(Test Bank) Intermediate Accounting

Kieso,Weygandt,Warfield, 18

Business

Test Bank

18th Edition

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Test Bank for Intermediate Accounting, The downloadable file consists of 1329 pages, and the total size of the file is 8.73 MB. Purchase now only for highly discounted price.

Author(s): Kieso, Weygandt, Warfield

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Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 1 CHAPTER 0 ACCOUNTING CYCLE REVIEW Learning Objective Total # of questions from 1 34 2 133 3 30 4 16 5 185 6 8 7 5 8 20 9 12 TRUE-FALSE—Conceptual 1. Economic events that require recording in the financial statements are called accounting transactions. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Industry/Sector Perspective, AICPA FC: Measur ement, AICPA PC: None, IMA: FSA 2. Revenue increases stockholders’ equity and should be recorded whenever cash is received from customers. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 3. Collection on an account receivable will inc rease both cash and accounts receivable. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 4. The payment of a liability decreases both cash and account s payable. Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 2 5. If total assets are increased, there must be a corresponding increase in liabilities or a decrease in stockholders’ equity. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 6. A new account is opened for each transaction entered into by a business firm. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 7. The recording process becomes more efficient and informative if al l transactions are recorded in one account. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 8. An account consists of two parts: (1) a left or debit s ide and (2) a right or credit side. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 9. For a T account, an account balance is the difference in total dollars between total debit amounts and total credit amounts. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 10. An account is often referred to as a T-account because of the way it is constructed. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 11. A debit to an account always indicates an increas e in that account. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 12. If a revenue account is credited, the revenue account is increased. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 13. The normal balance of all accounts is a debit. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 3 Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: N one, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 14. Debit and credit can be interpreted to mean “bad” and “good”, respectively. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/R egulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 15. A credit means that an account has been increased. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, A ICPA PC: None, IMA: FSA 16. A decrease in a liability account is recorded by a debit. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 17. An increase in an asset is recorded by a debit. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 18. The double -entry system of accounting refers to the placement of a double line at the end of a column of figures. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None,IMA: FSA 19. A credit balance in a liability accou nt indicates that an error in recording has occurred. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 20. The normal balance of an asset is a credit. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 21. The normal balance of the dividend account is a credit. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 4 22. Assets are decreased with a credit. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Per spective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 23. A debit means that an account has been decreased. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 24. A decrease in a liability is recorded by a debit. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 25. An increase in an asset is r ecorded by a debit. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 26. Liabilities are increased with debits and decreased with credits. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 27. The dividends account is a subdivision of the retained earnings account and appears as an expense on the incom e statement. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 28. Revenues are a subdivision of stockholders’ equity. Ans: T, LO: 2, Bloom: K, Dif ficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 29. Under the double -entry system, revenues must always equal expenses. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 30. Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 5 Ans: F, LO: 2, Bloom: K, Diffic ulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 31. Source documents can provide evidence that a transaction has occurred. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 32. Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, M in: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 33. Transactions are entered in the ledger accounts and then transferred to journals. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: N one, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 34. All business transactions must be entered first in the general ledger. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 35. Transactions are recorded in alphabetical order in a journal. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 36. The journal is a chronological record of all transactions. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: F SA 37. A journal is an accounting record in which transactions are initially recorded. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 38. The comple te effect of a transaction on the accounts is disclosed in the journal. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 6 39. The account titles used in journalizing transactions need not be identical to the account titles in the ledger. Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 40. The c hart of accounts is a special ledger used in accounting systems. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 41. A general ledger should be arrang ed in financial statement order beginning with the balance sheet accounts. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 42. The entire group of acc ounts maintained by a company is referred to collectively as the journal. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 43. Prepaid expenses are ass ets. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 44. Salaries and wages payable is a type of expense. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 45. Dividends are classified as an expense. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal /Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 46. Unearned Service Revenue is classified as a liability on the balance sheet. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspe ctive, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 47. Posting is the process of proving the equality of debits and credits in the trial balance. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 7 Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspecti ve, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 48. Entering transactions into the journal is called posting. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: Non e, IMA: FSA 49. A trial balance is prepared at the beginning of an accounting period. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 50. A trial balance does not prove that all transactions have been recorded or that the ledger is correct. Ans: T, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 51. In a trial balance, all debits are listed before all credits. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 52. When the columns of the trial ba lance equal each other, it means that no errors have occurred in the recording and posting the transactions. Ans: F, LO: 4, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA : FSA 53. The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Pr oblem Solving, IMA: Reporting 54. The periodicity assumption is often referred to as the expense recognition principle. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 55. The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 8 Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: No ne, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 56. Expense recognition is tied to revenue recognition. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Sol ving, IMA: Reporting 57. The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: N one, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 58. The expense recognition principle requires that efforts be related to accomplishments. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC : Measurement, AICPA PC: Problem Solving, IMA: Reporting 59. Recognizing when an expense contributes to the production of revenue is critical. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AIC PA PC: Problem Solving, IMA: Reporting 60. The expense recognition principle is frequently referred to as the matching principle. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Proble m Solving, IMA: Reporting 61. Income will always be greater under the cash basis of accounting than under the accrual basis of accounting. Ans: F, LO 5, BT: C, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 62. The cash basis of accounting is not in accordance with generally accepted accounting principles. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Mea surement, AICPA PC: Problem Solving, IMA: Business Economics 63. Adjusting entries are often made because some business events are not recorded as they occur. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 9 64. Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 65. Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB : None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 66. An adjusting entry would be made to the revenue account only when cash is received. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC : Reporting, AICPA PC: Problem Solving, IMA: Reporting 67. An adjusting entry to a prepaid expense is required to recognize expired expenses. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 68. An adjusting entry always involves two balance sheet accounts. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solvin g, IMA: Reporting 69. An adjusting entry always involves a balance sheet account and an income statement account. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Reporting 70. Revenue received before it is recognized and expenses paid before being used or consumed are both initially recorded as liabilities. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 71. Revenue received before it is recognized and expenses used or consumed before being paid are both initially recorded as liabilities. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA B B: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 10 72. Accrued revenues are revenues that have been received but not yet recognized. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Repor ting, AICPA PC: Problem Solving, IMA: Reporting 73. Accrued revenues are revenues that have been recognized but not yet recorded. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 74. The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded. Ans: F, LO 5, BT: C, Difficulty: Easy, TOT: 1 min. , AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 75. If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 76. The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 mi n., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving 77. The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique. Ans: F, LO 5, BT: C, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Risk Analysis, AICPA PC: Problem Solving, IMA: Business Economics 78. Accumulated Depreciation is a liability account and has a credit normal account balance. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 79. A liability —revenue account relationship exists with an unearned rent revenue adjusting entry. Ans: T, LO 5, BT: K, Difficulty: Easy, TOT: 1 min. , AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 11 80. The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 81. Unearned revenue is a prepayment that requires an adjusting entry when services are performed. Ans: T, LO 5, BT: K, Difficu lty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 82. The adjusting entry for unearned revenue results in an increase (a debit) to an asset account and an increase (a credit) to a revenue account. