Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
Chapter
02 Review of the Accounting
Process
True / False Questions
1. Owners' equity can be expressed as assets minus liabilities.
True False
2. Debits increase asset accounts and decrease liability accounts.
True False
3. Balance sheet accounts are referred to as temporary accounts because their
balances are always changing.
True False
4. After an unadjusted trial balance is prepared, the next step in the
accounting processing cycle is the preparation of financial
statements.
True False
5. Adjusting journal entries are required to comply with the realization and
matching principles.
True False
6. Accruals occur when the cash flow precedes either revenue or expense
recognition.
True False
7. The adjusted trial balance contains only permanent accounts.
True False
8. The income statement summarizes the operating activity of a firm at a
particular point in time.
True False
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
9. The balance sheet can be considered a change or flow statement.
True False
10. The statement of cash flows summarizes transactions that caused cash
to change during a reporting period.
True False
11. The statement of shareholders' equity discloses the changes in the
temporary shareholders' equity accounts.
True False
12. The post-closing trial balance contains only permanent accounts.
True False
13. The closing process brings all temporary accounts to a zero balance and
updates the balance in the retained earnings account.
True False
14. A reversing entry at the beginning of a period for salaries would include a
debit to salaries expense.
True False
15. The sale of merchandise on account would be recorded in a sales journal.
True False
16. The payment of cash to a supplier would be recorded in a purchases journal.
True False
Multiple Choice Questions
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
17. The accounting equation can be stated as:
A. A + L -
OE = 0.
B. A - L +
OE = 0.
C. -A + L - OE
= 0.
D. A - L - OE
= 0.
18. Examples of external transactions include all of the following except:
A. Paying
employees
salaries.
B. Purchasin
g
equipmen
t.
C. Depreciatin
g
equipment.
D. Collecting
a
receivable
.
19. Examples of internal transactions include all of the following except:
A. Writing off an
uncollectible account.
B. Recording the expiration of
prepaid insurance.
C. Recording
unpaid wages.
D. Paying wages to
company employees.
20. XYZ Corporation receives $100,000 from investors for issuing them shares of
its stock. XYZ's journal entry to record this transaction would include a:
A. Debit to
investment
s.
B. Credit to
retained
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
Chapter
02 Review of the Accounting
Process
True / False Questions
1. Owners' equity can be expressed as assets minus liabilities.
True False
2. Debits increase asset accounts and decrease liability accounts.
True False
3. Balance sheet accounts are referred to as temporary accounts because their
balances are always changing.
True False
4. After an unadjusted trial balance is prepared, the next step in the
accounting processing cycle is the preparation of financial
statements.
True False
5. Adjusting journal entries are required to comply with the realization and
matching principles.
True False
6. Accruals occur when the cash flow precedes either revenue or expense
recognition.
True False
7. The adjusted trial balance contains only permanent accounts.
True False
8. The income statement summarizes the operating activity of a firm at a
particular point in time.
True False
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
9. The balance sheet can be considered a change or flow statement.
True False
10. The statement of cash flows summarizes transactions that caused cash
to change during a reporting period.
True False
11. The statement of shareholders' equity discloses the changes in the
temporary shareholders' equity accounts.
True False
12. The post-closing trial balance contains only permanent accounts.
True False
13. The closing process brings all temporary accounts to a zero balance and
updates the balance in the retained earnings account.
True False
14. A reversing entry at the beginning of a period for salaries would include a
debit to salaries expense.
True False
15. The sale of merchandise on account would be recorded in a sales journal.
True False
16. The payment of cash to a supplier would be recorded in a purchases journal.
True False
Multiple Choice Questions
, Full file at http://testbankscafe.eu/Test-Bank-for-Intermediate-Accounting-7th-Edition-Spiceland,-Sepe,-Nelson
Test Bank for Intermediate Accounting 7th Edition Spiceland, Sepe, Nelson
17. The accounting equation can be stated as:
A. A + L -
OE = 0.
B. A - L +
OE = 0.
C. -A + L - OE
= 0.
D. A - L - OE
= 0.
18. Examples of external transactions include all of the following except:
A. Paying
employees
salaries.
B. Purchasin
g
equipmen
t.
C. Depreciatin
g
equipment.
D. Collecting
a
receivable
.
19. Examples of internal transactions include all of the following except:
A. Writing off an
uncollectible account.
B. Recording the expiration of
prepaid insurance.
C. Recording
unpaid wages.
D. Paying wages to
company employees.
20. XYZ Corporation receives $100,000 from investors for issuing them shares of
its stock. XYZ's journal entry to record this transaction would include a:
A. Debit to
investment
s.
B. Credit to
retained
