Question 1

Which of the following account balances would be closed at year-end by crediting the account?

Accepted Answer

A)  Investment revenue. 
B)  Loss on sale of building. 
C) Sales revenues. 
D) Unearned revenues. 
A)  Investment revenue. 
B)  Loss on sale of building. 
C) Sales revenues. 
D) Unearned revenues.

Question 2

On April 1, 2014, the premium on a one-year insurance policy was purchased for $3,000 cash with the insurance coverage beginning on that date. The books are adjusted only at year-end. Which of the following correctly describes the effect on the financial statements of the December 31, 2014 adjusting entry?

Accepted Answer

A)  Prepaid insurance will decrease $750. 
B)  Insurance expense will increase $750. 
C) Insurance expense will increase $2,250. 
D) Prepaid insurance will increase $2,250. 
A)  Prepaid insurance will decrease $750. 
B)  Insurance expense will increase $750. 
C) Insurance expense will increase $2,250. 
D) Prepaid insurance will increase $2,250.

Question 3

On September 1, 2014, Fast Track, Inc. was started with $30,000 invested by the owners as contributed capital. On September 30, 2014, the accounting records contained the following amounts:
Required:
Prepare a statement of stockholders' equity for September, the first month of operation. Ignore income taxes.

Accepted Answer

The answer of On September 1, 2014, Fast Track, Inc....

Question 4

What are the purposes of closing entries? Describe permanent and temporary accounts.

Accepted Answer

Closing entries transfer the balances in

Question 5

On July 1, 2014, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2014. On December 31, 2014, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2014 should reflect which of the following?

Accepted Answer

A)  A decrease in assets of $103,000 and a decrease in liabilities of $103,000. 
B)  A decrease in assets of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in liabilities of $103,000. 
C) A decrease in stockholders' equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000. 
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000. 
A)  A decrease in assets of $103,000 and a decrease in liabilities of $103,000. 
B)  A decrease in assets of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in liabilities of $103,000. 
C) A decrease in stockholders' equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000. 
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.

Question 6

Air Cargo Company recorded the following adjusting entries at the end of the accounting year, December 31, 2014:
Before these adjusting entries were recorded, a partial unadjusted trial balance reflected the following:
Required:
Prepare the closing entries for Air Cargo Company at December 31, 2014.

Accepted Answer

The answer of Air Cargo Company recorded the following adjusting...

Question 7

Which of the following journal entries is created to adjust for an accrual? A. Accounts receivable
$\quad$Revenues
B. Interest expense
$\quad$Cash
C. Accounts receivable
$\quad$Deferred revenue
D. Rent expense
$\quad$Prepaid rent

Accepted Answer

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

Question 8

An accrued expense is incurred and also paid for in the current period.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following accounts is used to initially record a deferral?

Accepted Answer

A)  Interest payable. 
B)  Interest revenue. 
C) Supplies. 
D) Supplies expense. 
A)  Interest payable. 
B)  Interest revenue. 
C) Supplies. 
D) Supplies expense.

Question 10

Which of the following correctly describes the following adjusting journal entry? Accounts receivable
$\quad$Franchise fees revenue

Accepted Answer

A)  Total assets do not change. 
B)  The transaction is an example of an accrual. 
C) Stockholders' equity decreases. 
D) Net income is not affecteD.Accrued revenues are previously unrecorded revenues that need to be adjusted at the end of the accounting period to reflect the amount earned and the related receivable account. 
A)  Total assets do not change. 
B)  The transaction is an example of an accrual. 
C) Stockholders' equity decreases. 
D) Net income is not affecteD.Accrued revenues are previously unrecorded revenues that need to be adjusted at the end of the accounting period to reflect the amount earned and the related receivable account.

Question 11

On December 31, Krug Company reported stockholders' equity of $280,000 prior to the following adjusting entries: Depreciation expense: $31,000.
Accrued service revenues: $29,000.
Accrued expenses: $12,000.
Used insurance: $9,000; the insurance was initially recorded as prepaid.
Rent revenue earned; $7,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue.
How much is Krug's stockholders' equity after adjusting entries?

Accepted Answer

A)  $280,000. 
B)  $262,000. 
C) $295,000. 
D) $264,000. 
A)  $280,000. 
B)  $262,000. 
C) $295,000. 
D) $264,000.

Question 12

Assume Idaho Company recorded the following adjusting journal entry at year-end: If the beginning balance in prepaid insurance was $500, and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?
$$\begin{array} { | c | r | r | } 
\hline \text { Insurance expense } & \$ 2,000 & \
\hline \text { Prepaid insurance } & & \$ 2,000 \
\hline
\end{array}$$

Accepted Answer

A)  $1,200. 
B)  $700. 
C) $2,200. 
D) $1,000. 
A)  $1,200. 
B)  $700. 
C) $2,200. 
D) $1,000.

