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Financial Accounting and Reporting > Midterms > Flashcards

Midterms Flashcards

1
Q

The Adjusting Entry to allocate part of the cost of a one-year fire insurance policy to expense will cause total asset to increase.

A

False

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2
Q

A Fiscal Period must begin on January 1.

A

False

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3
Q

A company’s fiscal year must correspond to the calendar year.

A

False

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4
Q

The Adjusting Entry to recognize an expense which is unrecorded and unpaid will cause total asset to increase.

A

False

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5
Q

Revenue cannot be recognized unless delivery of goods has occurred of services been rendered.

A

True

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6
Q

Every Adjusting Entry must change both Income Statement account and a Balance Sheet account.

A

True

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7
Q

Revenue is equal to the cash received by a company during an accounting period

A

False - Revenue is not always involving cash

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8
Q

Failure to record Adjusting Entry for Depreciation results in Assets and Owner’s Equity being overstated on the Balance Sheet

A

True

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9
Q

Recording Incurred but unpaid expenses is an example of an accrual

A

True

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10
Q

Adjusting Entries are useful in apportioning cost among two or more accounting periods

A

True

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11
Q

The Adjustment to record Depreciation of property and equipment consist of a debit to Depreciation Expense and a credit to Accumulated Depreciation

A

True

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12
Q

The amount of Accrued Revenues is recorded by debiting an Asset Account and crediting an Income Account

A

True

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13
Q

If all transactions were originally recorded in conformity with GAAP, there would be no need for adjusting entries at the end of the period.

A

False

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14
Q

In recording the Adjusting Entries for Depreciation, both accounts involved are increased.

A

True

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15
Q

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.

A

True

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16
Q

Book value is the original cost of a building less depreciation for the year.

A

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

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17
Q

The Adjusting Entry to recognize earned revenues which was received in advance will cause total liabilities to decrease.

A

True

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18
Q

When the reduction in prepaid expenses is not properly recorded this causes the asset accounts and expense accounts to be understated.

A

False - Expenses Understated and Asset Overstated

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19
Q

The Adjusting Entry to recognize earned commission revenues not previously recorded or billed will cause total assets to increase.

A

False

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20
Q

Accrued Revenue is a term used to describe revenue that has been received but not yet earned.

A

False

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21
Q

And Adjusting Entry includes at least one balance sheet account and at least one income statement account.

A

True

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22
Q

Failure to record the Adjusting Entry for Depreciation will overstate assets on the balance sheet.

A

True

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23
Q

As equipment is depreciated, its book value increases and it’s accumulated depreciation increases

A

False

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24
Q

Failure to record the Adjusting Entry for Accrued Salaries results in the current year’s profit being overstated.

A

True

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25
Q

In reading the Adjusting Entry for Accrued Salaries, all the accounts involved are decreased

A

False

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26
Q

Accounting Periods should be equal length to facilitate comparisons between periods.

A

True

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27
Q

Acquiring a computer for cash is just exchanging one asset for another and will not result in an expense even in future periods.

A

False

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28
Q

All decreases in Owner’s Equity are a result of expenses.

A

False - Withdrawals

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29
Q

The Owner’s Personal Withdrawals for the year cause a decrease in profit.

A

False

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30
Q

The expiration of usefulness of equipment during an accounting period is called depcreciation.

A

True

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31
Q

Working papers provide a written record of the work performed by the accountant or auditor

A

True

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32
Q

The Account Commissions Earned would appear on the Balance Sheet.

A

False - Income Statement

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33
Q

The amount for Owner’s Withdrawals will appear in the Income Statement columns of a worksheet.

A

False - Balance Sheet

34
Q

The worksheet shall be prepared after the formal financial statements have been prepared.

A

False - Worksheet is prepared before the Financial Statement

35
Q

The Accounts Wages Payable would appear on the income statement

A

False

36
Q

Buying and producing goods and services are examples of Operating Activities

A

True

37
Q

The worksheet is a type of Accountant’s working paper

A

True

38
Q

The balances of the Accumulated Depreciation Accounts will appear on the credit side of the worksheet’s Balance Sheet columns

A

True

39
Q

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

A

False - reflected Owner’s Capital Balance

40
Q

On the worksheet, the balance of the Owner’s Capital account is its ending amount for the period.

