Question 1

The post-closing trial balance differs from the adjusted trial balance in that it:

Accepted Answer

A)  does not take into account closing entries. 
B)  does not take into account adjusting entries. 
C)  does not include balance sheet accounts. 
D)  does not include income statement accounts. 
A)  does not take into account closing entries. 
B)  does not take into account adjusting entries. 
C)  does not include balance sheet accounts. 
D)  does not include income statement accounts.

Question 2

The difference between accrual-based revenue and accrual-based expenses in the period the activity occurred is called ____________________.

Accepted Answer

The answer of The difference between accrual-based revenue and accrual-based...

Question 3

Suppose a company received a $2,500 utility bill for the month of March but has not yet recorded the transaction or paid the bill. What adjusting entry is necessary at March 31?

Accepted Answer

A)  
  
B)  
  
C)    
D)  No Entry 
A)  
  
B)  
  
C)    
D)  No Entry

Question 4

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Accepted Answer

A)  Assets and stockholders' equity decrease 
B)  Assets and stockholders' equity increase 
C)  Assets and liabilities decrease 
D)  Liabilities increase and stockholders' equity decreases 
A)  Assets and stockholders' equity decrease 
B)  Assets and stockholders' equity increase 
C)  Assets and liabilities decrease 
D)  Liabilities increase and stockholders' equity decreases

Question 5

Court Corporation purchased supplies at a cost of $24,000 during 2012. At January 1, 2012, supplies on hand were $2,000. At December 31, 2012, supplies on hand are $2,100. Calculate supplies expense for 2012.

Accepted Answer

A)  $24,000 
B)  $23,900 
C)  $24,100 
D)  $28,100 
A)  $24,000 
B)  $23,900 
C)  $24,100 
D)  $28,100

Question 6

Which one of the following adjustments increases net income for the period?

Accepted Answer

A)  Recognition of the amount of supplies used. 
B)  Recognition of the revenue earned, but not yet received. 
C)  Recognition of the wages earned, but not paid to employees. 
D)  Recognition of rent costs that had been paid to the landlord in advance. 
A)  Recognition of the amount of supplies used. 
B)  Recognition of the revenue earned, but not yet received. 
C)  Recognition of the wages earned, but not paid to employees. 
D)  Recognition of rent costs that had been paid to the landlord in advance.

Question 7

Glass Corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Glass the amount due on July 31. Under the accrual basis of accounting, how should Glass record the transaction?

Accepted Answer

A)  Glass should recognize the revenue on July 31. 
B)  The July 15th transaction increases revenue, but has no effect on assets because cash has not been received. 
C)  Revenue is recognized after the cost of the merchandise sold has been paid by Glass Corporation 
D)  Revenue is recognized on July 15. The July 31st transaction has no effect on total assets under the accrual basis. 
A)  Glass should recognize the revenue on July 31. 
B)  The July 15th transaction increases revenue, but has no effect on assets because cash has not been received. 
C)  Revenue is recognized after the cost of the merchandise sold has been paid by Glass Corporation 
D)  Revenue is recognized on July 15. The July 31st transaction has no effect on total assets under the accrual basis.

Question 8

Axis Corporation purchased equipment at a cost of $100,000 in January, 2003. As of January 1, 2012, depreciation of $45,000 had been recorded on this asset. Depreciation expense for 2012 is $5,000. After the adjustments are recorded and posted at December 31, 2012, what are the balances for the Depreciation Expense and Accumulated Depreciation?

Accepted Answer

The answer of Axis Corporation purchased equipment at a cost...

Question 9

Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012?

Accepted Answer

A)  Sales commissions are charged to expense in 2012 on all sales revenue recognized in 2012 even though some of the commissions have not been paid. 
B)  Insurance expense is recognized for the total cost of a 1-year policy purchased in May, 2012. 
C)  Rent expenses are recognized as expenses in 2012 even though the last bill received in 2012 will not be paid until 2013. 
D)  Sales commissions paid in 2012 for 2013 commissions are recorded as prepaid expenses for 2012. 
A)  Sales commissions are charged to expense in 2012 on all sales revenue recognized in 2012 even though some of the commissions have not been paid. 
B)  Insurance expense is recognized for the total cost of a 1-year policy purchased in May, 2012. 
C)  Rent expenses are recognized as expenses in 2012 even though the last bill received in 2012 will not be paid until 2013. 
D)  Sales commissions paid in 2012 for 2013 commissions are recorded as prepaid expenses for 2012.

