Midterms Flashcards
The Adjusting Entry to allocate part of the cost of a one-year fire insurance policy to expense will cause total asset to increase.
False
A Fiscal Period must begin on January 1.
False
A company’s fiscal year must correspond to the calendar year.
False
The Adjusting Entry to recognize an expense which is unrecorded and unpaid will cause total asset to increase.
False
Revenue cannot be recognized unless delivery of goods has occurred of services been rendered.
True
Every Adjusting Entry must change both Income Statement account and a Balance Sheet account.
True
Revenue is equal to the cash received by a company during an accounting period
False - Revenue is not always involving cash
Failure to record Adjusting Entry for Depreciation results in Assets and Owner’s Equity being overstated on the Balance Sheet
True
Recording Incurred but unpaid expenses is an example of an accrual
True
Adjusting Entries are useful in apportioning cost among two or more accounting periods
True
The Adjustment to record Depreciation of property and equipment consist of a debit to Depreciation Expense and a credit to Accumulated Depreciation
True
The amount of Accrued Revenues is recorded by debiting an Asset Account and crediting an Income Account
True
If all transactions were originally recorded in conformity with GAAP, there would be no need for adjusting entries at the end of the period.
False
In recording the Adjusting Entries for Depreciation, both accounts involved are increased.
True
When services are not paid for until after they have been performed, the accrued expense is recorded by an Adjusting Entry at the end of the accounting period.
True
Book value is the original cost of a building less depreciation for the year.
False - the question is vague regarding “for the year” so it could be the following year or the “1st year.” If it is the 1st year then it would be true
The Adjusting Entry to recognize earned revenues which was received in advance will cause total liabilities to decrease.
True
When the reduction in prepaid expenses is not properly recorded this causes the asset accounts and expense accounts to be understated.
False - Expenses Understated and Asset Overstated
The Adjusting Entry to recognize earned commission revenues not previously recorded or billed will cause total assets to increase.
False
Accrued Revenue is a term used to describe revenue that has been received but not yet earned.
False
And Adjusting Entry includes at least one balance sheet account and at least one income statement account.
True
Failure to record the Adjusting Entry for Depreciation will overstate assets on the balance sheet.
True
As equipment is depreciated, its book value increases and it’s accumulated depreciation increases
False
Failure to record the Adjusting Entry for Accrued Salaries results in the current year’s profit being overstated.
True
In reading the Adjusting Entry for Accrued Salaries, all the accounts involved are decreased
False
Accounting Periods should be equal length to facilitate comparisons between periods.
True
Acquiring a computer for cash is just exchanging one asset for another and will not result in an expense even in future periods.
False
All decreases in Owner’s Equity are a result of expenses.
False - Withdrawals
The Owner’s Personal Withdrawals for the year cause a decrease in profit.
False
The expiration of usefulness of equipment during an accounting period is called depcreciation.
True
Working papers provide a written record of the work performed by the accountant or auditor
True
The Account Commissions Earned would appear on the Balance Sheet.
False - Income Statement
The amount for Owner’s Withdrawals will appear in the Income Statement columns of a worksheet.
False - Balance Sheet
The worksheet shall be prepared after the formal financial statements have been prepared.
False - Worksheet is prepared before the Financial Statement
The Accounts Wages Payable would appear on the income statement
False
Buying and producing goods and services are examples of Operating Activities
True
The worksheet is a type of Accountant’s working paper
True
The balances of the Accumulated Depreciation Accounts will appear on the credit side of the worksheet’s Balance Sheet columns
True
The amount paid opposite the owner’s Capital account in the Balance Sheet columns of the worksheet is the amount to be reflected for Owner’s Capital on the Balance Sheet
False - reflected Owner’s Capital Balance
On the worksheet, the balance of the Owner’s Capital account is its ending amount for the period.
False - It is on the Statement of Changes in Equity
Financial Position may be assessed by referring to a Balance Sheet
True
When the Balance Sheet of the worksheet are Initially Footed, they should be in Balance.
