Question 1

Presented below are the basic assumptions and principles underlying financial statements.

Accepted Answer

1. f 2. d

Question 2

Accumulated Depreciation is a liability account and has a credit normal account balance.

Accepted Answer

A) True 
 B)False

Question 3

Accounts often need to be adjusted because

Accepted Answer

A)  there are never enough accounts to record all the transactions. 
B)  many transactions affect more than one time period. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report. 
A)  there are never enough accounts to record all the transactions. 
B)  many transactions affect more than one time period. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report.

Question 4

The time period assumption is also referred to as the

Accepted Answer

A)  calendar assumption. 
B)  cyclicity assumption. 
C)  periodicity assumption. 
D)  fiscal assumption. 
A)  calendar assumption. 
B)  cyclicity assumption. 
C)  periodicity assumption. 
D)  fiscal assumption.

Question 5

If the adjusting entry for depreciation is not made,

Accepted Answer

A)  assets will be understated. 
B)  equity will be understated. 
C)  net income will be understated. 
D)  expenses will be understated. 
A)  assets will be understated. 
B)  equity will be understated. 
C)  net income will be understated. 
D)  expenses will be understated.

Question 6

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

Accepted Answer

A) True 
 B)False

Question 7

On July 1, 2014, Jeffrey Underwriters Associates received $16,000 from a client for a 2-year insurance policy.
Instructions
Prepare the necessary journal entries for Jeffrey Underwriters Associates on July 1 and December 31.

Accepted Answer

The answer of On July 1, 2014, Jeffrey Underwriters Associates...

Question 8

Accumulated Depreciation is

Accepted Answer

A)  an expense account. 
B)  an equity account. 
C)  a liability account. 
D)  a contra asset account. 
A)  an expense account. 
B)  an equity account. 
C)  a liability account. 
D)  a contra asset account.

Question 9

The expense recognition principle refers to

Accepted Answer

A)  recognizing revenue in the period when it is earned. 
B)  matching the revenue reported on the income statement with the receivable reported on the statement of financial position. 
C)  letting expenses follow revenues. 
D)  dividing the life of the business into artificial time periods. 
A)  recognizing revenue in the period when it is earned. 
B)  matching the revenue reported on the income statement with the receivable reported on the statement of financial position. 
C)  letting expenses follow revenues. 
D)  dividing the life of the business into artificial time periods.

Question 10

Adjusting entries are

Accepted Answer

A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only. 
A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to statement of financial position accounts only.

Question 11

Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 12

An adjusting entry recording accrued salaries for a period indicates that Salaries Expense has been ________________ but has not yet been ________________ or recorded.

Accepted Answer

The answer of An adjusting entry recording accrued salaries for...

Question 13

The time period assumption is often referred to as the expense recognition principle.

Accepted Answer

A) True 
 B)False

Question 14

Cara, Inc. purchased supplies costing $2,500 on January 1, 2014 and recorded the transaction by debiting an expense. At the end of the year $1,000 of the supplies are still on hand. If Cara, Inc. does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2014?

Accepted Answer

A)  Assets understated by $1,500. 
B)  Equity understated by $1,500. 
C)  Equity overstated by $1,000. 
D)  Assets understated by $1,000. 
A)  Assets understated by $1,500. 
B)  Equity understated by $1,500. 
C)  Equity overstated by $1,000. 
D)  Assets understated by $1,000.

Question 15

You are visiting with a friend, Jim Bede, who wants to start a new business. During discussions on forming the business, Jim makes this statement:
Our business will have accounts receivable and accounts payable. It will also acquire a substantial amount of computers and equipment. Will it be acceptable to use the cash basis of accounting?
Prepare a response for Jim.

Accepted Answer

Considering the proper basis of accounti

Question 16

At March 1, 2014, Jupiter Corp. had supplies on hand of $500. During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,000. The March 31 adjusting journal entry should include a

Accepted Answer

A)  debit to the supplies account for $1,000. 
B)  credit to the supplies account for $500. 
C)  debit to the supplies account for $1,200. 
D)  credit to the supplies account for $1,000. 
A)  debit to the supplies account for $1,000. 
B)  credit to the supplies account for $500. 
C)  debit to the supplies account for $1,200. 
D)  credit to the supplies account for $1,000.