Question 10

Accumulated Depreciation:

Accepted Answer

A)  increases with a debit. 
B)  decreases with a credit. 
C)  increases with a credit. 
D)  is an adjunct account. 
A)  increases with a debit. 
B)  decreases with a credit. 
C)  increases with a credit. 
D)  is an adjunct account.

Question 11

Staple Corp. purchased supplies at a cost of $2,581 during the year. At December 31, supplies on hand are $1,492. Supplies expense for the year was $6,213. How much were supplies on hand at January 1?

Accepted Answer

A)  $7,705 
B)  $8,794 
C)  $6,213 
D)  $5,124 
A)  $7,705 
B)  $8,794 
C)  $6,213 
D)  $5,124

Question 12

Under which accounting method are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Accepted Answer

A)  Under the cash basis of accounting 
B)  Under the accrual basis of accounting 
C)  Under the percentage of sales method of accounting 
D)  Under the direct write-off method of accounting 
A)  Under the cash basis of accounting 
B)  Under the accrual basis of accounting 
C)  Under the percentage of sales method of accounting 
D)  Under the direct write-off method of accounting

Question 13

Adjusting journal entries are made at the end of the period when:

Accepted Answer

A)  the cash basis of accounting is used for all accounting periods. 
B)  cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting. 
C)  management reports its adjustments on the statement of cash flows. 
D)  the company reports revenue in the same period cash is collected. 
A)  the cash basis of accounting is used for all accounting periods. 
B)  cash receipts and payments occur before or after the point in time when revenues and expenses should be recognized under the accrual basis of accounting. 
C)  management reports its adjustments on the statement of cash flows. 
D)  the company reports revenue in the same period cash is collected.

Question 14

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

Accepted Answer

The answer of Under the ____________________ basis of accounting, revenues...

Question 15

Peckham Corporation received a 9-month, 9% note for $100,000 from its agent on July 1, 2012. The note is due on March 31, 2013. If Peckham's accounting period ends on December 31, 2012, how much interest revenue should Peckham recognize during 2012 and 2013?

Accepted Answer

The note is for 9 months and it starts o

Question 16

On December 31, 2012, Bosco Corporation signed a one-year contract to provide services to Cosco Company for $120,000. Cosco will pay for the services on January 1, 2013. Using the accrual basis of accounting, when should Bosco Corporation recognize revenue?

Accepted Answer

A)  On January 1, 2013, when the cash is received from Cosco. 
B)  On December 31, 2013 (the end of the next year), when all services have been provided. 
C)  Equally throughout the year 2013, as the revenue is earned. 
D)  On December 31, 2012, when the contract is signed. 
A)  On January 1, 2013, when the cash is received from Cosco. 
B)  On December 31, 2013 (the end of the next year), when all services have been provided. 
C)  Equally throughout the year 2013, as the revenue is earned. 
D)  On December 31, 2012, when the contract is signed.

Question 17

Hondo Corporation began operations on December 1, 2012, and immediately paid $60,000 for 6 months rent in advance for the period beginning December 1, 2012. Hondo's accounting period ends on December 31, 2012. Indicate how much will be reported for each of the following accounts on Hondo's financial statements for the period ending December 31, 2012. If the amount reported is zero, indicate so by writing $0, and explain why zero is the appropriate amount.

Accepted Answer

The answer of Hondo Corporation began operations on December 1,...

Question 18

What is the significance of the timing in which cash is paid or received as it relates to the adjusting process?

Accepted Answer

Cash paid before an expense is incurred

Question 19

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

Accepted Answer

A)  Assets increase and liabilities decrease. 
B)  Assets increase and stockholders' equity increases. 
C)  Assets decrease and liabilities decrease. 
D)  Liabilities decrease and stockholders' equity increases. 
A)  Assets increase and liabilities decrease. 
B)  Assets increase and stockholders' equity increases. 
C)  Assets decrease and liabilities decrease. 
D)  Liabilities decrease and stockholders' equity increases.

Question 20

Failure to record the supplies used during the year would result in which of the following?

