Generally Accepted Accounting Principles (GAAP) allow companies to issue financial statements, using either the cash basis or the accrual basis of accounting, depending on their needs.

There are a total of 25 questions, each worth 4 points. The computer will automatically grade the true/false and multiple-choice questions, but grading will not be complete until your instructor manually grades the short-answer questions. Your instructor may grant partial credit on short-answer questions for less-than-complete answers.

You can take the quiz only once. You can save each question after answering, and you can save the quiz before you submit it. Once you have submitted the quiz, you will receive a score and can compare your answers to the correct answers.

True or False

Indicate whether the following statements are true or false.

Question 1 (4 points)

Generally Accepted Accounting Principles (GAAP) allow companies to issue financial statements, using either the cash basis or the accrual basis of accounting, depending on their needs.

Question 1 options:

	True
	False

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Question 2 (4 points)

Adjusting entries are done to make sure that expenses and revenues are recorded in the proper accounting period.

Question 2 options:

	True
	False

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Question 3 (4 points)

A single journal entry must debit only one account and credit only one account for the same amount so that the entry is in balance.

Question 3 options:

	True
	False

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Question 4 (4 points)

The current ratio is cash divided by current liabilities.

Question 4 options:

	True
	False

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Question 5 (4 points)

Materiality is subjective. One company may consider $1,000 material and another company may not.

Question 5 options:

	True
	False

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Multiple Choice

Select the best answer for each of the following questions.

Question 6 (4 points)

Revenues are recorded when _______________.

Question 6 options:

	a check is received from a customer
	goods or services are delivered to the customer
	a contract is signed
	the check has cleared and the money is available for use

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Question 7 (4 points)

Which of the following is NOT a liability?

Question 7 options:

	unearned revenue
	accounts payable
	accumulated depreciation
	long-term debt

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Question 8 (4 points)

Management failing to reveal a default on a loan agreement will have violated what principle?

Question 8 options:

	cost principle
	full-disclosure principle
	ethics principle
	matching principle

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Question 9 (4 points)

Expenses are recorded in the same period that related revenue is recorded, according to the _______________.

Question 9 options:

	matching principle
	accounting equation
	revenue-recognition principle
	cost principle

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Question 10 (4 points)

The percentage-of-completion method recognizes revenue _______________.

Question 10 options:

	at 10% per month
	when the contracted work has begun
	at the end of the entire project for a multi-year contract
	based on an estimate of the portion of work complete

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Question 11 (4 points)

An asset cost $14,400 and is expected to last 8 years, at which time it will be sold for a scrap value of $2,400. Using straight-line depreciation, the monthly depreciation journal entry would be _______________.

Question 11 options:

	debit accumulated depreciation and credit depreciation expense for $125
	debit depreciation expense and credit accumulated depreciation for $150
	debit depreciation expense and credit accumulated depreciation for $125
	debit accumulated depreciation and credit depreciation expense for $150

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Question 12 (4 points)

When money is collected from a customer previously billed, we _______________.

Question 12 options:

	credit accounts payable and debit cash
	credit cash and debit accounts receivable
	credit cash and debit accounts payable
	debit cash and credit accounts receivable

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Question 13 (4 points)

Which event will have the effect of increasing retained earnings?

Question 13 options:

	an expense is paid
	a customer pays us for a bill we sent last month
	revenue is recognized
	a dividend is declared

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Question 14 (4 points)

The income summary account is used to _______________.

Question 14 options:

	calculate net income
	set aside earned money available to owners
	record a history of income items
	zero out expense and revenue accounts at the end of the period

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Question 15 (4 points)

The dividends payable account belongs on which statement?

Question 15 options:

	Statement of cash flows
	Balance sheet
	Statement of retained earnings
	Income statement

Journal Entries

Prepare the journal entries to document these transactions. Dates and descriptions are not required.

Question 16 (4 points)

Paid $20,000 for stock in a newly formed corporation.

Question 17 (4 points)

Purchased photocopier for $5000 on account.

Question 18 (4 points)

Bought office supplies for immediate consumption for $200 cash.

Question 19 (4 points)

Billed customer $3500 for services performed

Question 20 (4 points)

Customer paid $2,000 on account.

Question 21 (4 points)

Prepaid insurance account has a $2,400 balance for a twelve-month premium. Month one has ended.

Question 22 (4 points)

Office supplies on hand account has a balance of $1,955, and a physical count reveals that there are $715 worth of supplies remaining at month end.

Question 23 (4 points)

A customer had previously paid $500 in advance on an order. The order has now been shipped FOB destination.

Question 24 (4 points)

Sales tax of $100 is collected from a customer to be remitted to the state at a later date.

Question 25 (4 points)

At month end, $2,300 of wages are due to employees but not yet paid.

 

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