False - After the Adjusted Entry, The Balance Sheet and Income Statement are not balanced
The purchase of equipment is an example of a Financing Activity
False - It is in the Investing Activities
Financial Statements cannot be prepared correctly until all accounts have been adjusted
True
The Balance Sheet is also known as the statement of Financial Position
True
A worksheet is more useful for a small entity than for a large one.
False - it is used by everyone
Total Assets, Total Liabilities and Owner’s Equity on the Balance Sheet are the same as the Totals of the Balance Sheet columns on the worksheet
False - They are not the same
The Heading for an Income Statement might include the line “As at December 31, 2021.”
False - For the month ending in December 31, 2021
The worksheet is prepared after the formal Adjusting and Closing Entries
False - The worksheet is prepared before the Adjusting Entry and Closing Entry
Paying taxes to the Government is an example of a Financing Activity.
False - It is an Operating Activity
The amount of withdrawals can be found on the worksheet
True
The purchase of land is an example of an Investing Activity
True
The Statement of Changes in Equity relates the income statement to the balance sheet by showing how the owner’s Capital account changed during the Accounting Period.
True
When the Income Statement columns of the worksheet are initially footed, they should be out of balance by the amount of profit or loss.
True
The Statement of Cash Flows discloses significant events related to the Operating, Investing, and Financing of the Business.
True
The Balance Sheet may be prepared by referring solely to the Balance Sheet columns of the worksheet.
False - it prepared on the Financial Statements
When Adjusting Entries are entered onto a worksheet, it is not necessary to record them in the General Journal.
False - it is necessary to record them in the General Journal
An important use of the worksheet is an aid in the preparation of Financial Statements
True
The Adjusted Trial Balance Columns of the worksheet are prepared by Combining the Unadjusted Trial Balance and Adjustments columns of the worksheet.
True
The Statement of Changes in Equity discloses withdrawals during period.
True
In the Accounting Cycle, Closing Entries are prepared before Adjusting Entries
False - Adjusting Entries are prepared first before Closing Entries
Trial Balance are prepared primarily to ensure that no entries have been omitted.
False - Trial Balance cannot detect those that are omitted.
The Income Summary account will appear on the Post Closing Trial Balance.
False - it will appear on the Closing Entries
The Post Closing Trial Balance will contain only Real Accounts
True
The final Trial Balance is called Post Closing Trial Balance
True
A Reversing Entry is a Journal Entry, which is the exact opposite of a related Adjusting Entry made at the end of the period.
True
The Post Closing Trial Balance contains Asset, Liability, Withdrawal, and Capital Account.
False - it does not include Withdrawals
Closing Entries clear Income and Expense Accounts at the end of the period
True
Nominal Account Balances are reduced to Zero Balances by Closing Entries
True
In the Accounting Cycle, Information from Source Documents is Initially Recorded in the Journal
True
Depreciation Expense - Building is a permanent account
False - Expenses are Nominal Accounts
The Adjusting Entries involving Rent Receivable and Salaries Payable could be reversed
True
The balance of all the accounts that appear on a Balance Sheet are the same on the Adjusted Trial Balance as they are on a Post Closing - Trial Balance
False - They are different
The Adjusting Entries involving Depreciation Expense - Building and Supplies Expense could be Reverse
False - Depreciation Expense and Supplies Expense can not be reversed
All Nominal Accounts must be closed before the Income Summary Account can be closed
False - Withdrawal Account is closed after the Income Summary Account is closed
After all Closing Entries have been entered and posted, the Balance of the Income Summary account will be zero
True
Closing Entries result in the transfer of profit or loss into the Owner’s Capital Account
True
The Post Closing Balance will have fewer accounts than the Adjusted Trial Balance
True
Closing Entries deal primarily with the Balances of Real Accounts
False - it deals with Nominal’s Account
The only accounts that are closed are Income Statement Accounts
False - also Withdrawal’s
