FAR — Financial Accounting & Reporting — Quiz 40

Questions in this quiz (10)

1. Which adjusting entry records interest earned but not yet received at period end?

   • Debit Cash; Credit Interest Revenue
   • Debit Interest Receivable; Credit Interest Revenue
   • Debit Interest Expense; Credit Cash
   • Debit Notes Receivable; Credit Cash

2. Which account increases when interest is accrued on a note receivable?

   • Interest receivable
   • Accounts payable
   • Expense
   • Liability

3. Which financial statement reports notes receivable as an asset?

   • Income statement
   • Balance sheet
   • Statement of cash flows
   • Statement of retained earnings

4. Which benefit is provided by notes receivable instead of accounts receivable?

   • They eliminate credit risk
   • They provide written agreements and interest income
   • They reduce accounting work
   • They eliminate reporting requirements

5. Which of the following best describes inventory?

   • Long-term investments
   • Goods held for sale to customers
   • Cash received from customers
   • Equipment used in operations

6. Inventory is classified as:

   • Long-term asset
   • Current asset
   • Liability
   • Expense

7. Which inventory system updates records after each transaction?

   • Periodic system
   • Perpetual system
   • Manual system
   • Adjusting system

8. Which inventory system determines balances at the end of the period?

   • Perpetual system
   • Periodic system
   • Continuous system
   • Real-time system

9. Which inventory method assumes oldest items are sold first?

   • LIFO
   • FIFO
   • Weighted-average
   • Specific identification

10. Which inventory method assumes newest items are sold first?

    • FIFO
    • LIFO
    • Weighted-average
    • Specific identification