Question 1

For prepaid expense adjusting entries

Accepted Answer

A)  an expense-liability account relationship exists. 
B)  prior to adjustment, expenses are overstated and assets are understated. 
C)  the adjusting entry results in a debit to an expense account and a credit to an asset account. 
D)  none of these answer choices are correct. 
A)  an expense-liability account relationship exists. 
B)  prior to adjustment, expenses are overstated and assets are understated. 
C)  the adjusting entry results in a debit to an expense account and a credit to an asset account. 
D)  none of these answer choices are correct.

Question 2

Financial statements are prepared directly from the

Accepted Answer

A)  general journal. 
B)  ledger. 
C)  trial balance. 
D)  adjusted trial balance. 
A)  general journal. 
B)  ledger. 
C)  trial balance. 
D)  adjusted trial balance.

Question 3

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Accepted Answer

A)  debit to an asset account and a credit to an expense account. 
B)  debit to an expense account and a credit to an asset account. 
C)  debit to an asset account and a credit to an asset account. 
D)  debit to an expense account and a credit to an expense account. 
A)  debit to an asset account and a credit to an expense account. 
B)  debit to an expense account and a credit to an asset account. 
C)  debit to an asset account and a credit to an asset account. 
D)  debit to an expense account and a credit to an expense account.

Question 4

Which one of the following is not an enhancing quality of useful information?

Accepted Answer

A)  Timeliness 
B)  Understandability 
C)  Materiality 
D)  Comparability 
A)  Timeliness 
B)  Understandability 
C)  Materiality 
D)  Comparability

Question 5

Expense recognition is tied to revenue recognition.

Accepted Answer

A) True 
 B)False

Question 6

At March 1, 2015, Minutemen Corp. had supplies on hand of $500. During the month, Minutemen purchased supplies of $1,200 and used supplies of $1,500. The March 31 adjusting journal entry should include a

Accepted Answer

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

Question 7

All of the following are characteristics of accounting information except

Accepted Answer

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

Question 8

The cash basis of accounting is not in accordance with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 9

163. Relevant accounting information

Accepted Answer

A)  is information that has been audited. 
B)  must be reported within the operating cycle or one year, whichever is longer. 
C)  has been objectively determined. 
D)  is information that is capable of making a difference in a business decision. 
A)  is information that has been audited. 
B)  must be reported within the operating cycle or one year, whichever is longer. 
C)  has been objectively determined. 
D)  is information that is capable of making a difference in a business decision.

Question 10

An adjusted trial balance

Accepted Answer

A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  cannot be used to prepare financial statements. 
A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  cannot be used to prepare financial statements.

Question 11

Revenue received before services are performed and expenses paid before being used or consumed are both initially recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 12

An adjusted trial balance should be prepared before the adjusting entries are made.

Accepted Answer

A) True 
 B)False

Question 13

A company's calendar year and fiscal year are always the same.

Accepted Answer

A) True 
 B)False

Question 14

On January 1, 2015, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2015 is

Accepted Answer

A)  $0. 
B)  $9,600. 
C)  $30,400. 
D)  $40,000. 
A)  $0. 
B)  $9,600. 
C)  $30,400. 
D)  $40,000.

Question 15

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Accepted Answer

A)  liabilities to be overstated. 
B)  revenues to be understated. 
C)  revenues to be overstated. 
D)  accounts receivable to be overstated. 
A)  liabilities to be overstated. 
B)  revenues to be understated. 
C)  revenues to be overstated. 
D)  accounts receivable to be overstated.

Question 16

Double Nickels Company purchased equipment for $9,000 on January 1, 2015. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

Accepted Answer

A)  $0. 
B)  $250. 
C)  $3,000. 
D)  $9,000. 
A)  $0. 
B)  $250. 
C)  $3,000. 
D)  $9,000.

Question 17

A company spends $15 million dollars for an office building. Over what period should the cost be written off?

Accepted Answer

A)  When the $15 million is expended in cash. 
B)  All in the first year. 
C)  Over the useful life of the building. 
D)  After $15 million in revenue is recognized. 
A)  When the $15 million is expended in cash. 
B)  All in the first year. 
C)  Over the useful life of the building. 
D)  After $15 million in revenue is recognized.

Question 18

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 19

A company using the same accounting principles from year to year is an application of

Accepted Answer

A)  timeliness. 
B)  consistency. 
C)  full disclosure. 
D)  materiality. 
A)  timeliness. 
B)  consistency. 
C)  full disclosure. 
D)  materiality.

Question 20

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

Accepted Answer

A)  expenses to be overstated. 
B)  net income to be overstated. 
C)  liabilities to be understated. 
D)  revenues to be understated. 
A)  expenses to be overstated. 
B)  net income to be overstated. 
C)  liabilities to be understated. 
D)  revenues to be understated.

For prepaid expense adjusting entries

Financial statements are prepared directly from the

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Which one of the following is not an enhancing quality of useful information?

Expense recognition is tied to revenue recognition.

At March 1, 2015, Minutemen Corp. had supplies on hand of $500. During the month, Minutemen purchased supplies of $1,200 and used supplies of $1,500. The March 31 adjusting journal entry should include a

All of the following are characteristics of accounting information except

The cash basis of accounting is not in accordance with generally accepted accounting principles.

163. Relevant accounting information

An adjusted trial balance

Revenue received before services are performed and expenses paid before being used or consumed are both initially recorded as liabilities.

An adjusted trial balance should be prepared before the adjusting entries are made.

A company's calendar year and fiscal year are always the same.

On January 1, 2015, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2015 is

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Double Nickels Company purchased equipment for $9,000 on January 1, 2015. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

A company spends $15 million dollars for an office building. Over what period should the cost be written off?

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

A company using the same accounting principles from year to year is an application of

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

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Exam 3: Adjusting the Accounts

For prepaid expense adjusting entries

Financial statements are prepared directly from the

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Which one of the following is not an enhancing quality of useful information?

Expense recognition is tied to revenue recognition.

At March 1, 2015, Minutemen Corp. had supplies on hand of $500. During the month, Minutemen purchased supplies of $1,200 and used supplies of $1,500. The March 31 adjusting journal entry should include a

All of the following are characteristics of accounting information except

The cash basis of accounting is not in accordance with generally accepted accounting principles.

163. Relevant accounting information

An adjusted trial balance

Revenue received before services are performed and expenses paid before being used or consumed are both initially recorded as liabilities.

An adjusted trial balance should be prepared before the adjusting entries are made.

A company's calendar year and fiscal year are always the same.

On January 1, 2015, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2015 is

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Double Nickels Company purchased equipment for $9,000 on January 1, 2015. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

A company spends $15 million dollars for an office building. Over what period should the cost be written off?

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

A company using the same accounting principles from year to year is an application of

A law firm received $3,000 cash for legal services to be rendered in the future. The full amount was credited to the liability account Unearned Service Revenue. If the legal services have been rendered at the end of the accounting period and no adjusting entry is made, this would cause

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, Stock Transactions, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Filters