AC/113 AC113 AC 113 UNIT 3 QUIZ

 1.

Question :

A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts?

Student Answer:

 If using the accrual method, increase accounts receivable and cash by $1,000,000 each

 If using the accrual method, increase accounts receivable and revenues by $1,000,000 each

 If using the cash method, increase accounts receivable and unearned revenues by $1,000,000 each

 If using the cash method, increase cash and revenues by $1,000,000 each
 
 
 

Question 2.

Question :

When reconciling net income to net cash flows from operating activities on the statement of cash flows, a decrease in accounts payable would __________.

Student Answer:

 be added back

 be subtracted

 be shown in the financing activities section

 be shown in the investing activities section

Question 3.

Question :

An example of an accrued revenue is __________.

Student Answer:

 interest accrued on a note receivable

 interest accrued on a note payable

 unearned revenues

 salaries owed to employees

Question 4.

Question :

On April 1, Tule Inc. paid $3,600 for an insurance premium on a three-year insurance policy. At the end of December, Tule's fiscal year end, what should be the balance in the Prepaid Insurance account?

Student Answer:

 $2,700

 $3,600

 $2,400

 $0

Question 5.

Question :

Unearned revenue is what type of an account?

Student Answer:

 Asset

 Revenue

 Stockholders' equity

 Liability