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Accruix,Inc.uses accrual basis accounting.Its balance sheets reported Accounts Receivable of $10,000 at the end of its first year and $15,000 at the end of its second year.Its income statement reported Sales Revenue of $100,000 in its second year.What would Accruix's revenues have been if it had used cash basis accounting?


A) $100,000
B) $95,000
C) $105,000
D) $10,000

E) A) and C)
F) A) and B)

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Sprinkler Blowout Company entered into the activities listed in the table below.The company's chart of accounts appears below the list of activities. For each activity,decide whether a transaction has occurred,and,if so,indicate the account(s)that should be debited and the account(s)that should be credited in the related journal entry by entering the appropriate account number(s)in the "Debit" and "Credit" columns in the table.If the activity is not a transaction,enter the word "None" in the "Debit" column for that activity. The account numbers to be used in the journal entry prepared for the first transaction are provided as an example. Sprinkler Blowout Company entered into the activities listed in the table below.The company's chart of accounts appears below the list of activities. For each activity,decide whether a transaction has occurred,and,if so,indicate the account(s)that should be debited and the account(s)that should be credited in the related journal entry by entering the appropriate account number(s)in the Debit and Credit columns in the table.If the activity is not a transaction,enter the word None in the Debit column for that activity. The account numbers to be used in the journal entry prepared for the first transaction are provided as an example. Sprinkler Blowout Company entered into the activities listed in the table below.The company's chart of accounts appears below the list of activities. For each activity,decide whether a transaction has occurred,and,if so,indicate the account(s)that should be debited and the account(s)that should be credited in the related journal entry by entering the appropriate account number(s)in the Debit and Credit columns in the table.If the activity is not a transaction,enter the word None in the Debit column for that activity. The account numbers to be used in the journal entry prepared for the first transaction are provided as an example.

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A: 5,12
B: 14,1
C: 4...

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Which of the following statements about the unadjusted trial balance is not correct?


A) trial balance is an internal report used to determine whether total debits equal total credits.
B) A trial balance lists every account name in one column, usually in the order of assets, liabilities, stockholders' equity, revenues and expenses.
C) A trial balance shows the ending balances obtained from the ledger listed in either the debit or credit column.
D) You can assume that no errors were made in the recording of transactions if total debits equal total credits on the unadjusted trial balance.

E) C) and D)
F) B) and D)

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Consider the following information from a company's unadjusted trial balance at December 31,2015.All accounts have normal balances. Consider the following information from a company's unadjusted trial balance at December 31,2015.All accounts have normal balances. What is the total of the debit side of the unadjusted trial balance? A) $22,000. B) $17,350. C) $16,500. D) $13,500. What is the total of the debit side of the unadjusted trial balance?


A) $22,000.
B) $17,350.
C) $16,500.
D) $13,500.

E) A) and D)
F) None of the above

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On September 30,ABC Co.received a bill for $1,000 for running a newspaper ad in September.The bill will be paid in October.Which of the following statements is correct for September?


A) Liabilities are decreased by $1,000.
B) Assets are increased by $1,000.
C) Expenses are increased by $1,000.
D) Revenues are decreased by $1,000.

E) A) and B)
F) B) and C)

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In its first year of business,Wok 'n' Roll,Inc.earned $100,000 of revenues of which $80,000 was collected.It also incurred $90,000 in expenses for which $80,000 was paid.Which of the following statements are correct?


A) Wok 'n' Roll should use cash basis accounting for external reporting purposes as required under GAAP and IFRS.
B) Wok 'n' Roll should report net income of $10,000 for external reporting purposes.
C) Wok 'n' Roll should report $0 net income for external reporting purposes.
D) Wok 'n' Roll should report net income of $20,000 for external reporting purposes.

E) B) and D)
F) A) and B)

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Which of the following situations results in unearned revenue?


A) Collected $100 from a customer who purchased goods a month ago
B) Received an order from a customer who will purchase and pay for goods in two weeks
C) Sold goods for $100 today with payment due from the customer in 30 days
D) Received $100 cash from a customer for an order of goods to be shipped next month

E) B) and C)
F) None of the above

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Unearned Revenue is a(n) :


A) expense.
B) asset.
C) revenue.
D) liability.

