Question 1

Which of the following is an example of an obvious financial reporting fraud as discussed in the text?
A)Closing the books at the end of the reporting period.
B)Transferring assets to an affiliate at more than their actual value.
C)Recording as expenses expenditures that should have been classified as expenses.
D)Recording a liability when title to merchandise passes to the purchaser.

Accepted Answer

Transferring assets to an affiliate at more than their actual value is an example of financial reporting fraud known as "overstating assets" or "inflating revenues". This is a deliberate misstatement of the company's financial situation to make it appear more successful than it actually is.

Question 2

The account most recently posted is determined most efficiently by referring to the
A)Post.Ref.column of the ledger.
B)balance column of the ledger.
C)date column of the general journal.
D)Post.Ref.column of the general journal.

Accepted Answer

The Post.Ref.column of the general journal contains the reference number of the account that was most recently posted. Thus, it is the most efficient way to determine the account that was most recently posted.

Question 3

A purchase is recognized in the accounting records when
A)payment is made for the item purchased.
B)the purchase requisition is sent to the purchasing department.
C)title transfers from the seller to the buyer.
D)the buyer receives the seller's bill.

Accepted Answer

The recognition of a purchase is based on the transfer of title from the seller to the buyer, regardless of whether payment has been made or the buyer has received the seller's bill.

Question 4

Which of the following is not an example of obvious financial reporting frauds as discussed in the text?
A)Keeping the books open for a few days after the end of the reporting period.
B)Transferring assets to an affiliate at more than their actual value.
C)Recording as assets expenditures that should have been classified as expenses.
D)Recording a liability when title to merchandise passes to the purchaser.

Accepted Answer

Recording a liability when title to merchandise passes to the purchaser is a standard accounting practice, not a financial reporting fraud. The other options (A, B, C) involve manipulations that can distort financial statements and mislead stakeholders.

Question 5

Mesquite,Inc.engaged in the following transactions during October:  
-What is the amount of cash still to be received?
A)$2,300
B)$1,500
C)$1,900
D)$400

Accepted Answer

The transactions that involve cash receipts are:

- Received cash of $1,500 for services rendered to customers.
- Collected $400 on account from a customer 
- Received $2,300 cash for services to be performed in the future.

The total cash received is $1,500 + $400 + $2,300 = $4,200
However, the question asks for the amount of cash still to be received, which is the remaining balance of the services to be performed in the future: $2,300. Therefore, the correct answer is B.

Question 6

Which of the following is a business event that is not considered a recordable transaction?
A)A company receives a product previously ordered.
B)A company pays an employee for work performed.
C)A customer inquires about the availability of a service.
D)A customer purchases a service.

Accepted Answer

A customer inquiry is not a recordable transaction as it does not involve any exchange of goods or services for a consideration. The other options involve either receiving or providing goods or services and/or making payments, which are all recordable transactions.

Question 7

Posting is performed by transferring information from the
A)source documents to the journal.
B)source documents to the ledger.
C)journal to the ledger.
D)ledger to the journal.

Accepted Answer

Posting involves transferring information from the journal to the ledger. The source documents are used to record transactions in the journal, and then those transactions are transferred to the appropriate accounts in the ledger through posting. Therefore, option C is the correct answer.

Question 8

The process of transferring journal entry information from the journal to the ledger is called
A)journalizing.
B)posting.
C)footing.
D)analyzing.

Accepted Answer

Posting is the process of transferring journal entry information to the ledger accounts.

Question 9

Copper Company engaged in the following transactions during April If the balance in cash after these transactions is $115,000,how much cash was collected on account?
A)$67,000
B)$62,000
C)$15,000
D)$29,000

Accepted Answer

The answer of Copper Company engaged in the following transactions...

Question 10

Which of the following is a business event that is considered a recordable transaction?
A)A company hires a new employee.
B)A customer purchases merchandise.
C)A company orders a product from a supplier.
D)An employee sends a purchase requisition to the purchasing department.

Accepted Answer

A transaction involving a customer purchasing merchandise is considered a recordable transaction because it involves an exchange of goods or services for payment, which affects the company's revenue and inventory. The other options are internal transactions that do not directly involve revenue or inventory.

Question 11

Mesquite,Inc.engaged in the following transactions during October:  
-What is the amount of cash still to be paid?
A)$2,300
B)$2,100
C)$1,300
D)$400

Accepted Answer

The answer of Mesquite,Inc.engaged in the following transactions during October:...

Question 12

Copper Company engaged in the following transactions during April

-What is the amount of cash still to be collected?
A)$126,000
B)$341,000
C)$144,000
D)$18,000

Accepted Answer

The correct choice is $126,000, which is the amount of cash still to be collected.

Question 13

Copper Company engaged in the following transactions during April

-What is the amount of cash still to be paid?
A)$18,000
B)$47,000
C)$94,000
D)$52,000

Accepted Answer

The total amount of the invoice is $100,000. The customer has already paid $53,000, so the amount of cash still to be paid is $100,000 - $53,000 = $47,000.

