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Unformatted text preview: CHAPTER 3 THE ACCOUNTING INFORMATION SYSTEM MULTIPLE CHOICE Conceptual Answer No. Description d 1. Purpose of an accounting system. d 2. Criteria for recording events. c 3. Purpose of trial balance. b 4. Trial balance d 5. Book of original entry. a 6. Transaction analysis. a 7. Definition of transaction. c 8. Event recording. d 9. Purpose of income summary account. c 10. Purpose of adjusting entries. d 11. Limitations of trial balance. d 12. Purpose of adjusting entries. c 13. Matching principle. c 14. Special journals. b 15. Special journals. b 16. Cash-basis of accounting. d 17. Definition of accrued expense. c 18. Adjusting entry for accrued expense. d 19. Factors to consider in estimating depreciation. c 20. Timing of financial statements. d 21. Effect of adjusting entries. b 22. Prepaid expense and the matching principle. c 23. Accrued revenue and the matching principle. b 24. Unearned revenue and the matching principle. d 25. Identification of a real account. b 26. Identification of a temporary account. c 27. Effect of understating ending inventory. c 28. Recordable transactions. d 29. Limitations of trial balance. d *30. Identification of reversing entries. d *31. Identification of reversing entries. Test Bank Chapter 3 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited Test Bank for Intermediate Accounting, Ninth Canadian Edition MULTIPLE CHOICE Computational Answer No. Description b 32. Determine adjusting entry. a 33. Determine adjusting entry. d 34. Determine adjusting entry. c 35. Adjusting entry for bad debts. b 36. Adjusting entry for bad debts. b 37. Unearned rent adjustment. b 38. Calculate cash received for interest. b 39. Calculate cash paid for salaries. d 40. Calculate cash paid for insurance. c 41. Calculate insurance expense. c 42. Calculate interest revenue. c 43. Calculate salary expense. c 44. Adjusting entry for interest receivable. d 45. Calculate property tax adjustment. a *46. Determine reversing entry. a *47. Determine year-end adjustment. MULTIPLE CHOICE CPA Adapted Answer No. Description c 48. Determine accrued interest payable. b 49. Determine balance of unearned revenues. b 50. Calculate prepaid insurance. c 51. Determine interest receivable. a 52. Calculate sales adjustment. b 53. Calculate accrued salaries. a 54. Calculate royalty revenue. a 55. Calculate payroll adjustment. *This topic is dealt with in an Appendix to the chapter. EXERCISES Item Description E3-56 Definitions. E3-57 Terminology. E3-58 Accrued and deferred items. E3-59 Adjusting entries. E3-60 Adjusting entries. E3-61 Accrual basis. E3-62 Accrual basis. E3-63 Accrual basis. Test Bank Chapter 3 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 3 - 2 The Accounting Information System PROBLEMS Item Description *P3-64 Adjusting and reversing entries....
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