#1
Which financial statement reports a company's revenues and expenses over a period of time?
Income Statement
ExplanationReports company's revenues and expenses.
#2
What is the primary purpose of the balance sheet?
To list the company's assets, liabilities, and equity at a specific date
ExplanationLists company's assets, liabilities, and equity at a specific date.
#3
Which of the following is an adjusting entry?
Recording accrued salaries at the end of the accounting period
ExplanationAdjusting entry records accrued salaries at period end.
#4
Which financial statement is prepared first during the accounting cycle?
Income Statement
ExplanationPrepares Income Statement first in the accounting cycle.
#5
Which financial statement reports the cash inflows and outflows of a company?
Statement of Cash Flows
ExplanationReports company's cash inflows and outflows.
#6
What is the purpose of the statement of retained earnings?
To report the changes in the company's equity over a period of time
ExplanationReports changes in company's equity over time.
#7
Which of the following is true about the accrual basis of accounting?
It records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid
ExplanationAccrual basis records revenues and expenses when earned or incurred.
#8
Which of the following is an example of a contra account?
Accumulated Depreciation
ExplanationExample of contra account is Accumulated Depreciation.
#9
Which of the following is an example of a prepaid expense?
Rent paid in advance
ExplanationExample of prepaid expense is rent paid in advance.
#10
When are adjusting entries typically made?
At the end of the accounting period
ExplanationAdjusting entries are typically made at period end.
#11
Which financial statement is used to determine the ending balance of retained earnings?
Statement of Retained Earnings
ExplanationDetermines ending balance of retained earnings.
#12
Which financial statement is affected by closing entries?
Statement of Retained Earnings
ExplanationClosing entries affect the Statement of Retained Earnings.