Question 1

On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

Accepted Answer

Jan. 1 Prepaid Rent

Question 2

Match the type of account a-e) with the business transactions that follow.
-Received 6 months of rental payments from a tenant.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 3

Match the type of account a-e) with the business transactions that follow.
-A contract to provide tutoring services beginning next month was signed.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 4

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 5

Deferred expenses have

Accepted Answer

A)  not yet been recorded as expenses but have been paid 
B)  been recorded as expenses and paid 
C)  been incurred and paid 
D)  not yet been recorded as expenses 
A)  not yet been recorded as expenses but have been paid 
B)  been recorded as expenses and paid 
C)  been incurred and paid 
D)  not yet been recorded as expenses

Question 6

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.
The adjustment for accrued fees of $1,170 was journalized as a debit to Accounts Receivable for $1,170 and a credit to Fees Earned for $1,107.

Accepted Answer

The total will be un

Question 7

Accumulated depreciation accounts are liability accounts.

Accepted Answer

A) True 
 B)False

Question 8

Explain the differences between
a) Accrued revenues and unearned revenues.
b) Accrued expenses and prepaid expenses.
c) Give an example of each.

Accepted Answer

a) Accrued revenues are services that ha

Question 9

Match the type of account a-e) with the business transactions that follow.
-Provided tutoring for a student that will be invoiced next month.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 10

Match the type of account a-e) with the business transactions that follow.
-Paid 6 months of rental payments to the landlord.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 11

The revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

Accepted Answer

A) True 
 B)False

Question 12

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

Accepted Answer

A)  debit to salary expense of $8,000 
B)  debit to salaries payable of $8,000 
C)  credit to salary expense of $16,000 
D)  credit to salaries payable of $16,000 
A)  debit to salary expense of $8,000 
B)  debit to salaries payable of $8,000 
C)  credit to salary expense of $16,000 
D)  credit to salaries payable of $16,000

Question 13

Match the type of account a-e) with the business transactions that follow.
-Annual property taxes that are paid at the end of the year.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 14

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of accrued revenue?

Accepted Answer

A)  snow removal services that have been paid for three months in advance 
B)  snow removal services that have been provided but have not been billed or paid 
C)  an agreement that has been signed for snow removal services for the next three months 
D)  snow removal services that has been provided and paid on the same day 
A)  snow removal services that have been paid for three months in advance 
B)  snow removal services that have been provided but have not been billed or paid 
C)  an agreement that has been signed for snow removal services for the next three months 
D)  snow removal services that has been provided and paid on the same day

Question 16

Match the type of account a-e) with the business transactions that follow.
-Paid for one year's insurance policy.

Accepted Answer

A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these

Question 17

What is the purpose of an adjusted trial balance? What types) of error does it detect? What types) of error does it not detect?

Accepted Answer

The purpose of an adjusted trial balance

Question 18

Adjusting entries are

Accepted Answer

A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies 
A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies

Question 19

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Accepted Answer

A) True 
 B)False

Question 20

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday. $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Date } & \text { Description } & \text { Post. Ref. } & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline
\end{array}$$

Accepted Answer

$10,000/5

Exam 3: The Adjusting Process

On January 1, Power House Co. prepaid the annual rent of $10,140. Prepare the journal entry to record this transaction.

Match the type of account a-e) with the business transactions that follow. -Received 6 months of rental payments from a tenant.

Match the type of account a-e) with the business transactions that follow. -A contract to provide tutoring services beginning next month was signed.

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Deferred expenses have

Accumulated depreciation accounts are liability accounts.

Explain the differences between a) Accrued revenues and unearned revenues. b) Accrued expenses and prepaid expenses. c) Give an example of each.

Match the type of account a-e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month.

Match the type of account a-e) with the business transactions that follow. -Paid 6 months of rental payments to the landlord.

The revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

Match the type of account a-e) with the business transactions that follow. -Annual property taxes that are paid at the end of the year.

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.

Which of the following is an example of accrued revenue?

Match the type of account a-e) with the business transactions that follow. -Paid for one year's insurance policy.

What is the purpose of an adjusted trial balance? What types) of error does it detect? What types) of error does it not detect?

Adjusting entries are

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday. Date Description Post. Ref. Debit Credit

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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