Option 3: Control

Option 4: Set of Rules

Problem 2: Unearned revenue is what type of an account?

Option 1: Liability

Option 2: Revenue

Option 3: Stockholders' equity

Option 4: Asset

Problem 3: A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts?

Option 1: Increase accounts receivable and unearned revenues by $1,000,000 each

Option 2: Increase cash and decrease accounts receivable by $1,000,000 each

Option 3: Increase accounts receivable and cash by $1,000,000 each

Option 4: Increase accounts receivable and revenues by $1,000,000 each

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

Option 1: Total assets increase by $4,000.

Option 2: The net effect on assets is zero.

Option 3: Total assets will decrease by $4,000

Option 4: Assets will increase by $4,000 and revenues will increase $4,000.

Problem 5: Fees receivable would appear on the balance sheet as a(n):

Option 1: unearned revenue.

Option 2: fixed asset.

Option 3: asset.

Option 4: liability.