ACC100 Chapter 3 Exam Questions with Verified Solutions (Graded A+)
Receiving cash in advance of performing a device creates what for a company? - Answers Liability
The accrual basis of accounting: - Answers Requires revenues to be recorded when the service is
performed
Physical assets of a long-term nature are referred to as: - Answers Fixed assets
Liabilities that will not be due for more than one year are called: - Answers Long-term liabilities
Under the cash basis of accounting expenses. Are recorded when: - Answers Paid
Using accrual accounting, revenue is recorded and reported - Answers when services are rendered
without regard to when cash is received
On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does
this transaction affect Smart's accounts? - Answers Increase prepaid insurance and decreases cash by
$7,200 Each
QRT. Co. received $1,560 advance Zync Inc. as rent for the use of building owned by QRT co. How does
this transaction affect QRT's accounts if QRT recognizes a liability in receipt of the rent? - Answers Cash
is increased and unearned rent in increased
A&M Co. provided services of $1,000,000 to clients in account. How does this transaction affect A&M's
accounts? - Answers Increase accounts receivables and revenue by $1,00,000 each
Electores co. purchased land for $55,000 with $20,000bpaidbin cash and $35,000 in notes payable.
What effect does this transaction affect have in the accounts under the accrual basics of accounting? -
Answers Net increase in assets of $35,000 and a net increase in liabilities of $35,000
XYZ Co. receive $3,000 in payments from clients for serviced billed in a previous month. Which accounts
will be affected and by what amounts under the accrual basis of accounting? - Answers Cash will
increase by $3,000 and accounts receivable decrease by $3,000.
Cash and other assets that are expected to be converted to cash or sold or used up within one year or
less through the normal operations of the business are called: - Answers Currents asserted
ASE company sold goods, receiving $35,000 in cash and $15,000 on credit. How much revenue should it
record under the accrual basis of accounting? - Answers $50,000
The updating is accrual accounting records before preparing financial statements is referred to as the: -
Answers Adjustment process
The fixes asset section of a balance sheet may also be labeled as property, plant, and equipment -
Answers True
Receiving cash in advance of performing a device creates what for a company? - Answers Liability
The accrual basis of accounting: - Answers Requires revenues to be recorded when the service is
performed
Physical assets of a long-term nature are referred to as: - Answers Fixed assets
Liabilities that will not be due for more than one year are called: - Answers Long-term liabilities
Under the cash basis of accounting expenses. Are recorded when: - Answers Paid
Using accrual accounting, revenue is recorded and reported - Answers when services are rendered
without regard to when cash is received
On April 1, Smart, Inc. paid $7,200 for an insurance premium on a three-year insurance policy. How does
this transaction affect Smart's accounts? - Answers Increase prepaid insurance and decreases cash by
$7,200 Each
QRT. Co. received $1,560 advance Zync Inc. as rent for the use of building owned by QRT co. How does
this transaction affect QRT's accounts if QRT recognizes a liability in receipt of the rent? - Answers Cash
is increased and unearned rent in increased
A&M Co. provided services of $1,000,000 to clients in account. How does this transaction affect A&M's
accounts? - Answers Increase accounts receivables and revenue by $1,00,000 each
Electores co. purchased land for $55,000 with $20,000bpaidbin cash and $35,000 in notes payable.
What effect does this transaction affect have in the accounts under the accrual basics of accounting? -
Answers Net increase in assets of $35,000 and a net increase in liabilities of $35,000
XYZ Co. receive $3,000 in payments from clients for serviced billed in a previous month. Which accounts
will be affected and by what amounts under the accrual basis of accounting? - Answers Cash will
increase by $3,000 and accounts receivable decrease by $3,000.
Cash and other assets that are expected to be converted to cash or sold or used up within one year or
less through the normal operations of the business are called: - Answers Currents asserted
ASE company sold goods, receiving $35,000 in cash and $15,000 on credit. How much revenue should it
record under the accrual basis of accounting? - Answers $50,000
The updating is accrual accounting records before preparing financial statements is referred to as the: -
Answers Adjustment process
The fixes asset section of a balance sheet may also be labeled as property, plant, and equipment -
Answers True
