1.You are the owner of a magazine publishing company. Which of the following cases would improperly inflate the revenue?

Select one:

a. A customer paid for a one-year subscription. You decided to record the full amount as revenue since it was paid in cash.

b. A customer has paid on account for your consulting service. Although the service is done, you decided not to record the revenue as cash, as it is not yet received.

c. None of the available choices

d. You paid for a two-year insurance policy in cash and decided to expense the full amount.

 

2.Which of the following can be used to help control collections of accounts receivable?

Select one:

a. All of the available choices

b. The customer should receive the invoice quickly.

c. The person opening the mail should be the same person recording the customer payments.

d. If a customer is late paying their bill, the business should not request the amount be paid immediately in order to build a good customer relationship.

 

3.AAA Inc. has a December 31st year end. On January 1st, 2013, AAA Inc. took out a $50,000 bank loan. The loan has an interest rate of 10% annually. The loan and the interest will be paid at the end of five years. What adjusting entry is necessary on December 31st, 2013?

Select one:

a. Increase interest payable $5,000; increase interest expense $5,000

b. Decrease bank loan payable $5,000; increase interest expense $5,000

c. No entry is required

d. Decrease Cash $5,000; increase interest expense $5,000

AAA Inc. has a December 31st year end. On January 1st, 2013, AAA Inc. took out a $50,000 bank loan. The loan has an interest rate of 10% annually. The loan and the interest will be paid at the end of five years. What adjusting entry is necessary on December 31st, 2013?

Select one:

a. Increase interest payable $5,000; increase interest expense $5,000

b. Decrease bank loan payable $5,000; increase interest expense $5,000

c. No entry is required

d. Decrease Cash $5,000; increase interest expense $5,000

 

4.On July 1st, 2013, BBB Inc. took out a five-year, $30,000 loan from the bank. The loan has an interest rate of 5% annually. Interest is paid each year on the date the loan was issued. What adjusting entry is necessary on December 31st, 2013, which is the fiscal year end date?

Select one:

a. Increase interest payable $750; increase interest expense $750

b. Decrease bank loan payable $1,500; increase interest expense $1,500

c. No entry is required

d. Increase interest payable $1,500; increase interest expense $1,500

 

5.Which one of the following is false?

Select one:

a. All of the choices are false

b. The person opening the mail should not be the same person recording the customer payments.

c. When customers are allowed to pay later for services provided, they are in effect being provided with an interest free loan that they must pay back within a certain timeframe.

d. Although there is always an element of risk when extending credit terms, a business needs to grant credit to every customer to ensure maximum profits.

 

6.True or False: TUV Inc.'s fiscal year is the same as the calendar year. On January 1st, 2013 TUV Inc. purchases a $25,000 car with an estimated ten year useful life. On December 31st, 2013, TUV Inc. has no adjusting entries to make.

Select one:

True

False

 

7.Which of the following is true when a company pays an expense at the time it was incurred?

Select one:

a. The expense cannot be recognized because cash has been paid

b. The expense must be recognized because it was incurred in this accounting period

c. The expense should be recognized evenly over the next year

d. The expense account should be increased along with accounts payable

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Status NEW Posted 01 Jun 2017 04:06 AM My Price 10.00

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