3.When closing entries are made:Immersive Reader
(1 Point)
All ledger accounts are closed to start the new accounting
period.
All real accounts are closed but not the nominal
accounts.
All balance sheet accounts are closed.
All temporary accounts are closed but not the permanent
accounts.
All permanent accounts are closed but not the nominal
accounts.
4.A wholesaler is an intermediary that buys products from
manufacturers or other wholesalers and sells them to
consumers.Immersive Reader
(1 Point)
True
False
5.The Merchandise Inventory account balance at the end of one
period is equal to the amount of beginning merchandise inventory
for the next period.Immersive Reader
(1 Point)
True
False
6.A company had sales of $695,000 and its cost of goods sold
of $278,000. Its gross margin equals:Immersive Reader
(1 Point)
$ 695,000.
$ 417,000.
$ 278,000.
$(417,000).
$ 973,000.
7.Beginning merchandise inventory plus the net cost of
purchases is the merchandise available for sale.Immersive
Reader
(1 Point)
True
False
8.The recurring steps performed each accounting period,
starting with analyzing and recording transactions in the journal
and continuing through the post-closing trial balance, are referred
to as the:Immersive Reader
(1 Point)
Accounting cycle.
Accounting period.
Operating cycle.
Closing cycle.
Natural business year.
9.The accrual basis of accounting reflects the principle that
revenue is recorded when it is earned, not when cash is
received.Immersive Reader
(1 Point)
True
False
10.Sales less sales discounts less sales returns and
allowances equals:Immersive Reader
(1 Point)
Net purchases.
Gross profit.
Net income.
Cost of goods sold.
Net sales.
11.Adjusting entries:Immersive Reader
(1 Point)
Affect both income statement and balance sheet accounts.
Affect only income statement accounts.
Affect only equity accounts.
Affect only cash flow statement accounts.
Affect only balance sheet accounts.
12.Cost of goods sold is reported on both the income statement
and the balance sheet.Immersive Reader
(1 Point)
True
False
13.Which of the following statements are true regarding the
closing process of a merchandiser?Immersive Reader
(1 Point)
Sales Discounts and Sales Returns and Allowances should be
credited; Cost of Goods Sold should be debited during
closing.
Sales Discounts, Sales Returns and Allowances and Cost of
Goods sold should all be debited during closing.
Sales Discounts, Sales Returns and Allowances and Cost of
Goods sold should all be credited during closing.
Sales Discounts and Sales Returns and Allowances should be
debited; Cost of Goods Sold should be credited during
closing.
Sales Discounts and Sales Returns and Allowances are not
closed. Cost of Goods Sold should be credited.
14.The revenue recognition principle is the basis for making
adjusting entries that pertain to unearned and accrued
revenues.Immersive Reader
(1 Point)
True
False
15.Prior to recording adjusting entries at the end of an
accounting period, some accounts may not show proper financial
statement amounts even though all transactions were correctly
recorded.Immersive Reader
(1 Point)
True
False
16.A broad principle that requires identifying the activities
of a business with specific time periods such as months, quarters,
or years is the:Immersive Reader
(1 Point)
Matching principle.
Going-concern principle.
Operating cycle of a business.
Time period principle.
Accrual basis of accounting.
17.Recording expenses early overstates current-period income;
recording expenses late understates current period income.Immersive
Reader
(1 Point)
True
False
18.Accrued expenses at the end of one period are expected to
result in cash payments in one or more future periods.Immersive
Reader
(1 Point)
True
False
19.Merchandise inventory:Immersive Reader
(1 Point)
Is a current asset.
Is classified with investments on the balance sheet.
Must be sold within one month.
Is a long-term asset.
Includes supplies.
20.Alpha Company had cash sales of $94,275, credit sales of
$83,450, sales returns and allowances of $1,700, and sales
discounts of $3,475. Alpha's net sales for this period
equal:Immersive Reader
(1 Point)
$176,025.
$177,725.
$ 94,275.
$172,550.
$174,250.
21.Cash sales shorten the operating cycle for a merchandiser;
credit purchases lengthen operating cycles.Immersive Reader
(1 Point)
True
False
22.Interim financial statements refer to financial
reports:Immersive Reader
(1 Point)
That are prepared before any adjustments have been
recorded.
