Question 1

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Accepted Answer

A) True 
 B)False

Question 2

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Accepted Answer

A) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E) Debit Office Supplies $105 and credit Supplies Expense $254. 
A) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E) Debit Office Supplies $105 and credit Supplies Expense $254.

Question 3

Each adjusting entry will affect a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 4

Explain why temporary accounts are closed each period.

Accepted Answer

Temporary accounts accumulate data relat

Question 5

A company's employees earn a total of $10,000 per week for a 5-day week that begins on Monday. December 31 of Year 1 is a Monday, and all 20 employees worked that day.
a) Prepare the required adjusting journal entry to record accrued salaries on December 31, Year 1.
b) Prepare the journal entry to record the payment of salaries on January 4, Year 2.

Accepted Answer

@#IMG-DLM& ($10,000

Question 6

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method. The adjusting entry needed to record annual depreciation is:

Accepted Answer

A) Debit Depreciation Expense, $15,000; credit Equipment, $15,000. 
B) Debit Equipment, $15,000; credit Accumulated Depreciation, $15,000. 
C) Debit Depreciation Expense, $10,000; credit Accumulated Depreciation, $10,000. 
D) Debit Depreciation Expense, $10,000; credit Equipment, $10,000. 
E) Debit Depreciation Expense, $15,000; credit Accumulated Depreciation, $15,000. 
A) Debit Depreciation Expense, $15,000; credit Equipment, $15,000. 
B) Debit Equipment, $15,000; credit Accumulated Depreciation, $15,000. 
C) Debit Depreciation Expense, $10,000; credit Accumulated Depreciation, $10,000. 
D) Debit Depreciation Expense, $10,000; credit Equipment, $10,000. 
E) Debit Depreciation Expense, $15,000; credit Accumulated Depreciation, $15,000.

Question 7

K. Canopy, the stockholder of Canopy Services, Inc., The company paid $5,700 cash in dividends to the owner (sole stockholder). The entry to close the dividends account at the end of the year is:

Accepted Answer

A) Debit Dividends $5,700; credit Cash, $5,700 
B) Debit Retained Earnings $5,700; credit Dividends $5,700 
C) Debit Dividends $5,700; credit Retained Earnings $5,700 
D) Debit Retained Earnings $5,700; credit Salary Expense $5,700 
E) Debit Income Summary $5,700; credit Retained Earnings $5,700 
A) Debit Dividends $5,700; credit Cash, $5,700 
B) Debit Retained Earnings $5,700; credit Dividends $5,700 
C) Debit Dividends $5,700; credit Retained Earnings $5,700 
D) Debit Retained Earnings $5,700; credit Salary Expense $5,700 
E) Debit Income Summary $5,700; credit Retained Earnings $5,700

Question 8

Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated.

Accepted Answer

A) True 
 B)False

Question 9

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The company paid $8,000 cash in dividends to the owner (sole shareholder). Which of the following entries could not be a closing entry?

Accepted Answer

A) Debit Income Summary $13,000; credit Retained Earnings $13,000. 
B) Debit Income Summary $75,000; credit Revenues $75,000. 
C) Debit Revenues $75,000; credit Income Summary $75,000. 
D) Debit Income Summary $62,000; credit Expenses $62,000. 
E) Debit Retained Earnings $8,000; credit Dividends $8,000. 
A) Debit Income Summary $13,000; credit Retained Earnings $13,000. 
B) Debit Income Summary $75,000; credit Revenues $75,000. 
C) Debit Revenues $75,000; credit Income Summary $75,000. 
D) Debit Income Summary $62,000; credit Expenses $62,000. 
E) Debit Retained Earnings $8,000; credit Dividends $8,000.

