Accounting Cycle and Transactions
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Questions and Answers

What type of account is affected by the closing process?

  • Liability account
  • Capital account (correct)
  • Asset account
  • Expense account

What best describes an accrued revenue?

  • An amount earned but not collected (correct)
  • An amount not collected and not earned
  • An amount earned and collected
  • An amount collected but not earned

What is the fundamental purpose of accounting that is NOT correct?

  • To provide quantitative information
  • To provide timely information
  • To provide qualitative information (correct)
  • To provide financial information

What is the term for an entity's ability to adapt to changes?

<p>Financial flexibility (C)</p> Signup and view all the answers

What is the criterion by which accounting information can be judged?

<p>Usefulness for decision making (C)</p> Signup and view all the answers

What is the primary purpose of source documents in the accounting cycle?

<p>To collect economic data in transaction and other accountable events (D)</p> Signup and view all the answers

What is the effect of a cash purchase of inventory on total assets?

<p>Total assets remain unchanged (B)</p> Signup and view all the answers

What type of account is credited when recording an increase in revenue?

<p>Revenue account (C)</p> Signup and view all the answers

What is the purpose of adjusting entries involving doubtful accounts?

<p>To record an expense that has already been incurred but not yet paid (C)</p> Signup and view all the answers

What type of account is initially recorded when an advanced payment is made for an expense?

<p>Asset account (C)</p> Signup and view all the answers

What is the purpose of a trial balance?

<p>To prove that total debit and total credit in the ledger are equal (B)</p> Signup and view all the answers

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