Question 1

An adjusted trial balance

Accepted Answer

A)  is prepared after the financial statements are completed.
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.
C)  is a required financial statement under international financial reporting standards.
D)  cannot be used to prepare financial statements.E) None of the above
F) A) and D)

Question 2

Accounts maintained within the ledger that appear on the statement of financial position include all of the following except

Accepted Answer

A)  Salaries and Wages Expense.
B)  Interest Payable.
C)  Supplies.
D)  Share Capital-Ordinary.E) None of the above
F) All of the above

Question 3

The trial balance uncovers any errors in journalizing and posting prior to preparation of the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 4

Adjusting entries are necessary to enable the financial statements to conform to International Financial Reporting Stanadard (IFRS).

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true regarding debits and credits?

Accepted Answer

A)  On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.
B)  Before adjustments, debits will not equal credits in the trial balance.
C)  The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities.
D)  On the income statement, revenues are increased by debit whereas on the statement of financial position retained earnings is increased by a credit.E) B) and D)
F) None of the above

Question 6

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

Accepted Answer

A)  an unearned revenue.
B)  a prepaid expense.
C)  an accrued revenue.
D)  an accrued expense.E) A) and D)
F) B) and D)

Question 7

A trial balance may prove that debits and credits are equal, but

Accepted Answer

A)  an amount could be entered in the wrong account.
B)  a transaction could have been entered twice.
C)  a transaction could have been omitted.
D)  All of these answers are correctE) A) and C)
F) C) and D)

Question 8

The accounting equation must remain in balance

Accepted Answer

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

Question 9

The failure to properly record an adjusting entry to accrue an expense will result in an:

Accepted Answer

A)  understatement of expenses and an understatement of liabilities.
B)  understatement of expenses and an overstatement of liabilities.
C)  understatement of expenses and an overstatement of assets.
D)  overstatement of expenses and an understatement of assets.E) A) and D)
F) C) and D)

Question 10

On the income statement, revenues are increased by a debit whereas on the statement of financial position retained earnings is increased by a credit.

Accepted Answer

A) True 
 B)False

Question 11

A general journal

Accepted Answer

A)  chronologically lists transactions and other events, expressed in terms of debits and credits.
B)  contains one record for each of the asset, liability, equity, revenue, and expense accounts.
C)  lists all the increases and decreases in each account in one place.
D)  contains only adjusting entries.E) None of the above
F) C) and D)

Question 12

Nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed.

Accepted Answer

A) True 
 B)False

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not be a correct form for an adjusting entry?

Accepted Answer

A)  A debit to a revenue and a credit to a liability
B)  A debit to an expense and a credit to a liability
C)  A debit to a liability and a credit to a revenue
D)  A debit to an asset and a credit to a liabilityE) A) and C)
F) C) and D)

Question 15

Unearned revenue on the books of one company is likely to be

Accepted Answer

A)  a prepaid expense on the books of the company that made the advance payment.
B)  an unearned revenue on the books of the company that made the advance payment.
C)  an accrued expense on the books of the company that made the advance payment.
D)  an accrued revenue on the books of the company that made the advance payment.E) A) and C)
F) None of the above

Question 16

Factors that shape an accounting information system include the

Accepted Answer

A)  nature of the business.
B)  size of the firm.
C)  volume of data to be handled.
D)  All of these answers are correct.E) None of the above
F) A) and B)

Question 17

Debit always means

Accepted Answer

A)  right side of an account.
B)  increase.
C)  decrease.
D)  None of these answers are correct.E) A) and D)
F) None of the above

Question 18

Each adjusting entry affects one statement of financial position account and one income statement account.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a nominal (temporary)  account?

Accepted Answer

A)  Unearned Service Revenue
B)  Salaries and Wages Expense
C)  Inventory
D)  Retained EarningsE) All of the above
F) C) and D)

Question 20

The trial balance will not balance when a company debits two statement of financial position accounts and no income statement accounts.

Accepted Answer

A) True 
 B)False

Exam 3: The Accounting Information System

The trial balance will not balance when a company debits two statement of financial position accounts and no income statement accounts.

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Which of the following would not be a correct form for an adjusting entry?

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Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

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Which of the following statements is true regarding debits and credits?

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Adjusting entries are necessary to enable the financial statements to conform to International Financial Reporting Stanadard (IFRS).

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Accounts maintained within the ledger that appear on the statement of financial position include all of the following except

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Debit always means

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A trial balance may prove that debits and credits are equal, but

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Nominal (temporary) accounts are revenue, expense, and dividend accounts and are periodically closed.

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Each adjusting entry affects one statement of financial position account and one income statement account.

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On the income statement, revenues are increased by a debit whereas on the statement of financial position retained earnings is increased by a credit.

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The trial balance uncovers any errors in journalizing and posting prior to preparation of the statement of financial position.

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A general journal

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The failure to properly record an adjusting entry to accrue an expense will result in an:

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Factors that shape an accounting information system include the

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The accounting equation must remain in balance

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Unearned revenue on the books of one company is likely to be

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An adjusted trial balance

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Which of the following is a nominal (temporary) account?

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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.

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