A

False - It is on the Statement of Changes in Equity

41
Q

Financial Position may be assessed by referring to a Balance Sheet

A

True

42
Q

When the Balance Sheet of the worksheet are Initially Footed, they should be in Balance.

A

False - After the Adjusted Entry, The Balance Sheet and Income Statement are not balanced

43
Q

The purchase of equipment is an example of a Financing Activity

A

False - It is in the Investing Activities

44
Q

Financial Statements cannot be prepared correctly until all accounts have been adjusted

A

True

45
Q

The Balance Sheet is also known as the statement of Financial Position

A

True

46
Q

A worksheet is more useful for a small entity than for a large one.

A

False - it is used by everyone

47
Q

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

A

False - They are not the same

48
Q

The Heading for an Income Statement might include the line “As at December 31, 2021.”

A

False - For the month ending in December 31, 2021

49
Q

The worksheet is prepared after the formal Adjusting and Closing Entries

A

False - The worksheet is prepared before the Adjusting Entry and Closing Entry

50
Q

Paying taxes to the Government is an example of a Financing Activity.

A

False - It is an Operating Activity

51
Q

The amount of withdrawals can be found on the worksheet

A

True

52
Q

The purchase of land is an example of an Investing Activity

A

True

53
Q

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.

A

True

54
Q

When the Income Statement columns of the worksheet are initially footed, they should be out of balance by the amount of profit or loss.

A

True

55
Q

The Statement of Cash Flows discloses significant events related to the Operating, Investing, and Financing of the Business.

A

True

56
Q

The Balance Sheet may be prepared by referring solely to the Balance Sheet columns of the worksheet.

A

False - it prepared on the Financial Statements

57
Q

When Adjusting Entries are entered onto a worksheet, it is not necessary to record them in the General Journal.

A

False - it is necessary to record them in the General Journal

58
Q

An important use of the worksheet is an aid in the preparation of Financial Statements

A

True

59
Q

The Adjusted Trial Balance Columns of the worksheet are prepared by Combining the Unadjusted Trial Balance and Adjustments columns of the worksheet.

A

True

60
Q

The Statement of Changes in Equity discloses withdrawals during period.

A

True

61
Q

In the Accounting Cycle, Closing Entries are prepared before Adjusting Entries

A

False - Adjusting Entries are prepared first before Closing Entries

62
Q

Trial Balance are prepared primarily to ensure that no entries have been omitted.

A

False - Trial Balance cannot detect those that are omitted.

63
Q

The Income Summary account will appear on the Post Closing Trial Balance.

A

False - it will appear on the Closing Entries

64
Q

The Post Closing Trial Balance will contain only Real Accounts

A

True

65
Q

The final Trial Balance is called Post Closing Trial Balance

A

True

66
Q

A Reversing Entry is a Journal Entry, which is the exact opposite of a related Adjusting Entry made at the end of the period.

A

True

67
Q

The Post Closing Trial Balance contains Asset, Liability, Withdrawal, and Capital Account.

A

False - it does not include Withdrawals

68
Q

Closing Entries clear Income and Expense Accounts at the end of the period

A

True

69
Q

Nominal Account Balances are reduced to Zero Balances by Closing Entries

A

True

70
Q

In the Accounting Cycle, Information from Source Documents is Initially Recorded in the Journal

A

True

71
Q

Depreciation Expense - Building is a permanent account

A

False - Expenses are Nominal Accounts

72
Q

The Adjusting Entries involving Rent Receivable and Salaries Payable could be reversed

A

True

73
Q

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

A

False - They are different

74
Q

The Adjusting Entries involving Depreciation Expense - Building and Supplies Expense could be Reverse

A

False - Depreciation Expense and Supplies Expense can not be reversed

75
Q

All Nominal Accounts must be closed before the Income Summary Account can be closed

A

False - Withdrawal Account is closed after the Income Summary Account is closed

76
Q

After all Closing Entries have been entered and posted, the Balance of the Income Summary account will be zero

A

True

77
Q

Closing Entries result in the transfer of profit or loss into the Owner’s Capital Account

A

True

78
Q

The Post Closing Balance will have fewer accounts than the Adjusted Trial Balance

A

True

79
Q

Closing Entries deal primarily with the Balances of Real Accounts

A

False - it deals with Nominal’s Account

80
Q

The only accounts that are closed are Income Statement Accounts

A

False - also Withdrawal’s

Financial Accounting and Reporting (1 decks)

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