ACC 556 Week 2 Homework Chapter 3 and 4

CHAPTER 3

1. Economic events that require recording in the financial statements are called accounting transactions.


2. An account is often referred to as a T-account because of the way it is constructed.


3. Revenues are a subdivision of stockholders’ equity.


4. Salaries and wages payable is a type of expense.


5. Operating activities are the types of activities the company performs to generate profits.


6. If total liabilities decreased by $4,000, then


7. An expense


8. Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?


9. Which statement about an account is true?


10. Which one of the following represents the expanded basic accounting equation?


11. Which of the following is not an example of a source document that provides evidence of a transaction?


12. The primary purpose of the trial balance is to


13. Which of the following statements is not true?


14. All of the following are characteristics of every accounting information system except it is a system


15. On June 1, 2014, England Inc. reported a cash balance of $21,000. During June, England made deposits of $8,000 and made disbursements totaling $24,000. What is the cash balance at the end of June?


16. All of the following statements regarding the double-entry system are true except


17. Borrowing money and issuing shares of stock are


18. Which statement is incorrect?


19. Match the items below by entering the appropriate code letter in the space provided.

CHAPTER 4

1. The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied.


2. An adjusting entry to a prepaid expense is required to recognize expired expenses.


3. Unearned revenue is a prepayment that requires an adjusting entry when services are performed.


4. When closing entries are prepared, each income statement account is closed directly to retained earnings.


5. The accounting cycle begins with the journalizing of the transactions.


6. Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns.


7. A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be recognized?


8. Which statement is correct?


9. Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.
   
   Cash received from customers                        $48,000
   
   Accounts receivable                                          12,000
   
   Cash paid for expenses                                     26,000
   
   Accounts payable (related to expenses)             3,000
   
   Prepaid rent for next period                                 7,000


10. Accrued expenses are:


11. If a resource has been consumed but a bill has not been received at the end of the accounting period, then:


12. Depreciation is the process of:


13. If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month’s financial statements?


14. Why do generally accepted accounting principles require the application of the revenue recognition principle?


15. Which of the following would not result in unearned revenue?


16. Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause:


17. At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?


18. Can financial statements be prepared directly from the adjusted trial balance?


19. Which statement is correct concerning the adjusted trial balance?


20. Match the items below by entering the appropriate code letter in the space provided.

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ACC 556 Week 2 Homework Chapter 3 and 4

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ACC 556 Week 2 Homework Chapter 3 and 4