Where the adjustment process is used to assign revenues to the
periods in which they are earned and to match expenses with
revenues.
Where revenues are reported on the income statement when cash
is received and expenses are reported when cash is paid.
That show the assets above the liabilities and the liabilities
above the equity.
That cover less than one year, usually spanning one, three, or
six-month periods.
23.Assets tied up in inventory are not productive
assets.Immersive Reader
(1 Point)
True
False
24.Cost of goods sold:Immersive Reader
(1 Point)
Is also called gross margin.
Is the term used for the cost of buying and preparing
merchandise for sale.
Is another term for merchandise sales.
Is another term for revenue.
Is a term only used by service firms.
25.Expenses that support the overall operations of a business
and include the expenses relating to accounting, human resource
management, and financial management are called:Immersive
Reader
(1 Point)
Purchasing expenses.
Selling expenses.
Nonoperating activities.
Cost of goods sold.
General and administrative expenses.
26.A perpetual inventory system requires updating of the
inventory account only at the beginning of an accounting
period.Immersive Reader
(1 Point)
True
False
27.Which of the following statements is incorrect?Immersive
Reader
(1 Point)
Accrued expenses and accrued revenues involve assets and
liabilities that had not previously been recorded.
Adjusting entries can be used to record both accrued expenses
and accrued revenues.
Prepaid expenses, depreciation, and unearned revenues involve
previously recorded assets and liabilities.
Adjusting entries affect the cash account.
Prepaid expenses, depreciation, and unearned revenues often
require adjusting entries to record the effects of the passage of
time.
28.Western Company has an annual reporting period that runs
from July 1st through June 30th. Based on this information which of
the following is a true statement?Immersive Reader
(1 Point)
Western must prepare financial statements as of December 31
each year.
None of the options
Western probably has little seasonal variation in their
sales.
Western has adopted a fiscal year.
Western has violated the time period principle.
29.A company uses the perpetual inventory system and recorded
the following entry:
Accounts Payable 2,500
Inventory 50
Cash 2,450
This entry reflects a:Immersive Reader
(1 Point)
Sale.
Payment of the account payable and recognition of a cash
discount taken.
Purchase and recognition of a cash discount taken.
Purchase.
Return.
30.Acme Car Wash has a contract with a taxi company to clean
their vehicles. At the beginning of each month Acme bills the taxi
company for all taxis washed the previous month. An adjusting entry
is needed at the end of each month becauseImmersive Reader
(1 Point)
Acme needs to accrue this expense
Acme needs to defer this revenue
Acme will overstate their assets without the adjustment
Acme needs to accrue this revenue
Acme needs to defer this expense
31.The operating cycle for a merchandiser that sells only for
cash moves from:Immersive Reader
(1 Point)
Inventory to purchases of merchandise to cash sales.
Purchases of merchandise to inventory to accounts receivable
to cash sales.
Accounts receivable to inventory to cash sales.
Accounts receivable to purchases of merchandise to inventory
to cash sales.
Purchases of merchandise to inventory to cash sales.
32.Under the perpetual inventory system, the cost of
merchandise purchased is recorded in the Purchases
account.Immersive Reader
(1 Point)
True
False
33.A debit to Sales Returns and Allowances and a credit to
Accounts Receivable:Immersive Reader
(1 Point)
Is recorded when a customer takes a discount.
Recognizes that a customer returned merchandise and/or
received an allowance.
Reflects an increase in amount due from a customer.
All of the options are correct.
Requires a debit memorandum to recognize the customer's
return.
34.Since the revenue recognition principle requires that
revenues be earned, there are no unearned revenues in accrual
accounting.Immersive Reader
(1 Point)
True
False
35.Each choice below contains three of the steps found in the
accounting cycle. Which presents the given steps in the proper
sequence, first to last?Immersive Reader
(1 Point)
Prepare adjusted trial balance, Journalize, Close
Analyze transactions, Adjust, Close
Adjust, Analyze transactions, Close
Prepare post-closing trial balance, Prepare statements,
Close
Prepare statements, Post, Close
36.An adjusting entry often includes an entry to
Cash.Immersive Reader
(1 Point)
True
False
37.A classified balance sheet:Immersive Reader
(1 Point)
Presents revenues, expenses, and net income.
