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AC/113 AC113 AC 113 UNIT 4 EXAM

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AC 113 UNIT 4 EXAM Question 1. Question : Cash and other assets that are expected to be converted to cash, or sold or, used up within one year or less through the normal operations of the business, are called Student Answer: current assets intangible assets fixed assets notes receivable Question 2. Question : Which type(s) of adjustments are the financial statements affected by? Student Answer: Deferrals Accruals Both deferrals and accruals Neither deferrals nor accruals Question 3. Question : Cash receipts from interest and dividends are classified as Student Answer: investing activities operating activities either financing or investing activities financing activities Question 4. Question : Deferred expenses (prepaid expenses) are items initially recorded as assets but are expected to become _____ over time. Student Answer: stockholders’ equity liabilities expenses assets Question 5. Question : Which asset is NOT depreciated as it usually does NOT lose its ability to provide service? Student Answer: Prepaid insurance Equipment Building Land Question 6. Question : When cash is paid to suppliers on account, which section of the Statement of Cash Flows is affected? Student Answer: Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities There is no effect on the Statement of Cash Flows Question 7. Question : Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in Student Answer: the cash flows from financing activities section the cash flows from investing activities section a separate schedule the cash flows from operating activities section Question 8. Question : The __________ is prepared with various sections, subsections, and captions that aid in its interpretation and analysis. Student Answer: accounting equation retained earnings statement intangible asset section classified balance sheet Question 9. Question : As time passes, fixed assets, other than land, lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called: Student Answer: Equipment allocation Depreciation Accumulation Matching Question 10. Question : When preparing an adjustment under accrual accounting, what would be the proper amount of the adjusting entry if the end of the period balance in the supply account is $4,000 and the amount of supplies on hand is $1650? Student Answer: 3,350 2,350 3,050 5,650 Question 11. Question : If prepaid insurance expires over time, this asset account becomes a (n) Student Answer: liability another asset revenue expense Question 12. Question : What is the purpose of accrual accounting? Student Answer: To avoid misleading information which arises from timing of cash receipts and payments Helps with cash transactions Helps to align the ongoing concern concept To help post to accounts receivable Question 13. Question : Which method of accounting is associated with the matching principle (concept)? Student Answer: Cash Production Accrual Selling Question 14. Question : ___________ is an example of a deferred expense. Student Answer: Unearned revenue Accounts payable Prepaid advertising Accounts receivable Question 15. Question : The accrual basis of accounting recognizes Student Answer: revenues when cash is received and expenses when cash is paid revenues when ea

AC/113 AC113 AC 113 UNIT 4 EXAM

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