Accounting For Accruals And Deferals Answer Key

Which of the following describes the matching concept? Expenses should be matched with the revenue they produce. An accrual occurs when ______. Revenue is recognized before the associated cash is collected *an expense is recognized before the associated cash is paid Issuing stock for cash impacts the ______. *balance sheet *statement of cash flows An account receivable is an expectation to ______ in the future. Collect cash When a company incurs a cash expense, the balance in the ______. *cash account decreases *expense account increases Accrued salary expense is normally recorded in a year-end _____ entry. Adjusting Westchester Company signed a legally binding contract to provide $3,000 of services to be performed in the future. Signing the agreement ______. Did not affect retained earnings *did not affect cash flow Issuing common stock for cash is a(n) ______ transaction. Asset source True or false: Accrual accounting practices cause differences between net income on the income statement and cash flow from operating activities on the statement of cash flows. Accounts receivable is a(n) ______. asset True or false: All increases shown on the statement of changes in stockholders' equity are from earnings during the accounting period. When a company incurs a cash expense, the balance in the cash account ______.decreases and the balance in the expense account increases When an employee works in Year 1, but is paid in Year 2, the employer will be required to recognize ______ expense in Year 1. Accrued Which of the following accounts appear on the balance sheet? Assets, liabilities, stockholder’s equity *cash *accounts receivable *salaries payable Signing a contract to provide future services ______. Has no effect on financial statements Grey Company earned $5,000 of revenue on account during Year 1, but collected the cash associated with the receivables in Year 2. Based on this information alone, under accrual accounting, the company will report ______. Net income of $5,000 and cash inflow from operations of zero in Year 1. Which of the following accounts appears on the income statement?*salaries expense *service revenue The statement of changes in stockholders' equity reports increases in equity from ______.issued stocks and earnings After the closing process is complete, which of the following accounts will have a zero balance? *revenue *expense *dividends *service revenue *salaries expense When a company incurs a cash expense, the balance in the ______. *cash account decreases *expense account increases If a company has total assets of $75,000 and liabilities of $30,000, then total stockholders' equity must be equal to $45000 In Year 1 Silver Sinks, Inc. recorded $33,000 of salary payable and paid employees $28,000 in cash. The balance of the salaries payable was paid in in Year 2. Based on this information alone, the company’s financial statements show ______. Expense of $33,000 and cash outflow from operating activities of $28,000 in Year 1 Which of the following correctly describes the sequence of the steps in the accounting cycle? True or false: Accrual accounting practices cause differences between net income on the income statement and cash flow from operating activities on the statement of cash flows. A company recognized an accrued salary expense in Year 1 and paid its employees in Year 2. The financial statements affected in Year 2 are the ______. *statement of cash flows *balance sheet Which of the following accounts is closed at the end of the accounting cycle? Salary expense The Wellness Center (TWC) paid $120 cash for lawn care service that was performed on the day the payment was made. Based on this information, TWC should report a(n) ______. An expense titled lawn service expense Unearned revenue represents ______. An obligation to provide service in the future If a company recognizes an accrued salary expense in Year 1 and pays its employees in Year 2, which financial statements will be affected in Year 1? *balance sheet *statement of changes in stockholders’ equity *income statement After the closing process is complete, which of the following accounts will have a zero balance? *salaries expense *service revenue During the closing process, the balances in ______ accounts are transfered to Retained Earnings. *Revenue *Expense *Dividend On January 1, Year 1, The Wellness Center (TWC) paid $2,400 cash for a oneyear insurance policy. Based on this information, on January 1, Year 1, TWC should report a(n) ______. Expense titled insurance expense Paying cash to purchase prepaid rent is a(n) ______ transaction. Asset exchange Unearned Revenue is a(n) ______ account. Liability Which regulatory body requires its members to comply with the Code of Professional Conduct. Section I of the Code includes 6 articles that provide general guidelines for ethical conduct? AICPA A company recognized an accrued salary expense in Year 1 and paid its employees in Year 2. The financial statements affected in Year 2 are the ______. *statement of cash flows *balance sheet True/False: Adjusting entries are prepared at the beginning of the accounting period so that all account balances are updated prior to their use in preparing financial statements. Which of the following features are required by the Sarbanes Oxley Act? Firms that provide public audits are prohibited from providing a variety of other non audit services *independent auditors conducting audits of public companies must register with the Public Company Accounting Oversight Board (PCAOB) True or False: An asset is the cost of a good or service that will be used in the future to generate revenue. The three elements of the fraud triangle are ___, ___ and rationalization. Opportunity, pressure The collection of cash from an account receivable is a(n) ______ transaction. Asset exchange Which principle of the AICPA Code of Professional Conduct requires members to strive continually to improve competence? Due Care Which of the following individuals must certify in writing that they have reviewed a company's financial reports and that the reports they reviewed present fairly the company’s financial status? *CFO *CEO Which of the following is not one of the components of the fraud triangle? *Honesty Recognizing revenue on account is a(n) ______ transaction. Asset source