Accounting 201Chapter 03 Practice Test

Question 1

On November 30, Meier Company received $3,000 from a customer for services to be performed during December and recorded unearned revenue. The adjusting entry that Meier Company should make on December 31 includes a:   
A) Credit to Unearned Revenue.   
B) Credit to Service Revenue.   
C) Debit to Service Expense.   
D) Debit to Retained Earnings.

Answer 1

B

Question 2

Which of the following accounts is not listed in a post-closing trial balance?   
A) Dividends.   
B) Accounts Receivable.   
C) Accumulated Depreciation.   
D) Interest Payable.

Answer 2

A

Question 3

The financial statements are prepared using the amounts listed in the:   
A) Unadjusted trial balance.   
B) Post-closing trial balance.   
C) Accounting balance.   
D) Adjusted trial balance.

Answer 3

D

Question 4

Recording salaries earned by the employees that will not be paid by the company until the following accounting period is an example of a(n):   
A) Prepaid expense.  
 B) Unearned revenue.   
C) Accrued expense.   
D) Accrued revenue.

Answer 4

C

Question 5

Which of the following is an example of a prepaid expense?
A) Utilities have been incurred but not yet recorded.
B) Part of the useful life of equipment has expired.
C) Service was provided to a customer but not yet billed.
D) Interest is incurred through the passage of time.

Answer 5

B

Question 6

Which of the following is an example of an accrued expense?
A) Insurance has been prepaid for the next 12 months.
B) Interest on an outstanding loan will not be paid until next accounting period.
C) Depreciation is recorded to reflect the machine’s decrease in usefulness.
D) Service was performed for a client but has not yet been billed.

Answer 6

B

Question 7

Closing entries are:
A) Optional.
B) Made to transfer the balances of temporary accounts to retained earnings.
C) Made to record events that occurred during the period but have not yet been recorded.
D) Made to transfer the balances of permanent accounts to retained earnings.

Answer 7

B

Question 8

Which of the following is an example of an accrued revenue?
A) Insurance coverage was prepaid for the next 12 months.
B) Interest on an outstanding loan will not be paid until the next accounting period.
C) Depreciation is recorded to reflect the machine’s decrease in its usefulness.
D) Service was performed for a client but cash has not yet been collected.

Answer 8

D

Question 9

Which of the following describes the information reported in the income statement?
A) Net income for the period is calculated by subtracting expenses from revenues.
B) Total assets are equal to total liabilities and stockholders’ equity.
C) Changes in stockholders’ equity are shown through changes in common stock and retained earnings.
D) All accounts and account balances are shown.

Answer 9

A

Question 10

Which of the following describes the information reported in the balance sheet?
A) Net income for the period is calculated by subtracting expenses from revenues.
B) Total assets are equal to total liabilities and stockholders’ equity.
C) Changes in stockholders’ equity are shown through changes in common stock and retained earnings.
D) All accounts and account balances are shown and all debits equal all credits.

Answer 10

B

Question 11

After the closing entries are posted to the accounts, all temporary accounts
A) Have zero balances.
B) Have balances equal to the amounts shown in the unadjusted trial balance.
C) Have balances equal to the amounts shown in the adjusted trial balance.
D) Are open.

Answer 11

A