Solved by verified expert :100.0/ 100.0 Points
Question 1 of 20 5.0/
5.0 Points
On April 1, Bear, Inc. paid $2,400 for an insurance premium
on a three-year insurance policy. At the end of December, Bear’s fiscal
year-end, what should be the balance in the prepaid insurance account?
A.$2,700
B.$3,000
C.$2,400
D.$1,800
Question 2 of 20 5.0/
5.0 Points
Eagle Eye, Inc., a corporation, received an additional
investment of $6,000 cash in exchange for shares of capital stock. How does
this transaction affect Eagle Eye’s accounts?
A.Increase in stock expense and decrease cash
by $6,000 each
B.Increase capital stock and increase cash by $6,000 each
C.Increase capital stock and increase revenue
by $6,000 each
D.Increase capital stock and decrease
retained earnings by $6,000 each
Question 3 of 20 5.0/
5.0 Points
Under the accrual basis of accounting, net cash flows from
operating activities on the statement of cash flows will normally be the same
as net income.
A. True
B. False
Question 4 of 20 5.0/
5.0 Points
Merchandise inventory shrinkage will decrease Retained
Earnings.
A. True
B. False
Question 5 of 20 5.0/
5.0 Points
The __________ is prepared with various sections,
subsections, and captions that aid in its interpretation and analysis.
A.accounting equation
B.retained earnings statement
C.intangible asset section
D.classified balance sheet
Question 6 of 20 5.0/
5.0 Points
Flyer Co. billed a client for flying lessons given in
January. The payment was received in February. Under the accrual basis of
accounting, when should Flyer Co. record the revenue?
A.January
B.February
C.Some in January and some in February
D.Flyer Co. should not record any revenue
Question 7 of 20 5.0/
5.0 Points
The merchandise inventory account is found on the balance
sheet.
A. True
B. False
Question 8 of 20 5.0/
5.0 Points
The accrual basis of accounting requires revenue to be
recorded when the service is performed.
A. True
B. False
Question 9 of 20 5.0/
5.0 Points
Depreciation Expense and Accumulated Depreciation are
classified, respectively, as:
A.expense and contra asset.
B.asset and contra liability.
C.revenue and asset.
D.contra asset and expense.
Question 10 of 20 5.0/
5.0 Points
East, Inc. had beginning inventory of $10,000, purchases of
$25,000, and ending inventory of $5,000. What is East’s cost of merchandise
sold?
A.$10,000
B.$25,000
C.$5,000
D.$30,000
Question 11 of 20 5.0/
5.0 Points
Which transaction would be recorded in a cash basis system
of accounting?
A.Purchase of equipment by signing a note
B.Purchase of supplies on credit
C.Sale of goods against a note
D.Sale of goods for cash
Question 12 of 20 5.0/
5.0 Points
Which expenses are subtracted from gross profit to arrive at
income from operations?
A.All expenses
B.Cost of merchandise sold
C.Operating expenses
D.Sales discounts
Question 13 of 20 5.0/
5.0 Points
Unearned revenue is what type of an account?
A.Asset
B.Revenue
C.Stockholders’ equity
D.Liability
Question 14 of 20 5.0/
5.0 Points
In credit terms of 1/10, n/30, the “10” represents the:
A.number of days in the discount period.
B.full amounts of the invoice.
C.number of days when the entire amount is
due.
D.percent of the cash discount.
Question 15 of 20 5.0/
5.0 Points
The credit terms of a sale are normally indicated on a(n):
A.purchase order.
B.invoice.
C.bill of lading.
D.check.
Question 16 of 20 5.0/
5.0 Points
The amount of the total cash paid to the seller for
merchandise purchased would normally include:
A.only the list price.
B.only the sales tax.
C.the list price plus the sales tax.
D.the list price less the sales tax.
Question 17 of 20 5.0/
5.0 Points
Accrued expenses are expenses that have been incurred and
paid.
A. True
B. False
Question 18 of 20 5.0/
5.0 Points
Liabilities that will not be due for more than one year are
called long-term liabilities.
A. True
B. False
Question 19 of 20 5.0/
5.0 Points
Cost of Merchandise Sold is used in accounting for
transactions by sellers of merchandise.
A. True
B. False
Question 20 of 20 5.0/
5.0 Points
Which of the following accounts would likely be included in
a deferral adjusting entry?
A.Interest Revenue
B.Unearned Revenue
C.Salaries Payable
D.Accounts Receivable
