CHAPTER 3: REVIEW OF A COMPANYS ACCOUNTING SYSTEM

CHAPTER 3: REVIEW OF A COMPANY’S ACCOUNTING SYSTEM

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• The primary purpose of an accounting system is to record, organize. summarize, and report useful information to

external financial statement users and stakeholders, as well as to company management, who make operating, investing and financing decisions.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.1 - LO: 3.1

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• The another interpretation of the accounting equation is Assets = Liabilities + Contributed Capital + Beginning

Retained Earnings + Net Income - Dividends + Beginning Accumulated Other Comprehensive Income + Other Comprehensive Income.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Moderate

LEARNING OBJECTIVES: ACCT.WHAL.16.3.1 - LO: 3.1

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• The accounting cycle followed each period by a company includes recording transactions, storing the data, organizing

the information, summarizing the events and arrangements, adjusting the accounts, reporting the accounting information in financial statements, and then closing the books.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.2 - LO: 3.2

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

Intermediate Accounting Reporting And Analysis 2017 Update 2nd Edition Wahlen Test Bank Visit TestBankDeal.com to get complete for all chapters

Chapter 3: Review of a Company's Accounting System

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• The last step in the accounting cycle is to prepare the financial statements.
• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.2 - LO: 3.2

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• An advantage of using the general journal is to prevent errors.
• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.3 - LO: 3.3

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• The general journal has all journal entry transactions listed by account title.
• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.3 - LO: 3.3

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

Chapter 3: Review of a Company's Accounting System

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• The trial balance does help find some errors but it will not identify errors resulting from transactions that have not been

posted or transactions that were posted twice.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.4 - LO: 3.4

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• If the trial balance does not balance, the preparer should check to see if the difference is evenly divisible by 9. If so

there may be a transposition.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.4 - LO: 3.4

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• Deferrals are transactions, events, or arrangements in which the cash flows occur after the related expenses are incurred

or revenues earned.

• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.5 - LO: 3.5

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

Chapter 3: Review of a Company's Accounting System

© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• In order to prepare the financial statements, the ending balance in each account in the ledger is recomputed to ensure

all effects of the adjusting entries have been captured.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.6 - LO: 3.6

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• When preparing the financial statements the adjusted trial balance is prepared listing all the accounts and associated

balances after the closing entries.

• True
• False

ANSWER: False

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.6 - LO: 3.6

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering

• The purpose of closing entries is to reduce the balance in the temporary (periodic) accounts to zero and to update the

Retained Earnings account.

• True
• False

ANSWER: True

POINTS: 1

DIFFICULTY: Easy

LEARNING OBJECTIVES: ACCT.WHAL.16.3.7 - LO: 3.7

NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking - BUSPROG: Analytic LOCAL STANDARDS: United States - OH - Default City - AICPA: FN-Decision Modeling KEYWORDS: Bloom’s: Remembering