Live wire hot rod shop follows the revenue recognition principle

book of accounts.

book of original entry.

book of source documents.

listing.

Multiple Choice Question 111

The ledger should be arranged in

chronological order.

dollar amount order.

financial statement order.

alphabetical order.

Multiple Choice Question 62

Assets normally show

debit and credit balances.

debit balances.

debit or credit balances.

credit balances.

Multiple Choice Question 133

A trial balance may balance even when each of the following occurs except when

incorrect accounts are used in journalizing.

a journal entry is posted twice.

a transposition error is made.

a transaction is not journalized.

Multiple Choice Question 80

During February 2014, its first month of operations, the owner of Ariel Pink Enterprises invested cash of $25,000. Ariel had cash revenues of $5,000 and paid expenses of $7,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

$27,000 debit

$23,000 debit

$2,000 debit

$2,000 credit

Multiple Choice Question 95

The final step in the recording process is to transfer the journal information to the

trial balance.

file cabinets.

financial statements.

ledger.

Multiple Choice Question 77

In the first month of operations for Gallowsbird Industries, the total of the debit entries to the cash account amounted to $9,000 ($4,000 investment by stockholders and revenues of $5,000). The total of the credit entries to the cash account amounted to $5,500 (purchase of equipment $2,000 and payment of expenses $3,500). At the end of the month, the cash account has a(n)

$1,500 credit balance.

$3,500 credit balance.

$1,500 debit balance.

$3,500 debit balance.

Multiple Choice Question 44

Adjustments would not be necessary if financial statements were prepared to reflect net income from

lifetime operations.

monthly operations.

fiscal year operations.

interim operations.

Multiple Choice Question 116

Fugazi City College sold season tickets for the 2013 football season for $200,000. A total of 8 games will be played during September, October and November. Assuming all the games are played, the Unearned Ticket Revenue balance that will be reported on the December 31 balance sheet will be

$0.

$125,000.

$75,000.

$200,000.

Multiple Choice Question 124

On January 1, 2012, Mudhoney Inc. purchased equipment for $30,000. The company is depreciating the equipment at the rate of $500 per month. At January 31, 2013, the balance in Accumulated Depreciation is

$6,500.

$500.

$6,000.

$23,500.

Multiple Choice Question 150

Employees at Tengo Corporation are paid $10,000 cash every Friday for working Monday through Friday. The calendar year accounting period ends on Wednesday, December 31. How much salary expense should be recorded two days later on January 2?

$10,000.

$6,000.

$4,000.

None, matching requires the weekly salary to be accrued on December 31.

Multiple Choice Question 55

Live Wire Hot Rod Shop follows the revenue recognition principle. Live Wire services a car on July 31. The customer picks up the vehicle on August 1 and mails the payment to Live Wire on August 5. Live Wire receives the check in the mail on August 6. When should Live Wire recognize the revenue?

August 5

August 1

July 31

August 6

Multiple Choice Question 166

Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2013 for $50,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2013 is

Insurance Expense10,000

Prepaid Insurance10,000

Insurance Expense7,500

Prepaid Insurance7,500

Insurance Expense2,500

Prepaid Insurance2,500

Prepaid Insurance7,500

Insurance Expense7,500

Multiple Choice Question 163

An expense is recorded under the cash basis only when

it is earned.

cash is paid.

services are performed.

it is incurred.

Multiple Choice Question 70

Which one of the following is not a justification for adjusting entries?

Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Adjusting entries are necessary to ensure that the revenue recognition principle is followed.

Adjusting entries are necessary to ensure that the expense recognition principle is followed.

Adjusting entries are necessary to enable financial statements to be in conformity with GAAP.