E) All of the above
F) A) and D)

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West Corporation issued a $100 gift card.What journal entry will West Corporation record?


A) Debit Cash and credit Sales Revenue for $100.
B) Debit Cash and credit Unearned Revenue for $100.
C) Debit Unearned Revenue and credit Cash for $100.
D) Debit Accounts Receivable and credit Cash for $100.

E) B) and D)
F) B) and C)

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The financial statement that reports revenues and expenses is the:


A) statement of retained earnings.
B) income statement.
C) balance sheet.
D) statement of cash flows.

E) B) and D)
F) A) and D)

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Which of the following statements about the income statement and income statement accounts is correct?


A) The income statement reports the financial position of a company at a point in time.
B) The balance sheet reports financial activities only for the current accounting period.
C) Income statement accounts are temporary accounts, while balance sheet accounts are permanent accounts.
D) The income statement reports the cash received and paid during the period.

E) B) and C)
F) A) and B)

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Cash basis accounting may not work well for businesses for which of the following reasons?


A) Purchasing supplies for cash may be too small in amount to record.
B) Businesses have too many cash transactions.
C) Businesses have too few cash transactions.
D) When credit is used for most transactions.

E) A) and B)
F) All of the above

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Censing Company collected $5,000 from a customer on account.What journal entry will be prepared by Censing to record this transaction?


A) Debit Cash and credit Accounts Receivable.
B) Debit Cash and credit Service Revenue.
C) Debit Accounts Receivable and credit Service Revenue.
D) Debit Accounts Receivable and credit Cash.

E) None of the above
F) A) and C)

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Which of the following statements about cash basis accounting and accrual basis accounting is correct?


A) Net income is generally larger under accrual basis accounting than cash basis accounting.
B) GAAP does not require the use of accrual basis accounting for external reporting.
C) Accrual basis accounting and cash basis accounting will always produce the same amount of net income.
D) Accrual basis accounting provides a better measure of operating performance than cash basis accounting.

E) B) and D)
F) All of the above

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A company's revenue recognition policy:


A) affects the income statement but not the balance sheet.
B) defines when its revenue should be collected.
C) is usually described in the notes to a company's financial statements.
D) states that revenues should not be recorded until payments are received from customers.

E) A) and B)
F) A) and C)

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Bank 'n' Roll,Inc.pays its employees once a month and records the expense at the time of payment.On May 31,Bank 'n' Roll,Inc.paid its employees $10,000 for work performed in May.The entry to record the payment includes a:


A) credit to Salaries and Wages Expense for $10,000.
B) credit to Cash for $10,000.
C) debit to Cash for $10,000.
D) credit to Salaries and Wages Payable for $10,000.

E) A) and B)
F) A) and D)

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During June,the Grass is Greener Company mows 100 lawns a week and is paid in July by those customers.The company uses the accrual basis of accounting.Which financial statement is impacted by these transactions?


A) The income statement shows the effects of the transactions in June.
B) The income statement shows the effects of the transactions in July.
C) The balance sheet shows no effect from the transactions in June.
D) The transactions have no effect on the balance sheet.

E) A) and B)
F) A) and C)

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Revenues:


A) decrease assets.
B) increase stockholders' equity.
C) increase liabilities.
D) decrease expenses.

E) All of the above
F) B) and D)

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On October 31,your company prepays rent of $7,000 for November and December.Which of the following describes the effects of this transaction on your company's accounting equation?


A) Assets decrease $7,000 and liabilities decrease $7,000.
B) Assets increase $7,000 and stockholders' equity increases $7,000.
C) There is no change to total assets, liabilities or stockholders' equity.
D) Liabilities decrease $7,000 and stockholders' equity increases $7,000.

E) B) and C)
F) A) and B)

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When cash is received in advance of being earned,a(n) ______ called _________ is recorded.


A) liability; Unearned Revenue
B) asset; Unearned Revenue
C) liability; Accounts Receivable
D) asset; Accounts Receivable

E) All of the above
F) B) and D)

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