Accounting Cycle Test Reviewer
Answer key found below
I. Multiple Choice
- Choose the best answer
1. Which accounting principle is the basis for adjusting entries?
a) Cost Principle
b) Matching Principle
c) Going Concern Principle
d) Conservatism Principle
2. Paying for next month's rent in advance is an example of:
a) An accrued expense
b) A prepaid expense
c) Unearned revenue
d) An accrued revenue
3. Salaries earned by employees but not yet paid at the end of the period are:
a) Prepaid expenses
b) Accrued expenses
c) Unearned revenue
d) Accrued revenue
4. Receiving cash for services to be performed in the future results in:
a) Accrued revenue
, b) Unearned expense
c) Unearned revenue
d) Prepaid revenue
5. Which of the following is NOT a step in the closing process?
a) Closing revenue accounts
b) Closing expense accounts
c) Preparing adjusting entries
d) Closing withdrawals
6. The Income Summary account is used in which part of the accounting cycle?
a) Adjusting entries
b) Closing entries
c) Post-closing trial balance
d) Preparing the trial balance
7. What type of accounts appear on the post-closing trial balance?
a) Temporary accounts only
b) Permanent accounts only
c) Both temporary and permanent accounts
d) Nominal accounts
8. Which of the following is a permanent account?
a) Salaries Expense
b) Rent Revenue
c) Withdrawals
Answer key found below
I. Multiple Choice
- Choose the best answer
1. Which accounting principle is the basis for adjusting entries?
a) Cost Principle
b) Matching Principle
c) Going Concern Principle
d) Conservatism Principle
2. Paying for next month's rent in advance is an example of:
a) An accrued expense
b) A prepaid expense
c) Unearned revenue
d) An accrued revenue
3. Salaries earned by employees but not yet paid at the end of the period are:
a) Prepaid expenses
b) Accrued expenses
c) Unearned revenue
d) Accrued revenue
4. Receiving cash for services to be performed in the future results in:
a) Accrued revenue
, b) Unearned expense
c) Unearned revenue
d) Prepaid revenue
5. Which of the following is NOT a step in the closing process?
a) Closing revenue accounts
b) Closing expense accounts
c) Preparing adjusting entries
d) Closing withdrawals
6. The Income Summary account is used in which part of the accounting cycle?
a) Adjusting entries
b) Closing entries
c) Post-closing trial balance
d) Preparing the trial balance
7. What type of accounts appear on the post-closing trial balance?
a) Temporary accounts only
b) Permanent accounts only
c) Both temporary and permanent accounts
d) Nominal accounts
8. Which of the following is a permanent account?
a) Salaries Expense
b) Rent Revenue
c) Withdrawals
