intermediate_solution_chap.3

intermediate_solution_chap.3 - CHAPTER 3 THE ACCOUNTING...

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CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM TRUE/FALSE Answer No. Description F 1. Recording transactions. T 2. Nominal accounts. F 3. Liability and stockholders’ equity accounts. F 4. Steps in accounting cycle. T 5. General journal. T 6. Adjusting entries for prepayments. F 7. Book value of depreciable assets. T 8. Reporting ending retained earnings. F 9. Closing entries and Income Summary. T 10. Perpetual inventory system. MULTIPLE CHOICE —Conceptual Answer No. Description d 11. Purpose of an accounting system. d 12. Necessity of accounting records. d 13. Purpose of an accounting system. c 14. Meaning of debit. c 15. Double-entry system. a 16. Effect on stockholders’ equity. d 17. Criteria for recording events. d 18. Identification of a recordable event. c 19. Identification of internal events. d 20. Book of original entry. a 21. Transaction analysis. d 22. Purpose of trial balance. d 23. Limitations of trial balance. d 24. Identification of a real account. b 25. Identification of a temporary account. a 26. Temporary vs. permanent accounts. d 27. External events. a 28. General journal. b 29. Journal entry. c 30. Journal entry. d 31. Journal entry. a 32. Timing of adjustments. a 33. Prepaid expense. a 34. Expiration of prepaid expenses. b 35. Effect of depreciation entry. a 36. Unearned revenue relationships.
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Test Bank for Intermediate Accounting, Twelfth Edition a 37. Computation of interest expense for adjusting entry. d 38. Purpose of adjusting entries. c 39. Matching principle. a 40. Prepaid items. d 41. Accrued items. c 42. Definition of unearned revenue. d 43. Definition of accrued expense. c 44. Adjusting entry for accrued expense. d 45. Factors to consider in estimating depreciation. d 46. Adjusting entries. d 47. Effect of adjusting entries. b 48. Prepaid expense and the matching principle. c 49. Accrued revenue and the matching principle. b 50. Unearned revenue and the matching principle. b 51. Adjusted trial balance. c 52. Closing entry process. c 53. Year-end inventory adjustment. c 54. Effect of understanding ending inventory. d *55. Cash basis revenue. c *56. Convert cash receipts to service revenue. c *57. Convert cash paid for operating expenses. c *58. Purpose of reversing entries. d *59. Identification of reversing entries. d *60. Identification of reversing entries. MULTIPLE CHOICE —Computational Answer No. Description c 61. Effect of transactions on owners’ equity. c 62. Effect of transactions on owners’ equity. c 63. Unearned rent adjustment. c 64. Unearned rent adjustment. a *65. Determine adjusting entry. d *66. Determine adjusting entry. d 67. Determine adjusting entry. c 68. Adjusting entry for bad debts. b 69. Adjusting entry for bad debts. b *70. Unearned rent adjustment. c 71. Adjusting entry for interest receivable. c 72. Subsequent period entry for interest. d *73. Use of reversing entry. d 74. Effect of closing entries. c *75. Calculate commission expense for the year.
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