Question 13

Rent of $4,000 collected in advance was recorded as unearned rent revenue. At the end of the accounting period, half the rent was earned. The related adjusting entry should be a credit to rent revenue for $2,000 and a debit to unearned rent revenue for $2,000.

Accepted Answer

A) True 
 B)False

Question 14

Accounts that retain their balance from one period to the next are referred to as permanent accounts and include balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following journal entries is created as the result of a deferral? A. Salaries expense
$\quad$Salaries payable
B. Interest expense
$\quad$Interest payable
C. Cash
$\quad$Unearned revenue
D. Accounts receivable
$\quad$Deferred revenue

Accepted Answer

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

Question 16

Which of the following transactions and events results in an increase in liabilities and a decrease in net income?

Accepted Answer

A)  The accrual of salaries expense at year-end. 
B)  Collecting cash from a customer for services to be provided in the future. 
C) The accrual of revenue earned at year-end. 
D) Adjustment of the unearned revenue account for revenue earned during the perioD.The accrual of salaries expense at year-end recognizes an expense that decreases net income, and creates a salaries payable that increases liabilities. 
A)  The accrual of salaries expense at year-end. 
B)  Collecting cash from a customer for services to be provided in the future. 
C) The accrual of revenue earned at year-end. 
D) Adjustment of the unearned revenue account for revenue earned during the perioD.The accrual of salaries expense at year-end recognizes an expense that decreases net income, and creates a salaries payable that increases liabilities.

Which of the following account balances would be closed at year-end by crediting the account?

What are the purposes of closing entries? Describe permanent and temporary accounts.

Air Cargo Company recorded the following adjusting entries at the end of the accounting year, December 31, 2014: Before these adjusting entries were recorded, a partial unadjusted trial balance reflected the following: Required: Prepare the closing entries for Air Cargo Company at December 31, 2014.

Which of the following journal entries is created to adjust for an accrual? A. Accounts receivable $\quad$ Revenues B. Interest expense $\quad$ Cash C. Accounts receivable $\quad$ Deferred revenue D. Rent expense $\quad$ Prepaid rent

An accrued expense is incurred and also paid for in the current period.

Which of the following accounts is used to initially record a deferral?

Which of the following correctly describes the following adjusting journal entry? Accounts receivable $\quad$ Franchise fees revenue

Rent of $4,000 collected in advance was recorded as unearned rent revenue. At the end of the accounting period, half the rent was earned. The related adjusting entry should be a credit to rent revenue for $2,000 and a debit to unearned rent revenue for $2,000.

Accounts that retain their balance from one period to the next are referred to as permanent accounts and include balance sheet accounts.

Which of the following journal entries is created as the result of a deferral? A. Salaries expense $\quad$ Salaries payable B. Interest expense $\quad$ Interest payable C. Cash $\quad$ Unearned revenue D. Accounts receivable $\quad$ Deferred revenue

Which of the following transactions and events results in an increase in liabilities and a decrease in net income?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 4: Adjustments, Financial Statements, and the Quality of Earnings

Which of the following account balances would be closed at year-end by crediting the account?

What are the purposes of closing entries? Describe permanent and temporary accounts.

Which of the following journal entries is created to adjust for an accrual? A. Accounts receivable \quad Revenues B. Interest expense \quad Cash C. Accounts receivable \quad Deferred revenue D. Rent expense \quad Prepaid rent

An accrued expense is incurred and also paid for in the current period.

Which of the following accounts is used to initially record a deferral?

Which of the following correctly describes the following adjusting journal entry? Accounts receivable \quad Franchise fees revenue

Rent of $4,000 collected in advance was recorded as unearned rent revenue. At the end of the accounting period, half the rent was earned. The related adjusting entry should be a credit to rent revenue for $2,000 and a debit to unearned rent revenue for $2,000.

Accounts that retain their balance from one period to the next are referred to as permanent accounts and include balance sheet accounts.

Which of the following journal entries is created as the result of a deferral? A. Salaries expense \quad Salaries payable B. Interest expense \quad Interest payable C. Cash \quad Unearned revenue D. Accounts receivable \quad Deferred revenue

Which of the following transactions and events results in an increase in liabilities and a decrease in net income?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Which of the following journal entries is created to adjust for an accrual? A. Accounts receivable $\quad$ Revenues B. Interest expense $\quad$ Cash C. Accounts receivable $\quad$ Deferred revenue D. Rent expense $\quad$ Prepaid rent

Which of the following correctly describes the following adjusting journal entry? Accounts receivable $\quad$ Franchise fees revenue

Which of the following journal entries is created as the result of a deferral? A. Salaries expense $\quad$ Salaries payable B. Interest expense $\quad$ Interest payable C. Cash $\quad$ Unearned revenue D. Accounts receivable $\quad$ Deferred revenue