Question 14

Which of the following guidelines is correct?
A)Dollar signs ($)are required in all financial statements and other schedules.
B)Account names are capitalized when referenced in text or listed in work documents like the journal or ledger.
C)In financial statements only the first word of an account name is capitalized.
D)All of these choices.

Accepted Answer

The answer of Which of the following guidelines is correct?
A)Dollar...

Question 15

Mesquite,Inc.engaged in the following transactions during October:  
-What is the balance in cash after these transactions?
A)$940
B)$1,140
C)$740
D)$2,440

Accepted Answer

- Starting cash balance: $500
- Oct 4: Cash received from clients: $1,000
- Oct 8: Cash paid for rent: -$400
- Oct 15: Cash paid to suppliers: -$600
- Oct 22: Cash received from sale of equipment: $500
- Oct 31: Cash paid for salaries: -$420

Total cash balance = $500 + $1,000 - $400 - $600 + $500 - $420 = $1,140.
Therefore, the correct answer is Option B.

Question 16

Which of the following business events is not a transaction?
A)Signing a contract.
B)Paying wages.
C)Receiving goods.
D)Purchasing a service.

Accepted Answer

Signing a contract is considered a legal agreement between parties and is not a direct exchange of goods, services, or money, making it not a transaction.

Question 17

Mesquite,Inc.is ordering a new machine to be used in its manufacturing facility.Which of the following events would trigger the recognition of the machine and related liability on Mesquite's books?
A)The company generates a purchase order.
B)A technician installs the machine on the floor of the manufacturing facility.
C)The company receives the machine.
D)The company pays the bill from the supplier.

Accepted Answer

The recognition of the machine and related liability on Mesquite's books would be triggered when the company receives the machine. Until the machine is received, the company has not yet acquired the asset or incurred the liability for it. The other events may be important for the purchasing and installation of the machine, but they do not trigger the recognition of the asset and liability on the company's books.

Question 18

Copper Company engaged in the following transactions during April

-What is the balance in cash after these transactions?
A)$302,000
B)$190,000
C)$144,000
D)$87,000

Accepted Answer

The balance in cash is calculated by considering all transactions that affect cash. Without specific transaction details, it's assumed that option B is the correct balance based on the context provided.

Question 19

Which of the following accounts should be debited in a journal entry?
A)Accounts Receivable,when it has been decreased.
B)Dividends,when it has been increased.
C)Wages Payable,when it has been increased.
D)All of these choices.

Accepted Answer

In accounting, a debit entry is used to record increases in assets and expenses and decreases in liabilities, equity, and income. Therefore, when dividends are increased, it represents a distribution of earnings to shareholders, which decreases retained earnings (an equity account), and thus, the Dividends account should be debited. Accounts Receivable is an asset account, so it would be credited, not debited, when decreased. Wages Payable is a liability account, so it would be credited, not debited, when increased.

Question 20

Slim Co.is ordering a new computer for its corporate office.Which of the following events would trigger the recognition of the computer and related liability on Slim's books?
A)The company generates a purchase order.
B)The purchasing department sends a purchase order to the supplier.
C)The company receives the computer.
D)The company receives the bill from the supplier.

Accepted Answer

Recognition of an asset and related liability occurs when the company gains control of the asset, which typically happens upon receipt of the goods, in this case, the computer.

Quiz 2: Measurement Concepts: Recording Business Transactions

Which of the following is an example of an obvious financial reporting fraud as discussed in the text?

The account most recently posted is determined most efficiently by referring to the

A purchase is recognized in the accounting records when

Which of the following is not an example of obvious financial reporting frauds as discussed in the text?

Mesquite,Inc.engaged in the following transactions during October: -What is the amount of cash still to be received?

Which of the following is a business event that is not considered a recordable transaction?

Posting is performed by transferring information from the

The process of transferring journal entry information from the journal to the ledger is called

Copper Company engaged in the following transactions during April If the balance in cash after these transactions is $115,000,how much cash was collected on account?

Which of the following is a business event that is considered a recordable transaction?

Mesquite,Inc.engaged in the following transactions during October: -What is the amount of cash still to be paid?

Copper Company engaged in the following transactions during April -What is the amount of cash still to be collected?

Copper Company engaged in the following transactions during April -What is the amount of cash still to be paid?

Which of the following guidelines is correct?

Mesquite,Inc.engaged in the following transactions during October: -What is the balance in cash after these transactions?

Which of the following business events is not a transaction?

Mesquite,Inc.is ordering a new machine to be used in its manufacturing facility.Which of the following events would trigger the recognition of the machine and related liability on Mesquite's books?

Copper Company engaged in the following transactions during April -What is the balance in cash after these transactions?

Which of the following accounts should be debited in a journal entry?

Slim Co.is ordering a new computer for its corporate office.Which of the following events would trigger the recognition of the computer and related liability on Slim's books?