CHAPTER 3 NAME ___________________________________
TEN-MINUTE QUIZ SECTION _____________ DATE____________
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_____ 1. An accrual is a transaction in which:
a. The recognition occurs before the exchange of cash
b. The exchange of cash occurs before the recognition
c. The exchange of cash and recognition occur at the same time
d. The exchange of cash will not occur
_____ 2. A deferral is a transaction in which:
a. The recognition occurs before the exchange of cash
b. The exchange of cash occurs before the recognition
c. The exchange of cash and recognition occur at the same time
d. The exchange of cash will not occur
_____ 3. Interest expense is incurred:
a. When cash is paid to the lender
b. As time passes
c. When money is borrowed
d. When the loan is repaid
_____ 4. Which of the following is a typical example of a deferred expense?
a. Prepaid insurance
b. Supplies
c. Both of the above
d. None of the above
_____ 5. Unearned revenue is:
a. A revenue account that appears on the income statement
b. An asset account that appears on the balance sheet
c. An expense account that appears on the income statement
d. A liability account that appears on the balance sheet
_____ 6. Prepaid insurance is:
a. An expense
b. A liability
c. An asset
d. A revenue
_____ 7. Supplies expense is recognized when:
a. Cash is paid for the supplies
b. The supplies are used or consumed
c. Cash is received for the supplies
d. All of the above
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-1
_____ 8. Depreciation is an example of:
a. A deferral adjustment
b. An accrual adjustment
c. A decline in market value
d. A cash transaction
_____ 9. Accumulated depreciation is:
a. A liability
b. An expense
c. A contra-asset
d. An amount saved to purchase a new asset
_____ 10. Abacus Company has the following balances:
Current assets $30,000
Current liabilities 20,000
Stockholders’ equity 60,000
Net sales 100,000
Net income 20,000
What is the company’s profit margin on sales?
a. $60,000
b. $80,000
c 20%
d 60%
ANSWER KEY – CHAPTER 3 – TEN-MINUTE QUIZ
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-2
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-3