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 83. Asset prepayments become expenses when they expire. Ans: T, LO 5, B T: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 84. A contra asset account is subtracted from a related account in the balance sheet. Ans: T, LO 5, BT: K, Dif ficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 85. Accrued revenues are revenues that have been recognized but cash has not been received before financial statements h ave been prepared. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 86. The adjusting entry for accrued salaries requires a debit to Salaries and Wages Payable. Ans: F, LO 5, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 87. The accrued interest for a three month note payable of $10,000 dated December 1, 2017 at an interest rate of 6% is $150 on December 31, 2017. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 12 Ans: F, LO 5, BT: K, Difficulty: Medium, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 88. Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders’ equity are overstated. Ans: T, LO 5, BT: K, Difficulty: Medium, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Repor ting, AICPA PC: Problem Solving, IMA: Reporting 89. Financial statements can be prepared from the information provided by an adjusted trial balance. Ans: T, LO 6, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 90. An adjusted trial balance must be prepared before the adjusting entries can be recorded. Ans: F, LO 6, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 91. Closing entries deal primarily with the balances of permanent accounts. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 92. The only accounts that are closed are temporary accounts. Ans: T, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem So lving, IMA: Business Economics 93. When closing entries are prepared, each income statement account is closed directly to retained earnings. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA P C: Problem Solving, IMA: Reporting 94. Cash is a temporary account. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 95. Accounts receivable is a permanen t account. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 13 Ans: T, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 96. The Dividends account is closed to the Income Summary account at the end of each year. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem S olving, IMA: Business Economics 97. A revenue account is closed with a credit to the revenue account and a debit to Income Summa ry. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving 98. An expense account is closed with a credit to the expense account and a debit to the Income Summary account. Ans: T, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 99. Financial statements must be prepared before the closing entries are made. Ans: T, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 100. In the accounting cycle, closing entries are prepared before adjusting entries. Ans: F, LO 8, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 101. Closing entries result in the transfer of net income or net loss into the Retained Earnings account. Ans: T, LO 8, BT: K, Difficu lty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 102. The post -closing trial balance will contain only permanent —balance sheet —accounts. Ans: T, LO 9, BT: K, Difficulty: Ea sy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 103. The post -closing trial balance will have fewer accounts than the adjusted trial balance. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 14 Ans: T, LO 9, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics 104. The accounting cycle begins with the journalizing of the transactions. Ans: F, LO 9, BT: K, Difficulty: Easy, TOT: 1 min., AACSB: Analytic, AICPA BB: None, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics MULTIPLE CHOICE —Conceptual 105. If total liabilities decreased by $4960 , then a. assets and stockholders’ equity each increased by $2480. b. assets must have increased by $4960. c. stockholders’ equity must have decreased by $4960. d. assets must have decreased by $4960, or stockholders’ equity must have increased by $4960. Ans: B, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 106. Collection of a $620 Accounts Receivable a. decreases an asset $620; decreases a liability $620. b. increases an asset $62 0; decreases a liability $62 0. c. decreases a liability $62 0; in creases stockholders’ equity $62 0. d. increases an asset $620; decreases an asset $620. Ans: D, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 107. If an individual asset is increased, then a. there could be an equal decrease in a specific liability. b. there could be an equal decrease in stockholders’ equity. c. there could be an equal decrease in another as set. d. none of these answer choices are correct. Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting 108. If services are rendered on account, then a. assets will decrease. b. liabilities will increase. c. stockholders’ equity will increase. d. liabilities will decrease. Test Bank for Intermediate Accounting, 18e Kieso, Weygandt, Terry Warfield 0- 15 Ans: C, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 109. If services are rendered for cash, then a. assets will increase. b. liabilities will increase. c. stockholders’ equity will decrease. d. liabilities will decrease. Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 110. If expenses are paid in cash, then a. assets will increase. b. liabilities will decrease. c. stockholders’ equity will increase. d. asset s will decrease. Ans: D, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: None, IMA: FSA 111. An investment by the stockholders in a business increases a. assets and stockholders’ equity. b. assets and liabilities. c. liabilities and stockholders’ equity. d. assets only. Ans: A, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: No ne, IMA: Reporting 112. The purchase of an asset for cash a. increases assets and stockholders’ equity. b. increases assets and liabilities. c. decreases assets and increases liabilities. d. leaves total assets unchanged. Ans: D, LO: 1, Bloom: C, Difficu lty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting 113. The purchase of an asset on credit a. increases assets and stockholders’ equity. b. increases assets and liabilities. c. decr eases assets and increases liabilities.