61.Which one of the following statements is true?
a.Accruals are adjustments that are recorded prior to the associated cash flow taking place.
b.Cash is used in the accrual process.
c.Accrual accounting recognizes revenues and expenses based on current period cash flows.
d.Accrual accounting may use either two asset or two liability accounts.
62.Which one of the following is a required characteristic of accruals and deferrals?
a.An asset or a liability will always be affected.
b.Cash is either increased or decreased as a result of recording an accrual or deferral.
c.Accruals record revenues, and expenses record deferrals.
d.An asset and an expense item will always be affected.
63.The main purpose of the adjusting process is
a.to remove the effects of all transactions recorded during the accounting period.
b.to make the account balances reflect the company’s true position according to the guidelines of accrual accounting.
c.to get the accounting records ready for a new accounting period.
d.to identify the amount of cash available for dividends to be paid.
64.The biggest distinction between accruals and deferrals is
a.one emphasizes conservatism while the other promotes aggressive accounting positions.
b.how long a company must wait until the collection of cash occurs.
c.with accruals, no record of the activity has been made prior to the adjustment process, and with deferrals, the activity has already been recorded in the accounting records, but the proper amount of revenue or expense has not been recognized.
d.adjustments are necessary for accruals, whereas, adjustments are not necessary for deferrals.
65.
Closing entries result in net income being transferred to
a.a revenue account.
b.the cash account.
b.the contributed capital account.
d.the retained earnings account.
66.A multinational is
a company that prepares accruals and deferrals throughout the year as well as yearend.
a corporation that has no home country due to operations in several countries.
a corporation that has its home in one country but operates under the laws of other countries as well.
a type of adjusting entry necessary for companies that trade with corporations in other countries.
67.On December 31, 2010, immediately after all the adjustments were made to Kingman Corp’s accounting records for the 2010 fiscal year, but before the books were closed, the retained earnings account reflected a balance of $50,000. Kingman Corp’s net income for 2010 was $12,000. Kingman paid no dividends during 2010. On the balance sheet for January 1, 2011, the beginning balance in the retained earnings account will be
$0
$62,000
$48,000
$50,000
68.On December 31, 2010, immediately after all the adjustments were made to Gilbert Inc.’s accounting records for the 2010 fiscal year, but before the books were closed, the retained earnings account reflected a deficit balance of $80,000. The sum of the pre-closing balances of all of Gilbert’s temporary accounts was a net credit balance of $18,000. Gilbert paid no dividends during 2010. On the balance sheet for January 1, 2011, the beginning balance in the retained earnings account will be
$0
$62,000 debit
$80,000 credit
$98,000 credit
69.On December 13, 2010, Tucson Corp. paid $24,000 for a two year property insurance policy covering their corporate headquarters for the period December 15, 2010 to December 15, 2012. The payment was charged to insurance expense. What adjusting entry is needed at the end of December?
a.
|
Cash
|
24,000
|
|
|
|
Prepaid insurance
|
|
24,000
|
b.
|
Prepaid insurance
|
23,500
|
|
|
|
Insurance expense
|
|
23,500
|
c.
|
Insurance expense
|
24,000
|
|
|
|
Cash
|
|
24,000
|
d.
|
Insurance expense
|
23,500
|
|
|
|
Accounts payable
|
|
23,500
|
|
|
|
|
|
During Bisbee’s first year of business, office supplies were purchased for cash in the amount of $4,300 and the amount was debited to supplies expense. At the end of the first year, the physical count indicated that $425 of supplies was unused. How much should be reported on the income statement at year end for office supplies expense?
a. $4,300
b. $3,875
c. $4,725
d. $425