Question 1

An example of deferred revenue is Unearned Rent.

Accepted Answer

A) True 
 B)False

Question 2

A business pays biweekly salaries of $20,000 every other Friday for a 10-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 3

Which of the following accounting steps in the accounting process would be completed last?

Accepted Answer

A)  preparing the adjusted trial balance 
B)  posting 
C)  preparing the financial statements 
D)  journalizing 
A)  preparing the adjusted trial balance 
B)  posting 
C)  preparing the financial statements 
D)  journalizing

Question 4

The balance in the supplies account before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Accepted Answer

A)  debit Supplies, $1,500; credit Supplies Expense, $1,500 
B)  debit Supplies Expense, $4,750; credit Supplies, $4,750 
C)  debit Supplies Expense, $1,500; credit Supplies, $1,500 
D)  debit Supplies, $4,750; credit Supplies Expense, $4,750 
A)  debit Supplies, $1,500; credit Supplies Expense, $1,500 
B)  debit Supplies Expense, $4,750; credit Supplies, $4,750 
C)  debit Supplies Expense, $1,500; credit Supplies, $1,500 
D)  debit Supplies, $4,750; credit Supplies Expense, $4,750

Question 5

The type of account and normal balance of Prepaid Insurance would be

Accepted Answer

A)  asset, credit 
B)  asset, debit 
C)  contra asset, credit 
D)  contra asset, debit 
A)  asset, credit 
B)  asset, debit 
C)  contra asset, credit 
D)  contra asset, debit

Question 6

Which of the following is an example of an accrued expense?

Accepted Answer

A)  salary owed but not yet paid 
B)  fees received but not yet earned 
C)  supplies on hand 
D)  a two-year premium paid on a fire insurance policy 
A)  salary owed but not yet paid 
B)  fees received but not yet earned 
C)  supplies on hand 
D)  a two-year premium paid on a fire insurance policy

Question 7

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

Accepted Answer

Jan. 1Prepaid Rent10

Question 8

Prior to the adjusting process, accrued expenses have

Accepted Answer

A)  not yet been incurred, paid, or recorded 
B)  been incurred, have not been paid, but have been recorded 
C)  been incurred but not paid and not recorded 
D)  been paid but have not yet been incurred 
A)  not yet been incurred, paid, or recorded 
B)  been incurred, have not been paid, but have been recorded 
C)  been incurred but not paid and not recorded 
D)  been paid but have not yet been incurred

Question 9

The entry to adjust for the cost of supplies used during the accounting period is

Accepted Answer

A)  debit Supplies Expense; credit Supplies 
B)  debit Owner's Equity; credit Supplies 
C)  debit Accounts Payable; credit Supplies 
D)  debit Supplies; credit Owner's Equity 
A)  debit Supplies Expense; credit Supplies 
B)  debit Owner's Equity; credit Supplies 
C)  debit Accounts Payable; credit Supplies 
D)  debit Supplies; credit Owner's Equity

Question 10

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period 
A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period

Question 11

The revenue recognition principle

Accepted Answer

A)  is not in conflict with the cash method of accounting 
B)  determines when revenue is credited to a revenue account 
C)  states that revenue is not recorded until the cash is received 
D)  controls all revenue reporting for the cash basis of accounting 
A)  is not in conflict with the cash method of accounting 
B)  determines when revenue is credited to a revenue account 
C)  states that revenue is not recorded until the cash is received 
D)  controls all revenue reporting for the cash basis of accounting

Question 12

Match the type of account (a through 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 choices 
A) Prepaid expense 
B) Accrued expense 
C) Unearned revenue 
D) Accrued revenue 
E) None of these choices

Question 13

Match the type of account (a through e) with the business transactions that follow.
-Services provided that have not been recorded.

Accepted Answer

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

Question 14

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Accepted Answer

A)  Fees Earned 
B)  Accounts Receivable 
C)  Unearned Fees 
D)  Depreciation Expense 
A)  Fees Earned 
B)  Accounts Receivable 
C)  Unearned Fees 
D)  Depreciation Expense

Question 15

The revenue recognition principle 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 16

Prepare the required entries for the following transactions:
(a)Austin Company pays daily wages of $645 
(Monday-Friday). Paydays are every other Friday. Prepare the Monday, January 31 adjusting entry, assuming that the previous payday was Friday, January 21.
(b)Prepare the journal entry to record Austin Company's payroll on Friday, February 4.
(c)Annual depreciation expense on the company's fixed assets is $39,600. Prepare the adjusting entry to recognize depreciation for the month of January.
(d)The company's office supplies account shows a debit balance of $3,755. A count of office supplies on hand on January 31 shows $635 worth of supplies on hand. Prepare the January 31 adjusting entry for Office Supplies.

Accepted Answer

The answer of Prepare the required entries for the following...

Question 17

For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.

Accepted Answer

A) True 
 B)False

Question 18

Adjusting entries always include

Accepted Answer

A)  only income statement accounts 
B)  only balance sheet accounts 
C)  the cash account 
D)  at least one income statement account and one balance sheet account 
A)  only income statement accounts 
B)  only balance sheet accounts 
C)  the cash account 
D)  at least one income statement account and one balance sheet account

Question 19

At January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account is omitted. Which items will be incorrectly stated, because of the error, on 
(a) the income statement for January and 
(b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

Accepted Answer

(a)Insurance expense 
(or expe

Question 20

The adjusting entry to record the depreciation of a building for the fiscal period is

Accepted Answer

A)  debit Depreciation Expense; credit Building 
B)  debit Depreciation Expense; credit Accumulated Depreciation 
C)  debit Accumulated Depreciation; credit Depreciation Expense 
D)  debit Building; credit Depreciation Expense 
A)  debit Depreciation Expense; credit Building 
B)  debit Depreciation Expense; credit Accumulated Depreciation 
C)  debit Accumulated Depreciation; credit Depreciation Expense 
D)  debit Building; credit Depreciation Expense

Exam 3: The Adjusting Process

An example of deferred revenue is Unearned Rent.

A business pays biweekly salaries of $20,000 every other Friday for a 10-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

Which of the following accounting steps in the accounting process would be completed last?

The balance in the supplies account before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

The type of account and normal balance of Prepaid Insurance would be

Which of the following is an example of an accrued expense?

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

Prior to the adjusting process, accrued expenses have

The entry to adjust for the cost of supplies used during the accounting period is

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

The revenue recognition principle

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

Match the type of account (a through e) with the business transactions that follow. -Services provided that have not been recorded.

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

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

For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.

Adjusting entries always include

The adjusting entry to record the depreciation of a building for the fiscal period is

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

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