Accounting Systems Financial Statement Practice

Question Description

I’m working on a accounting practice test / quiz and need guidance to help me understand better.

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CHAPTER QUIZ True or False 1. Accrued expenses are those that grow or increase gradually over time. a. True b. False 2. Employees for the Saginaw Corporation earn a salary of $8,000 per day, an amount that the accounting system recognizes automatically at the end of each day. If no salary is paid for the last nine days of the year, an adjusting entry is required before financial statements can be prepared. a. True b. False 3. In producing financial statements for the Day Corporation, rent expense is accidentally reported as an asset rather than an expense. As a result, the balance sheet will not balance. a. True b. False 4. A company owes $9,000 in interest on a note payable at the end of the current year. The accountant accidentally overlooks that information and no adjusting entry is made. As a result, reported net income will be overstated for that period. a. True b. False 5. According to U.S. GAAP, revenue cannot be recorded until cash is collected. a. True b. False 6. An accrued revenue is one that is earned gradually over time. a. True b. False 7. Only permanent accounts are closed at the end of the financial accounting process each year. a. True b. False _____________________________________________________________________________ Multiple Choice 8. 9. What is the account used in financial accounting to record debts incurred resulting from the acquisition of inventory and supplies? a) Gross profit b) Accounts receivable c) Accounts payable d) Notes payable Starting on December 21, Year One, the Shakespeare Corporation begins to incur an expense of $1,000 per day. By the end of the calendar year, the company owes the employees $11,000. What is the proper adjusting entry the company makes on December 31, Year One? a) Debit salary expense and credit cash for $11,000. b) Debit cash and credit salary expense for $11,000. c) Debit salary payable and credit salary expense for $11,000. d) Debit salary expense and credit salary payable for $11,000. 10. Starting on December 21, Year One, the Shakespeare Corporation begins to incur an expense of $1,000 per day. On January 21, Year Two, the company makes a payment of $31,000. The company made the proper adjusting entry on December 31. When the payment was eventually made, what account or accounts were debited? a) Expense was debited for $31,000. b) A liability was debited for $31,000. c) Expense was debited for $11,000, and a liability was debited for $20,000. d) Expense was debited for $20,000, and a liability was debited for $11,000. 11. What is the purpose of closing entries? a) Closing entries are a method of resetting specific accounts to a zero balance in order for the accounting system to measure the changes in that account for a one year period of time. b) Closing entries are a system of resetting balance sheet accounts to zero to recognize the payment of any liabilities. c) Closing entries are a method of recognizing revenue and expense accounts in the proper period under accrual accounting. d) Closing entries are a method of moving permanent balance sheet accounts to the retained earnings account. 12. Which of the following accounts is closed at the end of the year after financial statements are produced? a) Accounts receivable b) Accounts payable c) Cost of goods sold d) Unearned revenue.

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