Question 1

A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Accepted Answer

A) 85.4%. 
B) 117.1%. 
C) 53.9%. 
D) 217.1%. 
E) 46.1%. 
A) 85.4%. 
B) 117.1%. 
C) 53.9%. 
D) 217.1%. 
E) 46.1%.

Question 2

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Accepted Answer

A) Both U.S.GAAP and IFRS include guidance for adjusting entries. 
B) Both U.S.GAAP and IFRS prepare the same four financial statements. 
C) U.S.GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet. 
D) U.S.GAAP balance sheets report current items first. 
E) IFRS balance sheets normally present noncurrent items first. 
A) Both U.S.GAAP and IFRS include guidance for adjusting entries. 
B) Both U.S.GAAP and IFRS prepare the same four financial statements. 
C) U.S.GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet. 
D) U.S.GAAP balance sheets report current items first. 
E) IFRS balance sheets normally present noncurrent items first.

Question 3

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Accepted Answer

A) Debit Cash and credit Legal Fees Earned. 
B) Debit Cash and credit Unearned Legal Fees. 
C) Debit Unearned Legal Fees and credit Legal Fees Earned. 
D) Debit Legal Fees Earned and credit Unearned Legal Fees. 
E) Debit Unearned Legal Fees and credit Accounts Receivable. 
A) Debit Cash and credit Legal Fees Earned. 
B) Debit Cash and credit Unearned Legal Fees. 
C) Debit Unearned Legal Fees and credit Legal Fees Earned. 
D) Debit Legal Fees Earned and credit Unearned Legal Fees. 
E) Debit Unearned Legal Fees and credit Accounts Receivable.

Question 4

On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

Accepted Answer

The answer of On December 14 Branch Company received $3,100...

Question 5

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

Accepted Answer

overstated

Question 6

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Accepted Answer

The answer of ______________________ are required at the end of...

Question 7

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Accepted Answer

A) True 
 B)False

Question 8

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the furniture for the first year ended December 31?

Accepted Answer

A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750 
A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750

Question 9

On January 1,Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees.The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term.What amount of tuition revenue should the college recognize on February 28?

Accepted Answer

A) $300,000. 
B) $600,000. 
C) $800,000. 
D) $900,000. 
E) $1,200,000. 
A) $300,000. 
B) $600,000. 
C) $800,000. 
D) $900,000. 
E) $1,200,000.

Question 10

A trial balance prepared after adjustments have been recorded is called a(n):

Accepted Answer

A) Balance sheet. 
B) Adjusted trial balance. 
C) Unadjusted trial balance. 
D) Classified balance sheet. 
E) Unclassified balance sheet. 
A) Balance sheet. 
B) Adjusted trial balance. 
C) Unadjusted trial balance. 
D) Classified balance sheet. 
E) Unclassified balance sheet.

Question 11

Which of the following statements is incorrect?

Accepted Answer

A) An income statement reports revenues earned less expenses incurred. 
B) An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C) Interim financial reports can be based on one-month or three-month accounting periods. 
D) The fiscal year is any 12 consecutive months (or 52 weeks)used by a business as its annual accounting period. 
E) Property,plant,and equipment are referred to as plant assets. 
A) An income statement reports revenues earned less expenses incurred. 
B) An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C) Interim financial reports can be based on one-month or three-month accounting periods. 
D) The fiscal year is any 12 consecutive months (or 52 weeks)used by a business as its annual accounting period. 
E) Property,plant,and equipment are referred to as plant assets.

Question 12

A balance sheet that places the assets above the liabilities and equity is called a(n):

Accepted Answer

A) Report form balance sheet. 
B) Account form balance sheet. 
C) Classified balance sheet. 
D) Unadjusted balance sheet. 
E) Unclassified balance sheet. 
A) Report form balance sheet. 
B) Account form balance sheet. 
C) Classified balance sheet. 
D) Unadjusted balance sheet. 
E) Unclassified balance sheet.

Question 13

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Prepaid Insurance $6,000;credit Cash $6,000. 
B) Debit Insurance Expense $3,000;credit Accounts Payable $3,000. 
C) Debit Insurance Expense $3,000;credit Prepaid Insurance $3,000. 
D) Debit Cash $6,000;credit Prepaid Insurance $6,000. 
E) Debit Insurance Expense $6,000;credit Accounts Payable $6,000. 
A) Debit Prepaid Insurance $6,000;credit Cash $6,000. 
B) Debit Insurance Expense $3,000;credit Accounts Payable $3,000. 
C) Debit Insurance Expense $3,000;credit Prepaid Insurance $3,000. 
D) Debit Cash $6,000;credit Prepaid Insurance $6,000. 
E) Debit Insurance Expense $6,000;credit Accounts Payable $6,000.

