Results of operations

Question-1

The balance sheet presents a company’s:

  • Results of operations for a period of time
  • Results of operations at a moment of time
  • Financial position for a period of time
  • Financial position at a moment in time
  • None of the above

Question-2

The income statement represents a company’s:

  • Results of operations for a period of time
  • Results of operations at a moment of time
  • Financial position for a period of time
  • Financial position at a moment in time
  • None of the above

Question-3

The accrual method of accounting:

  • States that revenue should be recognized in the period when cash is received
  • Requires that revenue be recognized in the accounting period when it is earned
  • Requires that events which make a difference to financial statement users be disclosed
  • States that revenue should be recorded using a permanent account
  • None of the above

Question-4

The normal balance of any account is the:

  • Left side
  • right side
  • Side which increases that account
  • side which decreases that account

Question-5

Which of the following correctly identifies normal balances of accounts?

Assets Debit

  • Liabilities                                               Credit
  • Stockholders’ Equity           Credit
  • Revenues                                              Debit
  •  Expenses                                                Credit

Assets Debit

  • Liabilities                                               Credit
  • Stockholders’ Equity           Credit
  • Revenues                                              Credit
  • Expenses                                               Credit

Assets Credit

  • Liabilities                                               Debit
  • Stockholders’ Equity           Debit
  • Revenues                                              Credit
  • Expenses                                               Debit

Assets Debit

  • Liabilities                                               Credit
  • Stockholders’ Equity           Credit
  • Revenues                                              Credit
  • Expenses                                               Debit

Question-6

If expenses are paid in cash, then:

  • Assets will increase
  • Liabilities will decrease
  • Stockholders’ equity will increase
  • Assets will decrease

Question-7

Collection of a $1,000 accounts receivable:

  • Increases an asset $1,000; decreases an asset $1,000
  • Increases an asset $1,000; decreases a liability $1,000
  • Decreases a liability $1,000; increases stockholders’ equity $1,000
  • Decreases an asset $1,000; decreases a liability $1,000

Question-8

At January 1, 2008, Kobe Enterprises reported accounts receivable totaling $3,500. During the month, the company had credit sales of $5,000 and collected cash on accounts of $6,000.  At the end of January, the balance in accounts receivable is:

  • $1,500
  • $2,500
  • $14,500
  • Cannot determine based on the information provided

Question-9

Retained earnings at the end of the period is equal to:

  • Retained earnings at the beginning of the period plus net income minus liabilities
  • Retained earnings at the beginning of the period plus net income minus dividends
  • Net income
  • Assets plus liabilities

Question-10

Misra Company compiled the following financial information as of December 31, 2015:

Revenues                               $340,000                  Retained earnings (1/1/15)    $60,000

Equipment                                 80,000

Expenses                                 250,000

Cash                                            90,000

Dividends                                   20,000

Supplies                                      10,000

Accounts payable                      40,000

Accounts receivable                   70,000

Common stock                           80,000

Misra’s assets on December 31, 2015 are:

  • $180,000
  • $250,000
  • $360,000
  • $490,000

Use the following information to answer the two questions that follow.

Edith Inc. paid employees for a month’s work.

Question-11

The journal entry would include a debit to which account?

  • Retained earnings
  • Revenue
  • Salaries payable
  • Salary expense
  • Cash

Question-12

The journal entry would include a credit to which account?

  • Retained earnings
  • Revenue
  • Salaries payable
  • Salary expense
  • Cash

Use the following information to answer the two questions that follow.

Frank Company purchased computer equipment and paid $14,000 cash.

Question-13

The journal entry would include a debit to which account?

  • Computer Equipment Expense
  • Computer Equipment
  • Cash
  • Accounts payable
  • Accumulated Depreciation – Computer Equipment

Question-14

The journal entry would include a credit to which account?

  • Computer Equipment Expense
  • Computer Equipment
  • Cash
  • Accounts payable
  • Accumulated Depreciation – Computer Equipment

Question-15

Which adjusting entry will result in a decrease in assets?

  • An adjusting entry to record interest that has been incurred
  • An adjusting entry to record the expiration of rent
  • An adjusting entry to record revenue that is earned
  • All of the above
  • None of the above

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