Question

QUESTION 4

The recognition of a revenue would most likely be accompanied by which of the following?

	A.	a decrease in assets
	B.	an increase in assets
	C.	the contribution of capital by an owner
	D.	an increase in liabilities
	E.	none of the other answers provided are correct

1 points   

QUESTION 5

A gain on the disposal of a fixed asset will increase the following on the company’s income statement

	A.	COGS
	B.	Non-operating Income (Loss)
	C.	Net Income (Loss) from Operations
	D.	Sales Revenue
	E.	None of the other answers provided is correct

1 points   

QUESTION 6

Deferred expenses at the end of one accounting period relate to cash payments from a prior period.

  True

  False

1 points   

QUESTION 7

Consider the following accounts introduced in Accy 201 and reintroduced in Accy 202.

(i) Accounts Receivable (ii) Depreciation Expense (iii) Sales Revenue (iv) Prepaid Insurance Expense (v) Retained Earnings

How many of these accounts would be reported on the balance sheet?

	A.	5
	B.	0
	C.	1
	D.	2
	E.	3
	F.	4

Answer 1

4)Correct option is "B"- an increase in assets

Accounting equaiton says ,Asset = Liabilities +equity

So Increase in revenue (which is a closed to equity at year end ) will be justified by Increase in asset such that accounting equation is met.

5)Correct option is "B"- Non-operating Income (Loss)

Sale or purchase of fixed asset is not a part of normal or regular operations of business .Such assets are purchased to support the production of goods or services in normal course of business .Thus sale of such asset is not a part of normal operations as the motive of business is to sell goods or services and not to sell fixed asset .Thus it is a part of other income /(loss) or non operating income.

6)correct option is "True"

Deferred expense is a cost that is paid in advance in one accounting period for expenses to be incurred in another accounting period(s).

7)correct option is "E" -3

Accounts to be reported in balance sheet as at end of accounting period are those accounts which are permanent in nature and are not closed in an accounting period rather benefit of those is carried to future accounting period.

(i)Accounts receivable)

(iv)prepaid insurance

(v)Retained earning)

Sales revenue and depreciation expense is closed to income statement at end of period.