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C HAPTER 2 A Review of the Accounting Cycle M ULTIPLE C HOICE Q UESTIONS Theory/Definitional Questions 1 Characteristics of an accrual accounting system 2 Business transactions and owners equity 3 Prepaid expenses 4 Adjusting entries for prepaid expenses 5 Definition of chart of accounts 6 Criteria for recording an event 7 Accounts affected by adjusting entries 8 Items reportable in financial records 9 Definition of deferred revenue account 10 Timing of transaction analysis 11 Uses of the trial balance 12 Source documents 13 Steps in the accounting cycle 14 Correcting journal entry errors 15 Definition of an accrued expense 16 Errors detected by preparation of a trial balance 17 Definition of a prepaid asset 18 The effect of understating ending inventory 19 Format for adjusting entries 20 Steps in the accounting cycle 21 Income statement contents 22 Time period for accrued interest 23 Adjusting entries for deferred revenue 24 Allowance for bad debts--a contra account 25 Periodic inventory--recording purchase of inventory on credit 26 Balance sheet contents 27 End-of-period adjusting entries 28 Failure to record depreciation expense 29 Perpetual inventory--recording purchase of inventory for cash 30 Sales journal used for credit sales 31 Check register substitute for cash disbursements journal 23 24 Chapter 2 A Review of the Accounting Cycle Computational Questions 32 Sales journal used for credit sales 33 Computation of services rendered on account 34 Computation using the accounting equation 35 Computation for adjusting entries 36 Adjusting entries for prepaid expenses 37 Adjusting entry for interest expense/interest payable 38 Revenue recognition on subscription sales 39 Computation for adjusting entries 40 Trial balance errors 41 Computation of cash received 42 Computation of cash paid 43 Computation of unearned subscription revenue accounts 44 Computation for adjusting entries 45 Computation for adjusting entries 46 Adjusting entry for prepaid insurance/insurance expense 47 Computation of insurance expense 48 Use of special journals 49 Adjusting entry for unearned revenue/earned revenue 50 Computation of interest revenue 51 Computation of interest payable 52 Computation using the accounting equation 53 Use of the work sheet 54 Computation using the accounting equation 55 Computation of unearned revenues 56 Adjusting entry for doubtful accounts expense/allowance for doubtful accounts 57 Computation of interest payable 58 Adjusting entry for doubtful accounts expense/allowance for doubtful accounts 59 Use of a sales journal 60 Computation using the accounting equation 61 Use of cash receipts journal 62 Effect of computers on accounting 63 Sequence of steps in the accounting cycle 64 Accrual vs. cash-basis of accounting 65 Nature of the cash-basis of accounting 66 Nature of the cash-basis of accounting Test Bank, Intermediate Accounting , 14 th ed. 25 P ROBLEMS 1 Preparation of adjusting and reversing entries 2 Preparation of adjusting and reversing entries... View Full Document

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