Accounting 201 Questions With Accurate Solutions
Economic resources = creditor financing + owner financing - CORRECT
ANSWERWhich of the following is a correct statement of the accounting equation in
economic terms
Accounting 201 Questions With Accurate Solutions
Economic resources = creditor financing + owner financing - CORRECT
ANSWER✅✅✅Which of the following is a correct statement of the accounting equation in
economic terms
Financial accounting - CORRECT ANSWER✅✅✅The area of accounting dealing with the
preparation of financial statements showing a business's results of operations, financial position,
and cash flow is referred to as
Guides to action that apply primarily to the process of financial accounting - CORRECT
ANSWER✅✅✅Generally accepted accounting principles are
Going concern - CORRECT ANSWER✅✅✅Which of the following assumptions that
underlies the preparation of financial statements assumes that companies will continue their
operations over time?
The expenses in the income statement link to the total liability balance. - CORRECT
ANSWER✅✅✅Which one of the following is not a key linkage among the four primary
financial statements?
Revenues - CORRECT ANSWER✅✅✅The increases to a company's resources that result
when goods or services are provided to customers are called?
Operating, investing, and financing - CORRECT ANSWER✅✅✅What categories of cash
flows are presented in a statement of cash flows?
Understandability - CORRECT ANSWER✅✅✅Which one of the following is not a quality
of relevant accounting information?
Net income is determined by linking expenses incurred with related earned sales revenue. -
CORRECT ANSWER✅✅✅The expense recognition (matching) principle states that:
,Liabilities on the balance sheet - CORRECT ANSWER✅✅✅What are the obligations or
debts that a business must pay in cash or in goods and services at some future time because of
past transactions or events called and how are they reported?
Prepare a chart of accounts - CORRECT ANSWER✅✅✅Which of the following is not
among the five major steps in the accounting cycle?
Increase and decrease assets - CORRECT ANSWER✅✅✅Which of the following will
properly record the payment of a two-year insurance policy?
Purchasing equipment with payment due in 30 days - CORRECT ANSWER✅✅✅Which of
the following does not affect stockholders' equity?
The right side of an account - CORRECT ANSWER✅✅✅The term credit refers to:
A debit entry is recorded on the left side of an account - CORRECT ANSWER✅✅✅In a
double-entry accounting system
Debit Accounts Receivable - CORRECT ANSWER✅✅✅A company bills customers for
services rendered on account. Which of the following is one part of recording this transaction?
Net income decreases - CORRECT ANSWER✅✅✅Maxwell Industries recorded and paid
$700 advertising for the current month. Which occurred?
Total debits in the general ledger equal total credits. - CORRECT ANSWER✅✅✅A trial
balance that balances is useful because it indicates with certainty that:
All of the above - CORRECT ANSWER✅✅✅Which of the following errors may escape
detection when a trial balance is taken?
, D) $130,000 = $70,000 + $60,000 - CORRECT ANSWER✅✅✅Assets = Liabilities +
Stockholders' Equity
$120,000 = $60,000 + $60,000
If the company now purchases office equipment on account for $10,000, the accounting equation
will change to:
A debit to an expense account and a credit to a revenue account - CORRECT
ANSWER✅✅✅An adjusting entry will not take the format of which one of the following
entries?
D) Failure to record depreciation expense - CORRECT ANSWER✅✅✅Which one of the
following errors causes an overstatement of net income?
A) Office Supplies Expense 7,000
Office Supplies 7,000 - CORRECT ANSWER✅✅✅Office Supplies had a beginning balance
of $8,000. During the month, purchases of office supplies totaling $2,000 were debited to the
Office Supplies account. If $3,000 worth of office supplies is still on hand at month-end, what is
the proper adjusting entry?
D) Overstates this year's net income and overstates both retained earnings and assets at year-end
- CORRECT ANSWER✅✅✅In preparing its adjusting entries at the end of this year, Johns
Company neglected to adjust the Prepaid Insurance account for the amount of insurance expired
during the year. This error:
C) Balance sheet accounts are overstated and income statement accounts are understated. -
CORRECT ANSWER✅✅✅Which of the following reflect the balances of unearned revenue
prior to adjustment?
A) Overstates assets - CORRECT ANSWER✅✅✅On July 1, Mize paid $24,000 for a two-
year insurance policy, debiting Prepaid Insurance for the full amount. If the adjusting entry is not
made at December 31, the end of the accounting period, how does the error affect this year's
financial statements?
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