Question 10

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Accepted Answer

A) Entering an asset amount in the Income Statement Debit column. 
B) Entering a liability amount in the Income Statement Credit column. 
C) Entering an expense amount in the Balance Sheet Debit column. 
D) Entering a revenue amount in the Balance Sheet Debit column. 
E) Entering a liability amount in the Balance Sheet Credit column. 
A) Entering an asset amount in the Income Statement Debit column. 
B) Entering a liability amount in the Income Statement Credit column. 
C) Entering an expense amount in the Balance Sheet Debit column. 
D) Entering a revenue amount in the Balance Sheet Debit column. 
E) Entering a liability amount in the Balance Sheet Credit column.

Question 11

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

Accepted Answer

A) True 
 B)False

Question 12

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Accepted Answer

A) True 
 B)False

Question 13

Why are financial statements prepared in a specific order? What is the usual order in which financial statements are prepared from the adjusted trial balance?

Accepted Answer

The financial statements are prepared in

Question 14

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

Accepted Answer

adjusted t

Question 15

The current ratio is used to help assess a company's ability to pay its debts in the near future.

Accepted Answer

A) True 
 B)False

Question 16

After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $4,000 debit balance. This result implies that Cleaver earned a net income of $4,000.

Accepted Answer

A) True 
 B)False

Question 17

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

Accepted Answer

A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries. 
A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries.

Question 18

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Accepted Answer

A) Operating cycle of a business. 
B) Time period assumption. 
C) Going-concern assumption. 
D) Matching principle. 
E) Accrual basis of accounting. 
A) Operating cycle of a business. 
B) Time period assumption. 
C) Going-concern assumption. 
D) Matching principle. 
E) Accrual basis of accounting.

Question 19

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

Accepted Answer

A) It will have no effect on income. 
B) It will overstate assets and liabilities by $9,000. 
C) It will understate net income by $9,000. 
D) It will understate assets by $9,000. 
E) It will understate expenses and overstate net income by $9,000. 
A) It will have no effect on income. 
B) It will overstate assets and liabilities by $9,000. 
C) It will understate net income by $9,000. 
D) It will understate assets by $9,000. 
E) It will understate expenses and overstate net income by $9,000.

Question 20

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Each adjusting entry will affect a balance sheet account.

Explain why temporary accounts are closed each period.

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method. The adjusting entry needed to record annual depreciation is:

K. Canopy, the stockholder of Canopy Services, Inc., The company paid $5,700 cash in dividends to the owner (sole stockholder). The entry to close the dividends account at the end of the year is:

Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated.

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The company paid $8,000 cash in dividends to the owner (sole shareholder). Which of the following entries could not be a closing entry?

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Why are financial statements prepared in a specific order? What is the usual order in which financial statements are prepared from the adjusted trial balance?

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

The current ratio is used to help assess a company's ability to pay its debts in the near future.

After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $4,000 debit balance. This result implies that Cleaver earned a net income of $4,000.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

A salary owed to employees is an example of an accrued expense.

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

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Exam 3: Adjusting Accounts for Financial Statements

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Each adjusting entry will affect a balance sheet account.

Explain why temporary accounts are closed each period.

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method. The adjusting entry needed to record annual depreciation is:

K. Canopy, the stockholder of Canopy Services, Inc., The company paid $5,700 cash in dividends to the owner (sole stockholder). The entry to close the dividends account at the end of the year is:

Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated.

A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The company paid $8,000 cash in dividends to the owner (sole shareholder). Which of the following entries could not be a closing entry?

Which of the following errors would cause the Balance Sheet columns of a work sheet to be out of balance?

Current liabilities include accounts receivable, unearned revenues, and salaries payable.

Normally closing entries are first entered in the general journal and then posted to the work sheet.

Why are financial statements prepared in a specific order? What is the usual order in which financial statements are prepared from the adjusted trial balance?

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

The current ratio is used to help assess a company's ability to pay its debts in the near future.

After posting the entries to close all revenue and expense accounts, the Income Summary account of Cleaver Auto Services has a $4,000 debit balance. This result implies that Cleaver earned a net income of $4,000.

Journal entries recorded at the end of each accounting period to prepare the revenue, expense, and dividend accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. Which of the following statements is true?

A salary owed to employees is an example of an accrued expense.

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