Accounting Exam M/C And T/F With Complete Solutions 2024

Accounting Exam M/C And T/F With Complete Solutions 2024The cash basis of accounting is more useful than the accrual basis as the balance in the bank account is always reflected in the financial statements. T/F? - correct answer-F An expense is recognized when there is an increase in assets or a decrease in liabilities from consuming a service or asset in the company's business activities with its customers. T/F? - correct answer-F Revenue recognition is restricted to situations when the service has been performed and the revenue can be reliably measured and a collection is reasonably certain. T/F? - correct answer-T Prepayments are always made with cash. T/F? - correct answer-F Unearned revenue is a cash payment which has been received in advance and it is recorded as an asset of the business. T/F? - correct answer-F Unearned revenue is a prepayment that requires an adjusting entry when services are performed. T/F? - correct answer-T To decrease an unearned revenue account, a credit entry to that account must be made. T/F? - correct answer-F The straight-line method of depreciation will allocate a portion of the cost of the asset to each year of useful life of the asset. T/F? - correct answer-T Accumulated depreciation is a contra asset account. T/F? - correct answer-T Accrued expenses are expenses that have been incurred but have not been recorded in the records yet. T/F? - correct answer-T If an Interest Expense account is debited in an adjusting entry, then the account credited will be Interest Revenue. T/F? - correct answer-F If an Interest Receivable account is debited in an adjusting entry, then the account credited will be Interest Revenue. T/F? - correct answer-T In the adjusted trial balance, if some of your adjusting entries have been posted twice, the debit totals will equal the credit totals on the trial balance. T/F? - correct answer-T An adjusted trial balance is necessary to prepare financial statements. T/F? - correct answer-T Revenue will be recognized when the following occurs as a result of a business activity with a customer. a. There is an increase in assets. b. There is an increase in liabilities. c. There is a decrease in assets. d. None of the above. - correct answer-A Expenses should be recognized, excluding transactions with owners, when which of the following occurs? a. There is an increase in assets. b. There is an increase of liabilities. c. There is a decrease in liabilities. d. None of the above. - correct answer-B A company spends $10 million dollars for an office building. Over what period of time should the cost be written off? a. when the $10 million is expended in cash b. all in the first year c. over the useful life of the building d. over the physical life of the building - correct answer-C Expense recognition is tied to revenue recognition when a. cash has been received for the revenue. b. efforts should be matched with accomplishments. c. when there is a direct association with the costs incurred and when the revenue is earned. d. cash payments have been expended in the same accounting period. - correct answer-C A dress shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and payment from the customer is received on December 10. The dress shop follows GAAP and recognizes revenue accordingly. When is the $1,000 considered to be earned? a. December 5 b. December 10 c. November 30 d. December 1 - correct answer-C A furniture factory's employees work overtime to finish an order that is sold on February 28. The office sends a statement to the customer in early March and payment is received by mid-March. According to the expense recognition criteria the overtime wages should be expensed in: a. February. b. March. c. the period when the workers receive their cheques.