ACC 303 Week 4 Quiz – Strayer NEW
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Quiz 3 Chapter 3
Chapter 3
THE ACCOUNTING INFORMATION SYSTEM
IFRS questions are available at the end of this chapter.
TRUE/FALSE
1. A ledger is where the company
initially records transactions and selected other events.
2. Nominal (temporary) accounts are revenue, expense, and dividend
accounts and are periodically closed.
3. Real (permanent) accounts are revenue, expense, and dividend
accounts and are periodically closed.
4. An example of an internal event would be a flood that destroyed
a portion of a company's inventory.
5. All liability and stockholders’ equity accounts are increased
on the credit side and decreased on the debit side.
6. In general, debits refer to increases in account balances, and
credits refer to decreases.
7. The first step in the accounting cycle is the journalizing of
transactions and selected other events.
8. One purpose of a trial balance is to prove that debits and
credits of an equal amount are in the general ledger.
9. A general journal chronologically lists transactions and other
events, expressed in terms of debits and credits to accounts.
10. If a company fails to post one of its journal entries to its
general ledger, the trial balance will not show an equal amount of debit and
credit balance accounts.
11. Adjusting entries for prepayments record the portion of the
prepayment that represents the expense incurred or the revenue earned in the
current accounting period.
12. An adjustment for wages expense, earned but unpaid at year end,
is an example of an accrued expense.
13. The book value of any depreciable asset is the difference
between its cost and its salvage value.
14. The ending retained earnings balance is reported on both the
retained earnings statement and the balance sheet.
15. The post-closing trial balance consists of asset, liability,
owners' equity, revenue and expense accounts.
16. All revenues, expenses, and the dividends account are closed
through the Income Summary account.
17. It is not necessary to post the closing entries to the ledger
accounts because new revenue and expense accounts will be opened in the
subsequent accounting period.
*18. The accrual basis recognizes revenue when earned and expenses
in the period when cash is paid.
*19. Reversing entries are made at the end of the accounting cycle
to correct errors in the original recording of transactions.
*20. An adjusted trial balance that shows equal debit and credit
columnar totals proves the accuracy of the adjusting entries.
True / False Answers — Conceptual
MULTIPLE CHOICE—Conceptual
21. Factors that shape an accounting information system include the
a. nature of the business.
b. size of the firm.
c. volume of data to be handled.
d. all of these.
22. Maintaining a set of accounting records is
a. optional.
b. required by the Internal Revenue Service.
c. required by the Foreign Corrupt Practices
Act.
d. required by the Internal Revenue Service and
the Foreign Corrupt Practices Act.
23. Debit always means
a. right side of an account.
b. increase.
c. decrease.
d. none of these.
24. An accounting record into which the essential facts and figures
in connection with all transactions are initially recorded is called the
a. ledger.
b. account.
c. trial balance.
d. none of these.
25. A trial balance
a. proves that debits and credits
are equal in the ledger.
b. supplies a listing of open
accounts and their balances that are used in preparing financial statements.
c. is normally prepared three
times in the accounting cycle.
d. all of these.
26. Which of the following is a real (permanent) account?
a. Goodwill
b. Sales
c. Accounts Receivable
d. Both Goodwill and Accounts Receivable
27. Which of the following is a nominal (temporary) account?
a. Unearned Revenue
b. Salary Expense
c. Inventory
d. Retained Earnings
28. Nominal accounts are also called
a. temporary accounts.
b. permanent accounts.
c. real accounts.
d. none of these.
29. The double-entry accounting system means
a. Each transaction is recorded with two journal
entries.
b. Each item is recorded in a journal entry,
then in a general ledger account.
c. The dual effect of each transaction is
recorded with a debit and a credit.
d. More than one of the above.
30. When a corporation pays a note payable and interest,
a. the account notes payable will be
increased.
b. the account interest expense will be
decreased.
c. they will debit notes payable and interest
expense.
d. they will debit cash.
31. Stockholders’ equity is not affected by all
a. cash receipts.
b. dividends.
c. revenues.
d. expenses.
32. The debit and credit analysis of a transaction normally takes
place
a. before an entry is recorded in a journal.
b. when the entry is posted to the ledger.
c. when the trial balance is prepared.
d. at some other point in the accounting cycle.
33. The accounting equation must remain in balance
a. throughout each step in the accounting cycle.
b. only when journal entries are recorded.
c. only at the time the trial balance is
prepared.
d. only when formal financial statements are
prepared.
34. The difference between the accounting process and the accounting
cycle is
a. the accounting process results
in the preparation of financial statements, whereas the accounting cycle is
concerned with recording business transactions.
b. the accounting cycle represents
the steps taken to accomplish the accounting process.
c. the accounting process
represents the steps taken to accomplish the accounting cycle.
d. merely semantic, because both
concepts refer to the same thing.
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