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On December 31,the balance in the Prepaid Subscription account was $648.This is the remaining balance of a twelve-month subscription purchased on September 30 in the current year.How much did this subscription originally cost?


A) $72
B) $648
C) $7,776
D) $864
E) $1,512

F) A) and B)
G) B) and C)

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A classified balance sheet organizes assets and liabilities into important subgroups that are not found on an unclassified balance sheet.

A) True
B) False

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The accounting principle that requires revenue to be reported when earned is the:


A) Matching principle
B) Revenue recognition principle
C) Time period principle
D) Accrual reporting principle
E) Going-concern principle

F) A) and B)
G) B) and C)

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A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees for these accrued salaries and for other salaries earned through February 9.The January 31 and February 9 journal entries are:


A)
1/31 Salaries Expense 1,400 Salaries Payable 1,4002/9 Salaries Payable 7,000 Salaries Expense 1,400 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline 2 / 9 & \text { Salaries Payable } & 7,000 & \\\hline & \text { Salaries Expense } & 1,400 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
B)
1/31 Salaries Payable 1,400 Salaries Expense 1,400 2/9  Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000\begin{array} { | l | l | r | r | } \hline 1 / 31 & \text { Salaries Payable } & 1,400 & \\\hline & \text { Salaries Expense } & & 1,400 \\\hline \text { 2/9 } & \text { Salaries Expense } & 5,600 & \\\hline & \text { Salaries Payable } & 1,400 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
C)
1/31 Salaries Expense 1,400 Cash 1,4002/9 Salaries Expense 7,000 Cash 7,000\begin{array} { | l | l | c | c | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Cash } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
D)
1/31 Salaries Expense 1,400 Salaries Payable 1,4002/9 Salaries Expense 7,000 Cash 7,000\begin{array} { | l | c | c | c | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}
E)
1/31 Salaries Expense 1,400 Salaries Payable 1,400 2/9  Salaries Expense 5,600 Salaries Payable 1,400 Cash 7,000\begin{array} { | l | c | r | r | } \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \\\hline & \text { Salaries Payable } & & 1,400 \\\hline \text { 2/9 } & \text { Salaries Expense } & 5,600 & \\\hline & \text { Salaries Payable } & 1,400 & \\\hline & \text { Cash } & & 7,000 \\\hline\end{array}

F) All of the above
G) A) and D)

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In accrual accounting,accrued revenues are recorded as liabilities.

A) True
B) False

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The dividends account is normally closed by debiting it.

A) True
B) False

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It is acceptable to credit cash received in advance to revenue accounts when cash is received.

A) True
B) False

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Discuss the importance of periodic reporting and the time period principle.

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For information to be valuable to decisi...

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Based on the following information,determine the current ratio,assuming all accounts have a normal balance?  Cash $6,754 Dividends $2,000 Accounts receivable 13,733 Consulting fees earned 13,71 Office supplies 2,625 Rent expense 3,67 Land 37,153 Salaries expense 6,64 Office equipment 14,535 Telephone expense 560 Accounts payable 6,463 Miscellaneous expense 280 Common stock 54,490 Retained Earnings ?\begin{array}{lrlr}\text { Cash } & \$ 6,754 & \text { Dividends } & \$ 2,000 \\\text { Accounts receivable } & 13,733 & \text { Consulting fees earned } & 13,71 \\\text { Office supplies } & 2,625 & \text { Rent expense } & 3,67 \\\text { Land } & 37,153 & \text { Salaries expense } & 6,64 \\\text { Office equipment } & 14,535 & \text { Telephone expense } & 560 \\\text { Accounts payable } & 6,463 & \text { Miscellaneous expense } & 280 \\\text { Common stock } & 54,490 & \text { Retained Earnings } & ?\end{array}


A) 1.23
B) 3.58
C) 11.57
D) 1.23.
E) 1.57

F) A) and B)
G) A) and C)

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The asset section of a classified balance sheet usually includes:


A) Current assets,investments,plant assets and intangible assets
B) Current assets,long-term assets,revenues and intangible assets
C) Current assets,investments,plant assets and equity
D) Current liabilities,investments,plant assets and intangible assets
E) Current assets,liabilities,plant assets and intangible assets

F) A) and B)
G) B) and C)

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Prepare a statement of retained earnings from the adjusted trial balance of Hanson Storage. Prepare a statement of retained earnings from the adjusted trial balance of Hanson Storage.

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None...

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Match the following terms with the appropriate definition. -     Depreciation 


A)  The expense created by allocating the cost of plant and equipment to the periods in which they are used 
B)  The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses 
C)  Items paid for in advance of receiving their benefits 
D)  Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life 
E)  The accounting system that recognizes revenues when earned and expenses when incurred 
F)  A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters or years 
G)  Revenues earned in a period that are both unrecorded and not yet received in cash or other assets 
H)  Net income divided by net sales 
I)  The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid 

J) G) and I)
K) A) and I)

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Interim financial statements refer to financial reports:


A) That cover less than one year,usually spanning one,three or six-month periods
B) That are prepared before any adjustments have been recorded
C) That show the assets above the liabilities and the liabilities above the equity
D) Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid
E) Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues

F) A) and D)
G) A) and C)

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What is the difference between GAAP and IFRS presentations of the current assets section on the balance sheet?


A) Under IFRS it is mandatory to present current assets first while under GAAP it is customary (but not required) to present noncurrent assets first.
B) Both IFRS and GAAP require that current assets are listed first
C) Under GAAP it is mandatory to present current assets first while under IFRS it is customary (but not required) to present noncurrent assets first.
D) It is customary (but not required) under both IFRS and GAAP to present noncurrent assets first
E) GAAP requires that current assets be presented first while IFRS requires that current assets be presented last

F) B) and C)
G) D) and E)

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The Income Summary account is used:


A) To adjust and update asset and liability accounts
B) To close the revenue and expense accounts
C) To determine the appropriate dividend amount
D) In some situations to replace the income statement
E) To replace the retained earnings account in some businesses

F) B) and C)
G) A) and E)

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An error is indicated if the following account has a balance appearing on the post-closing trial balance:


A) Office Equipment
B) Accumulated Depreciation-Office Equipment
C) Depreciation Expense-Office Equipment
D) Common Stock
E) Salaries Payable

F) C) and E)
G) C) and D)

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Current liabilities include accounts receivable,unearned revenues and salaries payable.

A) True
B) False

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Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings and a balance sheet Use the following partial work sheet from Matthews Lanes to prepare its income statement,statement of changes in retained earnings and a balance sheet

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None...

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Which of the following accounts would be closed at the end of the accounting period?


A) Accounts Receivable
B) Unearned Consulting Fees
C) Fees Earned
D) Retained Earnings
E) Land

F) A) and B)
G) A) and E)

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The first five steps in the accounting cycle include analyzing transactions,journalizing,posting,preparing an unadjusted trial balance and recording adjusting entries.

A) True
B) False

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