ch 2 quiz questions

Question 1

In general, debits refer to increases in account balances, and credits refer to decreases. True Or False

Answer 1

False

Question 2

The book value of any depreciable asset is?

Answer 2

the original cost minus the accumulated depreciation

Question 3

A general journal chronologically lists transactions and other events, expressed in terms of debits and credits to accounts. True Or False

Answer 3

True

Question 4

An adjustment for wages expense, earned but unpaid at year end, is an example of an accrued expense. True Or False

Answer 4

True

Question 5

Adjusting entries for prepayments record the portion of the prepayment that represents the expense incurred or the revenue earned in the current accounting period. True Or False

Answer 5

True

Question 6

It is not necessary to post the closing entries to the ledger accounts because new revenue and expense accounts will be opened in the subsequent accounting period. True Or False

Answer 6

False

Question 7

If a company fails to post one of its journal entries to its general ledger, will the trial balance show an equal or an unequal amount of debit and credit balance accounts.

Answer 7

equal

Question 8

When does the accrual basis recognize revenue?

Answer 8

when it is earned, regardless of when cash is received

Question 9

The post-closing trial balance included which accounts?

Answer 9

owners’s equity, revenue and expense

Question 10

all liability and stockholders’ equity accounts are increased on the credit side and decreased on the debit side. True or False?

Answer 10

False

Question 11

All revenues, expenses, and the dividends account are closed through the income summary account. True or False?

Answer 11

False. Divdeds is closed through retained earnings.

Question 12

Nominal (temporary) accounts are revenue, expense, and the dividend accounts and are periodically closed. True or False?

Answer 12

True

Question 13

A ledger is where the company initially records transactions and selects other events. True or Flase?

Answer 13

False. A ledger provides the balance in each of the accounts as well as keeps track of changes in these balances

Question 14

Recording the adjusting entry for depreciation has the same effect on the accounting equation as recording the adjusting entry for?

a prepaid expense
an unearned revenue
an accrued expense
an accrued revenue

Answer 14

a prepaid expense

Question 15

Which of the following is a recordable event in the accounting system?

changes in personnel
none of the answers are correct.
the value of human resources
changes in managerial policy

Answer 15

none of the answers are correct

Question 16

The failure to properly record an adjusting entry to accrue an expense will result in an:

understatement of expenses and an understatement of liabilities

overstatement of expenses and an understatement of assets

understatement of expenses and an overstatement of assets

understatement of expenses and an overstatement of liabiltiies

Answer 16

understatement of expenses and an understatement of liabilities

Question 17

Stockholder’s equity is not affected by all

revenues
cash receipts
dividends
expenses

Answer 17

cash receipts

Question 18

When a corporation pays a note payable and interest

they will debit notes payable and interest expense
the account interest expense will be decreased
the account notes payable will be increased
they will debit cash

Answer 18

they will debit notes payable and interest expense

Question 19

Which of the following statements is associated with the accrual basis of accounting?

this method is used less frequently by businesses than the cash method of accounting.

the timing of cash receipts and disbursements is emphasized

a minimum amount of record keeping is required

Revenues are recognized in the period they are earned, regardless of the time period the cash is received.

Answer 19

Revenues are recognized in the period they are earned, regardless of the time period the cash is received

Question 20

The trial balance may prove that debits and credits are equal, but

a transaction could have been omitted

an amount could be entered in the wrong account

a transaction could have been entered twice

all of the answers are correct

Answer 20

all of the answers are correct

Question 21

An accounting record into which the essential facts and figures in connection with all transactions are initially recorded is called the

trial balance
ledger
account
none of the answers are correct

Answer 21

none of the answers are correct

Question 22

A trial balance

supplies a listing of open accounts and their balances that are used in preparing financial statements

is normally prepared three times in the accounting cycle

all of these answers are correct.

proves that debits and credits are equal in the ledger

Answer 22

all of these answers are correct.

Question 23

Why are certain costs of doing business capitalized when incurred and then depreciated or amortized over subsequent accounting cycles?

to match the costs of the capitalized asset with revenues as they are earned

to adhere to the accounting constraint of conservatism

to aid management in cash-flow analysis

to reduce the federal income tax liability

Answer 23

to match the costs of the capitalized asset with revenues as they are earned