Question 14

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Accepted Answer

A) Fiscal year. 
B) Calendar year. 
C) Natural business year. 
D) Accounting period. 
E) Interim period. 
A) Fiscal year. 
B) Calendar year. 
C) Natural business year. 
D) Accounting period. 
E) Interim period.

Question 15

An _______________________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

Accepted Answer

adjusted t

Question 16

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.The journal entry made by Fragmental Co.at year-end on December 31 would be:

Accepted Answer

A) A debit to Rent Revenue and a credit to Cash for $2,400. 
B) A debit to Rent Revenue and a credit to Unearned Rent for $2,400. 
C) A debit to Cash and a credit to Rent Revenue for $6,400. 
D) A debit to Unearned Rent and a credit to Rent Earned for $2,400. 
E) A debit to Unearned Rent and a credit to Rent Earned for $4,000. 
A) A debit to Rent Revenue and a credit to Cash for $2,400. 
B) A debit to Rent Revenue and a credit to Unearned Rent for $2,400. 
C) A debit to Cash and a credit to Rent Revenue for $6,400. 
D) A debit to Unearned Rent and a credit to Rent Earned for $2,400. 
E) A debit to Unearned Rent and a credit to Rent Earned for $4,000.

Question 17

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Accepted Answer

A) Assets overstated and equity understated. 
B) Assets and equity both understated. 
C) Assets overstated,net income understated,and equity overstated. 
D) Assets,net income,and equity understated. 
E) Assets,net income,and equity overstated. 
A) Assets overstated and equity understated. 
B) Assets and equity both understated. 
C) Assets overstated,net income understated,and equity overstated. 
D) Assets,net income,and equity understated. 
E) Assets,net income,and equity overstated.

Question 18

The adjusted trial balance contains information pertaining to:

Accepted Answer

A) Asset accounts only. 
B) Balance sheet accounts only. 
C) Income statement accounts only. 
D) All general ledger accounts. 
E) Revenue accounts only. 
A) Asset accounts only. 
B) Balance sheet accounts only. 
C) Income statement accounts only. 
D) All general ledger accounts. 
E) Revenue accounts only.

Question 19

Wilson Company paid insurance premiums for four months in advance on November 1.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

Accepted Answer

A) Debit Insurance Expense,$2,400;credit Prepaid Insurance,$2,400. 
B) Debit Prepaid Insurance,$2,400;credit Insurance Expense,$2,400. 
C) Debit Insurance Expense,$1,200;credit Prepaid Insurance,$1,200. 
D) Debit Prepaid Insurance,$1,200;credit Insurance Expense,$1,200. 
E) Debit Cash,$4,800;Credit Prepaid Insurance,$4,800. 
A) Debit Insurance Expense,$2,400;credit Prepaid Insurance,$2,400. 
B) Debit Prepaid Insurance,$2,400;credit Insurance Expense,$2,400. 
C) Debit Insurance Expense,$1,200;credit Prepaid Insurance,$1,200. 
D) Debit Prepaid Insurance,$1,200;credit Insurance Expense,$1,200. 
E) Debit Cash,$4,800;Credit Prepaid Insurance,$4,800.

Question 20

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Accepted Answer

A) $4,000. 
B) $800. 
C) $1,600. 
D) $2,400. 
E) $3,200. 
A) $4,000. 
B) $800. 
C) $1,600. 
D) $2,400. 
E) $3,200.

Exam 3: Adjusting Accounts and Preparing Financial Statements

A company had $7,000,000 in net income for the year.Its net sales were $15,200,000 for the same period.Calculate its profit margin.

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

On December 14 Branch Company received $3,100 cash for consulting services that will be completed on January 12.Branch records all such prepayments by customers in a liability account.Prepare the January 12 adjusting journal entry.

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

A trial balance prepared after adjustments have been recorded is called a(n):

Which of the following statements is incorrect?

A balance sheet that places the assets above the liabilities and equity is called a(n):

On December 31,2015 Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage.The adjusting entry needed on December 31 is:

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

An _______________________ is a listing of all of the accounts in the ledger with their account balances after adjustments are made.

Fragmental Co.leased a portion of its store to another company for eight months beginning on October 1,at a monthly rate of $800.Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue.The journal entry made by Fragmental Co.at year-end on December 31 would be:

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

The adjusted trial balance contains information pertaining to:

Wilson Company paid insurance premiums for four months in advance on November 1.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

A company pays its employees $4,000 each Friday,which amounts to $800 per day for the five-day workweek that begins on Monday.If the monthly accounting period ends on Thursday and the employees worked through Thursday,the amount of salaries earned but unpaid at the end of the accounting period is:

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

Filters

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be _ and equity would be _.