Accounting 231 Exam Two, Fall 2002
Put your multiple choice questions on the scantron, do the workout on the test.
Your Name _________________________
1. An accounting time period that is one year in length is called
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.
2. The revenue recognition principle dictates that revenue should be
recognized in the accounting records
a. when cash is received.
b. when it is earned.
c. at the end of the month.
d. in the period that income taxes are paid.
3. The primary difference between prepaid and accrued expenses is that
prepaid expenses have
a. been incurred and accrued expenses have not.
b. not been paid and accrued expenses have.
c. been recorded and accrued expenses have not.
d. not been recorded and accrued expenses have.
4. If a resource has been consumed but a bill has not been received at
the end of the accounting period, then
a. an expense should be recorded when the bill is received.
b. an expense should be recorded when the cash is paid out.
c. an adjusting entry should be made recognizing the expense.
d. it is optional whether to record the expense before the bill is
5. Reese Company purchased office supplies costing $4,000 and debited
Office Supplies for the full amount. At the end of the accounting
period, a physical count of office supplies revealed $1,600 still on
hand. The appropriate adjusting journal entry to be made at the end
of the period would be
a. Debit Office Supplies Expense, $1,600; Credit Office Supplies,
b. Debit Office Supplies, $2,400; Credit Office Supplies Expense,
c. Debit Office Supplies Expense, $2,400; Credit Office Supplies,
d. Debit Office Supplies, $1,600; Credit Office Supplies Expense,
6. A law firm received $2,000 cash for legal services to be rendered in
the future. The full amount was credited to the liability account
Unearned Service Revenue. If the legal services have been rendered
at the end of the accounting period and no adjusting entry is made,
this would cause
a. expenses to be overstated.
b. net income to be overstated.
c. liabilities to be understated.