Measures a company's ability to pay its bills on time.
Organizes assets and liabilities into important
subgroups.
Reports the effect of profit and dividends on retained
earnings.
Reports operating, investing, and financing activities.
38.The matching principle requires that revenue not be
assigned to the accounting period in which it is earned.Immersive
Reader
(1 Point)
True
False
39.A company had sales of $375,000 and its gross profit was
$157,500. Its cost of goods sold equals:Immersive Reader
(1 Point)
$ 375,000.
$ 532,500.
$(217,000).
$ 157,500.
$ 217,500.
40.The cash basis of accounting commonly results in financial
statements that are not comparable from period to period.Immersive
Reader
(1 Point)
True
False
41.A company purchased $1,800 of merchandise on December 5. On
December 7, it returned $200 worth of merchandise. On December 8,
it paid the balance in full, taking a 2% discount. The amount of
the cash paid on December 8 equals:Immersive Reader
(1 Point)
$1,600.
$1,564.
$1,800.
$ 200.
$1,568.
42.When preparing an unadjusted trial balance using a periodic
inventory system, the amount shown for Merchandise Inventory
is:Immersive Reader
(1 Point)
The ending inventory amount.
The beginning inventory amount.
Equal to the cost of goods purchased.
Equal to the cost of goods sold.
Equal to the gross profit.
43.A company paid $6,000 for a six-month insurance policy. The
policy coverage began on February 1. On February 28, $100 of
insurance expense must be recorded.Immersive Reader
(1 Point)
True
False
44.A company purchased $1,500 of merchandise on credit with
terms 3/15, n/30. How much will be debited to Accounts Payable if
the company pays $485 cash on this account within ten days?
(Company uses Gross Invoice method to record inventory
purchases)Immersive Reader
(1 Point)
$485
$470.45
$1,455
Nothing will be debited to Accounts Payable, the account
should be credited in this situation.
$500
45.The approach to preparing financial statements based on
recognizing revenues when they are earned and matching expenses to
those revenues is:Immersive Reader
(1 Point)
Cash basis accounting.
The time period principle.
Revenue basis accounting.
Accrual basis accounting.
The matching principle.
46.A company had expenses other than cost of goods sold of
$250,000. Determine sales and gross profit given cost of goods sold
was $100,000 and net income was $150,000.Immersive Reader
(1 Point)
Sales: $350,000; Gross Profit: $50,000.
Sales: $350,000; Gross Profit: $150,000.
Sales: $400,000; Gross Profit: $500,000.
Sales: $500,000; Gross Profit: $400,000.
Sales: $500,000; Gross Profit: $50,000.
47.The main purpose of adjusting entries is to:Immersive
Reader
(1 Point)
Record external transactions and events.
Recognize debts paid during the period.
Correct errors.
Record internal transactions and events.
Recognize assets purchased during the period.
48.A company purchased $4,000 worth of merchandise.
Transportation costs were an additional $350. The company later
returned $275 worth of merchandise and paid the invoice within the
2% cash discount period. The total amount paid for this merchandise
is:Immersive Reader
(1 Point)
$3,995.00.
$4,000.50.
$4,075.00.
$3,725.00.
$3,925.00.
49.Due to an oversight, a company made no adjusting entry for
accrued and unpaid employee wages of $24,000 on December 31. This
oversight would:Immersive Reader
(1 Point)
Overstate net income by $24,000.
Understate net income by $24,000.
Overstate assets by $24,000.
Understate assets by $24,000.
Have no effect on net income.
50.Adjusting entries are made after the preparation of
financial statements.Immersive Reader
(1 Point)
True
False
51.On October 15, a company received $15,000 cash as a down
payment on a consulting contract. The amount was credited to
Unearned Consulting Revenue. By October 31, 10% of the services
required by the contract were completed. The company will record
consulting revenue of $1,500 from this contract for
October.Immersive Reader
(1 Point)
True
False
52.A company records the fees for legal services paid in
advance by its clients in an account called Unearned Legal Fees. If
the company fails to make the end-of-period adjusting entry to
record the portion of these fees that has been earned, one effect
will be:Immersive Reader
(1 Point)
An understatement of liabilities.
An overstatement of equity.
An understatement of equity.
An overstatement of assets.
An understatement of assets.
Submit