Question 1

___________________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

Accepted Answer

The answer of ___________________ is the process of allocating the...

Question 2

Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 3

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account,one effect will be:

Accepted Answer

A) An overstatement of equity. 
B) An understatement of equity. 
C) An understatement of assets. 
D) An understatement of liabilities. 
E) An overstatement of assets. 
A) An overstatement of equity. 
B) An understatement of equity. 
C) An understatement of assets. 
D) An understatement of liabilities. 
E) An overstatement of assets.

Question 4

On December 31,Chu Company had performed $3,000 of management services for clients that had not yet been billed.Prepare Chu's adjusting entry to record these fees earned.

Accepted Answer

The answer of On December 31,Chu Company had performed $3,000...

Question 5

Which of the following statements is incorrect?

Accepted Answer

A) An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded. 
B) An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger. 
C) Each trial balance amount is used in preparing the financial statements. 
D) Financial statements should be prepared directly from information in the unadjusted trial balance. 
E) Financial statements can be prepared directly from information in the adjusted trial balance. 
A) An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded. 
B) An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger. 
C) Each trial balance amount is used in preparing the financial statements. 
D) Financial statements should be prepared directly from information in the unadjusted trial balance. 
E) Financial statements can be prepared directly from information in the adjusted trial balance.

Question 6

All of the following are true regarding unearned revenues except:

Accepted Answer

A) They are payments received in advance of services performed. 
B) The adjusting entry for unearned revenues increases assets and increases revenues. 
C) The adjusting entry for unearned revenues increases revenues and decreases liabilities. 
D) They are liabilities. 
E) As they are earned,they become revenues. 
A) They are payments received in advance of services performed. 
B) The adjusting entry for unearned revenues increases assets and increases revenues. 
C) The adjusting entry for unearned revenues increases revenues and decreases liabilities. 
D) They are liabilities. 
E) As they are earned,they become revenues.

Question 7

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?

Accepted Answer

A) debit Unearned Fees,$1,548;credit Fees Earned,$1,548. 
B) debit Unearned Fees,$516;credit Fees Earned,$516. 
C) debit Unearned Fees,$1,161;credit Fees Earned,$1,161. 
D) debit Unearned Fees,$129;credit Fees Earned,$129. 
E) debit Unearned Fees,$387;credit Fees Earned,$387. 
A) debit Unearned Fees,$1,548;credit Fees Earned,$1,548. 
B) debit Unearned Fees,$516;credit Fees Earned,$516. 
C) debit Unearned Fees,$1,161;credit Fees Earned,$1,161. 
D) debit Unearned Fees,$129;credit Fees Earned,$129. 
E) debit Unearned Fees,$387;credit Fees Earned,$387.

Question 8

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

Accepted Answer

A) debit Salary Expense,$9,000;credit Cash,$9,000 
B) debit Salary Expense,$9,000;credit Fees Earned,$9,000 
C) debit Salary Expense,$9,000;credit Prepaid Salary,$9,000 
D) debit Salary Expense,$9,000;credit Salaries Payable,$9,000 
E) debit Salaries Payable,$9,000;credit Salary Expense $9,000 
A) debit Salary Expense,$9,000;credit Cash,$9,000 
B) debit Salary Expense,$9,000;credit Fees Earned,$9,000 
C) debit Salary Expense,$9,000;credit Prepaid Salary,$9,000 
D) debit Salary Expense,$9,000;credit Salaries Payable,$9,000 
E) debit Salaries Payable,$9,000;credit Salary Expense $9,000

Question 9

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Accepted Answer

A) Debit Prepaid Insurance,$1,800;credit Cash,$1,800. 
B) Debit Prepaid Insurance,$1,440;credit Insurance Expense,$1,440. 
C) Debit Prepaid Insurance,$360;credit Insurance Expense,$360. 
D) Debit Insurance Expense,$360;credit Prepaid Insurance,$360. 
E) Debit Insurance Expense,$360;credit Prepaid Insurance,$1,440. 
A) Debit Prepaid Insurance,$1,800;credit Cash,$1,800. 
B) Debit Prepaid Insurance,$1,440;credit Insurance Expense,$1,440. 
C) Debit Prepaid Insurance,$360;credit Insurance Expense,$360. 
D) Debit Insurance Expense,$360;credit Prepaid Insurance,$360. 
E) Debit Insurance Expense,$360;credit Prepaid Insurance,$1,440.

Question 10

In accrual accounting,accrued revenues are recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

On April 1,Santa Fe,Inc.paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines.Santa Fe debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.What amount should appear in the Prepaid Subscription account for Santa Fe,Inc.after adjustments on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustment has been made?

Accepted Answer

A) $1,548. 
B) $387. 
C) $516. 
D) $1,161. 
E) $0. 
A) $1,548. 
B) $387. 
C) $516. 
D) $1,161. 
E) $0.

