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Quiz 3

  1. The net increase in owner’s equity that results from business operations is call:

    1. net income
    2. revenue
    3. an expense
    4. an asset

  2. In general, the accounts in the income statement are:

    1. permanent accounts
    2. temporary accounts
    3. unearned revenue accounts
    4. contra-asset accounts

  3. A business can choose a fiscal year that corresponds to:

    1. the calendar year
    2. the natural business year
    3. any twelve-month period
    4. any of the above

  4. Assigning revenues to the accounting period in which goods are delivered or services performed and expenses to the accounting period in which they are used to produce revenues is called the:

    1. accounting period
    2. continuity assumption
    3. matching rule
    4. recognition rule

  5. Accrual accounting involves all of the following except:

    1. recording all revenues when cash was received
    2. applying the matching rule
    3. recognizing expenses when incurred
    4. adjusting the accounts

  6. Which of the following is an example of a deferral:

    1. Apportioning costs between two or more periods
    2. Recognizing an accrued expense
    3. Recognizing an unrecorded revenue
    4. Recognizing an accrued revenue

  7. Prepaid Insurance shows an ending balance of $2,300. During the period, insurance in the amount of $1,200 expired. The adjusting entry would debit:

    1. Prepaid Insurance for $1,200
    2. Insurance Expense for $1,200
    3. Unexpired Insurance for $1,100
    4. Insurance Expense for $1,100

  8. Adjusting entries are used to:

    1. make financial statements from one period to the next more comparable
    2. make net income reflect cash flow
    3. correct errors in the recording of earlier transactions
    4. record initial transactions

  9. The adjusted trial balance is a list of accounts and their balances at:

    1. the beginning of the accounting period
    2. the end of the accounting period
    3. the end of the accounting period immediately after adjusting entries have be posted
    4. any point during the accounting period

  10. A purchase of office supplies that was recorded in the Office Equipment account would require a correcting entry that:

    1. credits Office Supplies
    2. credits Cash
    3. debits Office Equipment
    4. credits Office Equipment

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