Chapter 2 Final Exam Study Flashcards Preview

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Flashcards in Chapter 2 Final Exam Study Deck (14):
1

The journal entry to record the borrowing of cash and the signing of a note payable involves:

A debit to cash and a credit to note payable.

2

Which of the following is most likely an accrued liability?
-Depreciation
-Interest
-COGS
-Office supplies

Interest

3

A prepaid expense is an expense:

Paid but not yet incurred.

4

The Esquire Clothing Company borrowed a sum of cash on October 1, 2018, and signed a note payable. The annual interest rate was 12% and the company's year 2018 income statement reported interest expense of $1,260 related to this note. What was the amount borrowed?

$42,000

5

Which of the following adjusting entries causes a decrease in assets?
-Recognizing the portion of revenue collected in advance.
-Recording depreciation expense.
-Accruing unrecorded salaries expense.
-Accruing unrecorded interest revenue.

Recording depreciation expense.

6

Which of the following adjusting entries causes an increase in liabilities?
-Accruing unrecorded interest expense.
-Recording the amount of expired prepaid insurance.
-Accruing unrecorded interest revenue.
-Recording depreciation expense.

Accruing unrecorded interest expense.

7

If the required adjusting entry for depreciation expense is omitted:

Assets will be overstated and income overstated.

8

The accumulated depreciation account is a contra (valuation) account to:

Asset account

9

The correct amount of prepaid insurance shown on a company's December 31, 2018, balance sheet was $900. On July 1, 2019, the company paid an additional insurance premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2019 income statement is:

$1,000

10

The Wazoo Times Newspaper Company reported an $11,200 liability in its 2018 balance sheet for subscription revenue received in advance. During 2019, $62,000 was received from customers for subscriptions and the 2019 income statement reported subscription revenue of $63,700. What is the liability amount for deferred subscription revenue that will appear in the 2019 balance sheet?

$9,500
[11,200 (beg. bal.) + 62,000 (add. receipts) - 63,700 (subscription revenue recognized)]

11

In a classified balance sheet, supplies would be classified among:

Current assets

12

In a statement of cash flows, cash received from the issuance of common stock would be classified as a:

Financing Activity

13

The closing process involves:

Transferring revenue and expense balances to retained earnings.

14

If revenues exceed expenses for the accounting period, the income summary account:

Will have a credit balance prior to closing.