Question 1

A classified balance sheet:

Accepted Answer

A) Measures a company's ability to pay its bills on time. 
B) Organizes assets and liabilities into important subgroups that provide more information. 
C) Broadly groups items into assets, liabilities and equity. 
D) Reports operating, investing, and financing activities. 
E) Reports the effect of profit and dividends on retained earnings. 
A) Measures a company's ability to pay its bills on time. 
B) Organizes assets and liabilities into important subgroups that provide more information. 
C) Broadly groups items into assets, liabilities and equity. 
D) Reports operating, investing, and financing activities. 
E) Reports the effect of profit and dividends on retained earnings.

Question 2

A _____________ account is an account linked with another account, having an opposite normal balance, and reported as a subtraction from that other account's balance.

Accepted Answer

The answer of A _____________ account is an account linked...

Question 3

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Accepted Answer

A) True 
 B)False

Question 4

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 5

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Accepted Answer

A) True 
 B)False

Question 6

Prior to recording adjusting entries on December 31, a company's Office Supplies account had a $780 debit balance. A physical count of the supplies showed $425 of unused supplies available as of December 31. Prepare the required adjusting entry.

Accepted Answer

The answer of Prior to recording adjusting entries on December...

Question 7

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

Accepted Answer

A) True 
 B)False

Question 8

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Andrew Inc.'s net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio.

Accepted Answer

Profit Margin Ratio

Question 10

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

Accepted Answer

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

Question 11

What is the purpose of closing entries? Describe the closing process.

Accepted Answer

The purpose of closing entries is to tra

Question 12

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A) Accrual basis accounting. 
B) Operating cycle accounting. 
C) Cash basis accounting. 
D) Revenue recognition accounting. 
E) Current basis accounting. 
A) Accrual basis accounting. 
B) Operating cycle accounting. 
C) Cash basis accounting. 
D) Revenue recognition accounting. 
E) Current basis accounting.

Question 13

Adjusting entries result in a better matching of revenues and expenses for the period.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

unadjusted

Question 15

Plant assets are usually listed in order from most liquid to least liquid.

Accepted Answer

A) True 
 B)False

Question 16

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses, not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 17

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Accepted Answer

A) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Expense } & 1400 & \
\hline & \text { Salaries Payable } & & 1,400 \
\hline 2 / 9 & \text { Salaries Payable } & 7,000 & \
\hline & \text { Salaries Expense } & 1400 & \
\hline & \text { Cash } & & 7,000 \
\hline \hline
\end{array}$$ 
B) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Payable } & 1,400 & \
\hline & \text { Salaries Expense } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \
\hline & \text { Salaries Payable } & 1,400 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
C) $$\begin{array} { | l | l | r | r | } 
\hline \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \
\hline & \text { Cash } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
D) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Expense } & 1400 & \
\hline & \text { Salaries Payable } & & 1400 \
\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
E) $$\begin{array} { | l | l | r | r | } 
\hline \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \
\hline & \text { Salaries Payable } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \
\hline & \text { Salaries Payable } & 1,400 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
A) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Expense } & 1400 & \
\hline & \text { Salaries Payable } & & 1,400 \
\hline 2 / 9 & \text { Salaries Payable } & 7,000 & \
\hline & \text { Salaries Expense } & 1400 & \
\hline & \text { Cash } & & 7,000 \
\hline \hline
\end{array}$$ 
B) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Payable } & 1,400 & \
\hline & \text { Salaries Expense } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \
\hline & \text { Salaries Payable } & 1,400 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
C) $$\begin{array} { | l | l | r | r | } 
\hline \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \
\hline & \text { Cash } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
D) $$\begin{array} { | l | l | r | r | } 
\hline 1 / 31 & \text { Salaries Expense } & 1400 & \
\hline & \text { Salaries Payable } & & 1400 \
\hline 2 / 9 & \text { Salaries Expense } & 7,000 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
E) $$\begin{array} { | l | l | r | r | } 
\hline \hline 1 / 31 & \text { Salaries Expense } & 1,400 & \
\hline & \text { Salaries Payable } & & 1,400 \
\hline 2 / 9 & \text { Salaries Expense } & 5,600 & \
\hline & \text { Salaries Payable } & 1,400 & \
\hline & \text { Cash } & & 7,000 \
\hline
\end{array}$$

Question 18

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Accepted Answer

A) True 
 B)False

Question 19

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

Accepted Answer

revenue recognition;

Question 20

Two common subgroups for liabilities on a classified balance sheet are:

Accepted Answer

A) Current liabilities and intangible liabilities. 
B) Present liabilities and operating liabilities. 
C) General liabilities and specific liabilities. 
D) Intangible liabilities and long-term liabilities. 
E) Current liabilities and long-term liabilities. 
A) Current liabilities and intangible liabilities. 
B) Present liabilities and operating liabilities. 
C) General liabilities and specific liabilities. 
D) Intangible liabilities and long-term liabilities. 
E) Current liabilities and long-term liabilities.

A classified balance sheet:

A _____________ account is an account linked with another account, having an opposite normal balance, and reported as a subtraction from that other account's balance.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Cash and office supplies are both classified as current assets.

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Prior to recording adjusting entries on December 31, a company's Office Supplies account had a $780 debit balance. A physical count of the supplies showed $425 of unused supplies available as of December 31. Prepare the required adjusting entry.

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Andrew Inc.'s net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio.

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

What is the purpose of closing entries? Describe the closing process.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Adjusting entries result in a better matching of revenues and expenses for the period.

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

Plant assets are usually listed in order from most liquid to least liquid.

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses, not when cash is paid.

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Accrual accounting and the adjusting process rely on two principles: the _ principle and the ______ principle.

Two common subgroups for liabilities on a classified balance sheet are:

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters

Exam 3: Adjusting Accounts for Financial Statements

A classified balance sheet:

A _____________ account is an account linked with another account, having an opposite normal balance, and reported as a subtraction from that other account's balance.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Cash and office supplies are both classified as current assets.

If all columns of a completed work sheet balance, you can be sure that no errors were made in its preparation.

Prior to recording adjusting entries on December 31, a company's Office Supplies account had a $780 debit balance. A physical count of the supplies showed $425 of unused supplies available as of December 31. Prepare the required adjusting entry.

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Andrew Inc.'s net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000. Calculate the company's profit margin ratio.

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

What is the purpose of closing entries? Describe the closing process.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Adjusting entries result in a better matching of revenues and expenses for the period.

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

Plant assets are usually listed in order from most liquid to least liquid.

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses, not when cash is paid.

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

Two common subgroups for liabilities on a classified balance sheet are:

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters

Accrual accounting and the adjusting process rely on two principles: the _ principle and the ______ principle.