Assignment: Ch 03 Quiz MC

MC Qu. 133 Which of the following statements is true?

Which of the following statements is true?

	Retained earnings must be closed each accounting period.
→	A post-closing trial balance should include only permanent accounts.
	Information on the work sheet can be used in place of preparing financial statements.
	By using a work sheet to prepare adjusting entries, you need not post these entries to the ledger accounts
	Closing entries are only necessary if errors have been made.

MC Qu. 66 The approach to preparing financial...

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

	Cash basis accounting.
	The matching principle.
	The time period principle.
	Accrual basis accounting.
	Revenue basis accounting.

MC Qu. 109 An adjusting entry was made on December ...

An adjusting entry was made on December 31, 2014 to accrue a salary expense of $1,200. Which of the following entries would be prepared to record the next payment of salaries on January, 2015 in the amount of $3,000?

$3,000 (total) - $1,200 (accrued) = $1,800 expense

MC Qu. 102 On April 30, 2014, a three-year insurance...

On April 30, 2014, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31, 2014?

	$500
	$4,000
	$6,000
	$14,000
	$18,000

$18,000 x 8/36 = $4,000

MC Qu. 83 A company earned...

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

	2%
→	20%
	200%
	500%
	$8,000

$2,000/$10,000 = 20%

MC Qu. 62 The main purpose of adjusting entries is to:

The main purpose of adjusting entries is to:

	Record external transactions and events.
	Record internal transactions and events.
	Recognize assets purchased during the period.
	Recognize debts paid during the period.
	Correct errors.

MC Qu. 72 Each letter below contains three of the...

Each letter below contains three of the steps found in the accounting cycle. Which presents the given steps in the proper sequence, first to last?

	Adjust, analyze transactions, close.
	Analyze transactions, adjust, close.
	Prepare post-closing trial balance, prepare statements, close.
	Prepare statements, post, close.
	Prepare adjusted trial balance, journalize, close.

MC Qu. 126 The following information is available for...

The following information is available for the Travis Travel Agency. After the closing entries have been journalized and posted, what will be the balance in the Retained Earnings account?

  

	$65,000
	$80,000
→	$130,000
	$145,000
	$280,000

$80,000 + $125,000 - $60,000 - $15,000 = $130,000

MC Qu. 73 A classified balance sheet:

A classified balance sheet:

	Measures a company's ability to pay its bills on time.
	Organizes assets and liabilities into important subgroups.
	Presents revenues, expenses, and net income.
	Reports operating, investing, and financing activities.
	Reports the effect of profit and dividends on retained earnings.

MC Qu. 134 Under the alternative method for accounting...

Under the alternative method for accounting for unearned revenues, which of the following pairs of journal entry formats is correct?

  

	Option A
→	Option B
	Option C
	Option D
	Option E