3 Interactive Quiz A

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Interactive Quiz A http://highered.mcgraw-hill.com/sites/0072996536/student_view0/chapter3/interactive_quiz_a.html[6/22/2010 6:34:43 PM] Interactive Quiz A (See related pages) Results Reporter Out of 25 questions, you answered 3 correctly with a final grade of 12% 3 correct (12%) 22 incorrect (88%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . 1 CORRECT Although it is possible to find an exception to the following statement, the vast majority of adjusting entries follow which pattern described below: A) One of the accounts debited or credited is an income statement account while the second account debited or credited is a balance sheet account. B) Both of the accounts debited or credited are income statement accounts. C) Both of the accounts debited or credited are balance sheet accounts. D) Both of the accounts debited or credited are part of the statement of owner's equity. E) None of the above is correct. Feedback: The vast majority of the adjusting entries include a debit or credit to an income statement account and a balance sheet account. 2 INCORRECT The financial accounting principle which best explains why most entities adopt a 12-month accounting period is the: A) Going-concern principle. B) Cost principle. C) Conservatism principle. D) Time period or periodicity principle. E) Monetary-unit principle. Feedback: It is the time period or periodicity principle which assumes that the financial activities of an entity can be divided into specific time periods for the purpose of income measurement. 3 INCORRECT A company has adopted a 12-month accounting period which ends on January 31 of each year. The company prepares quarterly interim financial statements and one set of annual financial statements. Which of the following date sequences is the correct sequence for the issuance of company balance sheets? A) December 31, March 31, June 30, September 30 B) February 28, May 31, August 31, November 30 C) December 31, January 31, April 30, July 31 D) January 31, April 30, August 31, November 30 E) January 31, April 30, July 31, October 31 Feedback: The correct sequence is January 31, April 30, July 31, and October 31. 4 INCORRECT A company purchased a two-year fire insurance policy on May 1, 2006. It paid the $2,400 premium in cash on the same date and recorded the entry with a debit to Prepaid Insurance for $2,400. The company has adopted a 12-month accounting period ending on January 31 of each year. How much insurance expense will be recorded for the accounting periods ending January 31, 2007, and January 31, 2008, if the company uses the accrual basis of accounting? A) $1,800 and $2,400 B) $900 and $1,200 C) $2,400 and $0 D) $0 and $2,400 E) None of the above. Feedback: A 24-month policy costing $2,400 represents $100 of insurance expense per month. There
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3 Interactive Quiz A - Interactive Quiz A Home > Chapter...

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