Multiple Choice Answers

An increase in Stockholders’ Equity from revenues earned will result in an increase also in __________.

a. Liabilities
b. Assets
c. Stockholders’ equity
d. No financial statement element

An example of a preventive control is:

a. the use of a bank account
b. separation of the Cashier Department and Accounting Department personnel
c. bonding employees who handle cash
d. accepting payment in currency only

Which of the following is an example of deferred revenue?

a. Prepaid advertising
b. Premiums received in advance
c. Insurance expense
d. Accounts Receivable
If depreciation expense is deducted to arrive at net income, it must be __________ to reconcile net income to cash flows from operations.

a. Added back
b. Subtracted
c. Transferred to accumulated deprecation
d. Closed to retained earnings

The primary difference between the cash and accrual bases of accounting involves the __________.
a. Matching concept
b. Unit of measure
c. Accounting period
d. Going concern