Question 17

Which of the following is not a common time period chosen by businesses as their accounting period?

Accepted Answer

A)  Daily 
B)  Monthly 
C)  Quarterly 
D)  Annually 
A)  Daily 
B)  Monthly 
C)  Quarterly 
D)  Annually

Question 18

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows:   The effect of this entry is to

Accepted Answer

A)  adjust the accounts to their proper amounts on December 31. 
B)  understate total assets on the statement of financial position as of December 31. 
C)  overstate the book value of the depreciable assets at December 31. 
D)  understate the book value of the depreciable assets as of December 31. 
A)  adjust the accounts to their proper amounts on December 31. 
B)  understate total assets on the statement of financial position as of December 31. 
C)  overstate the book value of the depreciable assets at December 31. 
D)  understate the book value of the depreciable assets as of December 31.

Question 19

Accounting information should be verifiable in order to enhance

Accepted Answer

A)  comparability. 
B)  faithful representation. 
C)  consistency. 
D)  relevance. 
A)  comparability. 
B)  faithful representation. 
C)  consistency. 
D)  relevance.

Question 20

Wave Inn is a resort located in Canada. Wave Inn collects cash when guests make a reservation. During December 2013, Wave Inn collected $75,000 of cash and recorded the receipt by recognizing revenue. By the end of the month Wave Inn had earned one third of this amount, the other two thirds will be earned during January 2014. The adjusting entry required at December 31, 2013 would impact the statement of financial position by

Accepted Answer

A)  Decreased Equity $50,000. 
B)  Decreased Liabilities $50,000. 
C)  Increased Assets $75,000. 
D)  Increased Equity $25,000. 
A)  Decreased Equity $50,000. 
B)  Decreased Liabilities $50,000. 
C)  Increased Assets $75,000. 
D)  Increased Equity $25,000.

Presented below are the basic assumptions and principles underlying financial statements.

Accumulated Depreciation is a liability account and has a credit normal account balance.

Accounts often need to be adjusted because

The time period assumption is also referred to as the

If the adjusting entry for depreciation is not made,

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

On July 1, 2014, Jeffrey Underwriters Associates received $16,000 from a client for a 2-year insurance policy. Instructions Prepare the necessary journal entries for Jeffrey Underwriters Associates on July 1 and December 31.

Accumulated Depreciation is

The expense recognition principle refers to

Adjusting entries are

Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.

An adjusting entry recording accrued salaries for a period indicates that Salaries Expense has been but has not yet been or recorded.

The time period assumption is often referred to as the expense recognition principle.

At March 1, 2014, Jupiter Corp. had supplies on hand of $500. During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,000. The March 31 adjusting journal entry should include a

Which of the following is not a common time period chosen by businesses as their accounting period?

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows: The effect of this entry is to

Accounting information should be verifiable in order to enhance

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters

Exam 3: Adjusting the Accounts

Presented below are the basic assumptions and principles underlying financial statements.

Accumulated Depreciation is a liability account and has a credit normal account balance.

Accounts often need to be adjusted because

The time period assumption is also referred to as the

If the adjusting entry for depreciation is not made,

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

On July 1, 2014, Jeffrey Underwriters Associates received $16,000 from a client for a 2-year insurance policy. Instructions Prepare the necessary journal entries for Jeffrey Underwriters Associates on July 1 and December 31.

Accumulated Depreciation is

The expense recognition principle refers to

Adjusting entries are

Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.

An adjusting entry recording accrued salaries for a period indicates that Salaries Expense has been ________________ but has not yet been ________________ or recorded.

The time period assumption is often referred to as the expense recognition principle.

At March 1, 2014, Jupiter Corp. had supplies on hand of $500. During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,000. The March 31 adjusting journal entry should include a

Which of the following is not a common time period chosen by businesses as their accounting period?

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows: The effect of this entry is to

Accounting information should be verifiable in order to enhance

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Share Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Accounting and Financial Reporting for Contingent Liabilities and Leases

Filters

An adjusting entry recording accrued salaries for a period indicates that Salaries Expense has been but has not yet been or recorded.