Accepted Answer

A)  Net income being understated 
B)  An overstatement of liabilities 
C)  Assets and Stockholders' equity being overstated 
D)  Total assets being understated 
A)  Net income being understated 
B)  An overstatement of liabilities 
C)  Assets and Stockholders' equity being overstated 
D)  Total assets being understated

The post-closing trial balance differs from the adjusted trial balance in that it:

The difference between accrual-based revenue and accrual-based expenses in the period the activity occurred is called ____________________.

Suppose a company received a $2,500 utility bill for the month of March but has not yet recorded the transaction or paid the bill. What adjusting entry is necessary at March 31?

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Court Corporation purchased supplies at a cost of $24,000 during 2012. At January 1, 2012, supplies on hand were $2,000. At December 31, 2012, supplies on hand are $2,100. Calculate supplies expense for 2012.

Which one of the following adjustments increases net income for the period?

Glass Corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Glass the amount due on July 31. Under the accrual basis of accounting, how should Glass record the transaction?

Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012?

Accumulated Depreciation:

Staple Corp. purchased supplies at a cost of $2,581 during the year. At December 31, supplies on hand are $1,492. Supplies expense for the year was $6,213. How much were supplies on hand at January 1?

Under which accounting method are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Adjusting journal entries are made at the end of the period when:

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

Peckham Corporation received a 9-month, 9% note for $100,000 from its agent on July 1, 2012. The note is due on March 31, 2013. If Peckham's accounting period ends on December 31, 2012, how much interest revenue should Peckham recognize during 2012 and 2013?

On December 31, 2012, Bosco Corporation signed a one-year contract to provide services to Cosco Company for $120,000. Cosco will pay for the services on January 1, 2013. Using the accrual basis of accounting, when should Bosco Corporation recognize revenue?

What is the significance of the timing in which cash is paid or received as it relates to the adjusting process?

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

Failure to record the supplies used during the year would result in which of the following?

Financial Accounting

Corporate Financial Statements

Recording Accounting Transactions

Internal Control and Cash

Receivables

Inventory

Fixed Assets and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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Exam 4: Accrual Accounting and Adjusting Entries

The post-closing trial balance differs from the adjusted trial balance in that it:

The difference between accrual-based revenue and accrual-based expenses in the period the activity occurred is called ____________________.

Suppose a company received a $2,500 utility bill for the month of March but has not yet recorded the transaction or paid the bill. What adjusting entry is necessary at March 31?

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

Court Corporation purchased supplies at a cost of $24,000 during 2012. At January 1, 2012, supplies on hand were $2,000. At December 31, 2012, supplies on hand are $2,100. Calculate supplies expense for 2012.

Which one of the following adjustments increases net income for the period?

Glass Corporation sold merchandise to a customer for $30,000 on credit on July 15. The customer paid Glass the amount due on July 31. Under the accrual basis of accounting, how should Glass record the transaction?

Joe's Auto Company uses the accrual basis of accounting. Which situation violates the matching principle during 2012?

Accumulated Depreciation:

Staple Corp. purchased supplies at a cost of $2,581 during the year. At December 31, supplies on hand are $1,492. Supplies expense for the year was $6,213. How much were supplies on hand at January 1?

Under which accounting method are revenues and expenses recognized in the same accounting period that cash receipts and payments occur?

Adjusting journal entries are made at the end of the period when:

Under the ____________________ basis of accounting, revenues are recognized when earned and expenses when incurred.

Peckham Corporation received a 9-month, 9% note for $100,000 from its agent on July 1, 2012. The note is due on March 31, 2013. If Peckham's accounting period ends on December 31, 2012, how much interest revenue should Peckham recognize during 2012 and 2013?

On December 31, 2012, Bosco Corporation signed a one-year contract to provide services to Cosco Company for $120,000. Cosco will pay for the services on January 1, 2013. Using the accrual basis of accounting, when should Bosco Corporation recognize revenue?

What is the significance of the timing in which cash is paid or received as it relates to the adjusting process?

What effect does "recognizing revenue at the end of the accounting period for rent previously received in advance" have on the accounting equation for the insurance company?

Failure to record the supplies used during the year would result in which of the following?

Financial Accounting

Corporate Financial Statements

Recording Accounting Transactions

Internal Control and Cash

Receivables

Inventory

Fixed Assets and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Filters