1.Making insurancepayments in advance is an example of: An accrued revenue transaction. An accrued expense transaction. A deferred revenue transaction. A deferred expense transaction. Question 2. 2.In its 2004 annualreport, Apple Computer reported the following in one of its disclosurenotes: “Warranty Expense: The Company provides currently for theestimated cost for product warranties at the time the related revenue isrecognized.” This note exemplifies Apple’s use of: Conservatism The matching principle Realization principle Full disclosure principle Question 3. 3.The purpose ofclosing entries is to transfer: Accounts receivable to retained earnings when an account is fully paid. Balances in temporary accounts to a permanentaccount. Inventory to cost of goods sold when merchandise is sold. Assets and liabilities when operations are discontinued. Question 4. 4.The best argumentin support of historical cost information is: Relevance. Predictive quality for future cash flows. Materiality. Verifiability. Question 5. 5.Rent collected inadvance is: An asset account in the balance sheet. A liability account in the balance sheet. A shareholders’ equity account in the balance sheet. A temporary account, not in the balance sheet at all. Question 6. 6.Which of thefollowing accounts are closed at the end of the accounting period? Allowance for uncollectibles Unearned revenue Retained earnings Provision for income taxes Question 7. 7.The principalconcern with accounting for related party transactions is: The size of the transactions. Differences between economic substance and legalform. The absence of legally binding contracts. The lack of accurate data to record transactions. Question 8. 8.The adjusting entryrequired to record accrued expenses includes: A credit to cash. A debit to an asset. A credit to an asset. A credit to liability. Question 9. 9.When converting anincome statement from a cash basis to an accrual basis, cash received forservices: Exceed service revenue. May exceed or be less than service revenue. Is less than service revenue. Equals service revenue. Question 10. 10.Accrued expenses: Are generally paid in services rather than cash. Result from payment before services are received. Result from services received before payment. Are deferred charges to expense.
1.Making insurance
payments in advance is an example of:
An accrued revenue transaction.
An accrued expense transaction.
A deferred revenue transaction.
A deferred expense transaction.
Question 2. 2.In its 2004 annual
report, Apple Computer reported the following in one of its disclosure
notes: “Warranty Expense: The Company provides currently for the
estimated cost for product warranties at the time the related revenue is
recognized.” This note exemplifies Apple’s use of:
Conservatism
The matching principle
Realization principle
Full disclosure principle
Question 3. 3.The purpose of
closing entries is to transfer:
Accounts receivable to
Balances in temporary accounts to a permanent
account.
Inventory to cost of goods sold when merchandise is sold.
Assets and liabilities when operations are discontinued.
Question 4. 4.The best argument
in support of historical cost information is:
Relevance.
Predictive quality for future cash flows.
Materiality.
Verifiability.
Question 5. 5.Rent collected in
advance is:
An asset account in the balance sheet.
A liability account in the balance sheet.
A shareholders’ equity account in the balance sheet.
A temporary account, not in the balance sheet at all.
Question 6. 6.Which of the
following accounts are closed at the end of the accounting period?
Allowance for uncollectibles
Unearned revenue
Retained earnings
Provision for income taxes
Question 7. 7.The principal
concern with accounting for related party transactions is:
The size of the transactions.
Differences between economic substance and legal
form.
The absence of legally binding contracts.
The lack of accurate data to record transactions.
Question 8. 8.The
required to record accrued expenses includes:
A credit to cash.
A debit to an asset.
A credit to an asset.
A credit to liability.
Question 9. 9.When converting an
income statement from a cash basis to an accrual basis, cash received for
services:
Exceed service revenue.
May exceed or be less than service revenue.
Is less than service revenue.
Equals service revenue.
Question 10. 10.Accrued expenses:
Are generally paid in services rather than cash.
Result from payment before services are received.
Result from services received before payment.
Are deferred charges to expense.
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