Question 13

On November 1,Jovel Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Accepted Answer

A) No entry required. 
B) Debit Interest Expense,$5,000;credit Interest Payable,$5,000. 
C) Debit Interest Expense,$1,000;credit Note Payable,$1,000. 
D) Debit Interest Receivable,$500;credit Interest Revenue,$500. 
E) Debit Interest Receivable,$1,000;credit Interest Revenue,$1,000. 
A) No entry required. 
B) Debit Interest Expense,$5,000;credit Interest Payable,$5,000. 
C) Debit Interest Expense,$1,000;credit Note Payable,$1,000. 
D) Debit Interest Receivable,$500;credit Interest Revenue,$500. 
E) Debit Interest Receivable,$1,000;credit Interest Revenue,$1,000.

Question 14

A company purchased a new delivery van at a cost of $45,000 on July 1.The truck is estimated to have a useful life of 6 years and a salvage value of $3,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the van during the first year ended December 31?

Accepted Answer

A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000. 
A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000.

Question 15

Sanborn Company rents space to a tenant for $2,200 per month.The tenant currently owes rent for November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Rent Receivable,$6,600;credit Rent Earned,$6,600. 
B) Debit Unearned Rent,$4,400;credit Rent Earned,$4,400. 
C) Debit Unearned Rent,$2,200;credit Rent Earned,$2,200. 
D) Debit Rent Receivable,$4,400;credit Rent Earned,$4,400. 
E) Debit Rent Receivable,$2,200;credit Rent Earned,$2,200. 
A) Debit Rent Receivable,$6,600;credit Rent Earned,$6,600. 
B) Debit Unearned Rent,$4,400;credit Rent Earned,$4,400. 
C) Debit Unearned Rent,$2,200;credit Rent Earned,$2,200. 
D) Debit Rent Receivable,$4,400;credit Rent Earned,$4,400. 
E) Debit Rent Receivable,$2,200;credit Rent Earned,$2,200.

Question 16

On May 1,Sellers Marketing Company received $1,500 from Franco Marcelli for a marketing campaign effective from May 1 this year to April 30 of the following year.The Cash receipt was recorded as unearned fees and at year-end on December 31,$1,000 of the fees had been earned.The adjusting entry on December 31 would be:

Accepted Answer

A) A debit to Unearned Fees and a credit to Cash for $500. 
B) A debit to Fees Earned and a credit to Unearned Fees for $500. 
C) A debit to Unearned Fees and a credit to Fees Earned for $1,000. 
D) A debit to Fees Earned and a credit to Cash for $1,000. 
E) A debit to Fees Earned and a credit to Cash for $500. 
A) A debit to Unearned Fees and a credit to Cash for $500. 
B) A debit to Fees Earned and a credit to Unearned Fees for $500. 
C) A debit to Unearned Fees and a credit to Fees Earned for $1,000. 
D) A debit to Fees Earned and a credit to Cash for $1,000. 
E) A debit to Fees Earned and a credit to Cash for $500.

Question 17

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.

Accepted Answer

The answer of Gracio Co.had the following transactions in the...

Question 18

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

Accepted Answer

The answer of Companies experiencing seasonal variations in sales often...

Question 19

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar reporting period?

Accepted Answer

A) $0. 
B) $516. 
C) $387. 
D) $129. 
E) $430. 
A) $0. 
B) $516. 
C) $387. 
D) $129. 
E) $430.

Question 20

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

Accepted Answer

A) A debit to an expense and credit to a prepaid expense for $7,500. 
B) A debit to an expense and credit to Cash for $7,500. 
C) A debit to a prepaid expense and a credit to Cash for $7,500. 
D) A credit to a prepaid expense and a debit to Cash for $7,500. 
E) A debit to Cash for $7,500 and a credit to an expense for $7,500. 
A) A debit to an expense and credit to a prepaid expense for $7,500. 
B) A debit to an expense and credit to Cash for $7,500. 
C) A debit to a prepaid expense and a credit to Cash for $7,500. 
D) A credit to a prepaid expense and a debit to Cash for $7,500. 
E) A debit to Cash for $7,500 and a credit to an expense for $7,500.

Exam 3: Adjusting Accounts and Preparing Financial Statements

___________________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?

A company records the fees for legal services paid in advance by its clients in an account called Unearned Legal Fees.If the company fails to make the end-of-period adjusting entry to move the portion of these fees that has been earned to a revenue account,one effect will be:

On December 31,Chu Company had performed $3,000 of management services for clients that had not yet been billed.Prepare Chu's adjusting entry to record these fees earned.

Which of the following statements is incorrect?

All of the following are true regarding unearned revenues except:

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

In accrual accounting,accrued revenues are recorded as liabilities.

Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?

On November 1,Jovel Company loaned another company $100,000 at a 6.0% interest rate.The note receivable plus interest will not be collected until March 1 of the following year.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Sanborn Company rents space to a tenant for $2,200 per month.The tenant currently owes rent for November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

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