ACCY 200 Exam 1 UIUC; Questions & Answers
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The balance sheet equation can be represented by: Correct answer-Assets - Liabilities =
Stockholders' Equity.
Assets = Liabilities + Stockholders' Equity.
Net Assets = Stockholders' Equity.
This accounting method accomplishes much of the matching of revenues and expenses?
Correct answer-Accrual accounting
A fiscal year: Correct answer-is frequently selected based on the firm's operating cycle
Expenses are: Correct answer-decreases in net assets resulting from usual operating
activities
The going concern concept refers to a presumption that: Correct answer-the entity will
continue to operate in the foreseeable future.
A credit entry will: Correct answer-increase a liability account.
A debit entry will: Correct answer-increase the balance of an expense account.
, ACCY 200 Exam 1 UIUC; Questions & Answers
100% Verified
The effect of an adjustment is: Correct answer-to increase the accuracy of the financial
statements.
An expanded version of the accounting equation could be: Correct answer-Assets =
Liabilities + Paid-in Capital + Beginning Retained Earnings + Revenues - Expenses - Dividends
When a manufacturer invests in short-term marketable securities: Correct answer-risk
avoidance is of great importance.
Accounts receivable are reported at: Correct answer-net realizable value
The inventory cost flow assumption describes the flow of product cost: Correct answer-
into the asset (inventory) account and out to the expense (cost of goods sold) account.
examples of an inventory account a manufacturing firm might use? Correct answer-
Finished goods inventory.
Work in process inventory.
Raw materials inventory.
The accrual of interest on short-term marketable securities results in: Correct answer-an
increase in current assets and an increase in net income.
, ACCY 200 Exam 1 UIUC; Questions & Answers
100% Verified
When a firm uses the LIFO inventory cost flow assumption: Correct answer-There is
better matching of revenue and expense is achieved than under FIFO.
One of the principal reasons for selecting the LIFO cost flow assumption instead of the FIFO cost
flow assumption in an inflationary economic environment is that: Correct answer-income
taxes will be lower.
The accounting concept or principle applied when an allowance is provided for estimated
uncollectible accounts receivable is: Correct answer-matching revenue and expense.
Bad debt expense is recognized in the same accounting period as the revenue that is related to
the receivable because: Correct answer-all costs incurred in the current period should be
subtracted from current period revenues.
Expenditures capitalized as long-lived assets generally include those expenditures that:
Correct answer-are material in amount and that have an economic benefit to the entity
that extends beyond the current year.
When a depreciable asset is sold: Correct answer-a gain arises if the sales proceeds
exceed the net book value.
The entry to record depreciation expense: Correct answer-increases a contra asset and
decreases net income.
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