Question 1

Which of the following is considered to be an accrued expense?

Accepted Answer

A)  A computer technician installed the latest software updates and was paid on the same day. 
B)  A computer technician has been paid in advance to install software updates as they become available. 
C)  A computer technician has just signed an agreement with you regarding pricing for future work. 
D)  A computer technician has installed the latest software updates, but you have not received an invoice or made payment. 
A)  A computer technician installed the latest software updates and was paid on the same day. 
B)  A computer technician has been paid in advance to install software updates as they become available. 
C)  A computer technician has just signed an agreement with you regarding pricing for future work. 
D)  A computer technician has installed the latest software updates, but you have not received an invoice or made payment.

Question 2

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 3

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Accepted Answer

Depreciation Expense

Question 4

Accumulated depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 5

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a (n)

Accepted Answer

A)  asset 
B)  liability 
C)  owner's equity account 
D)  contra liability 
A)  asset 
B)  liability 
C)  owner's equity account 
D)  contra liability

Question 6

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

Accepted Answer

A) True 
 B)False

Question 7

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 have 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 have been provided and paid on the same day

Question 8

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Accepted Answer

A)  $56,700 
B)  $58,000 
C)  $55,800 
D)  $54,500 
A)  $56,700 
B)  $58,000 
C)  $55,800 
D)  $54,500

Question 9

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet.
-Interest earned on a note receivable was not recorded.

Accepted Answer

A) Assets and owner's equity overstated 
B) Assets and owner's equity understated 
C) Assets overstated and owner's equity understated 
D) Assets understated and owner's equity overstated 
E) Liabilities and owner's equity overstated
F)Liabilities and owner's equity understated
G)Liabilities overstated and owner's equity understated
H)Liabilities understated and owner's equity overstated 
A) Assets and owner's equity overstated 
B) Assets and owner's equity understated 
C) Assets overstated and owner's equity understated 
D) Assets understated and owner's equity overstated 
E) Liabilities and owner's equity overstated
F)Liabilities and owner's equity understated
G)Liabilities overstated and owner's equity understated
H)Liabilities understated and owner's equity overstated

Question 10

For the year ending December 31, Beard Clinical Supplies Co. mistakenly omitted adjusting entries for 
(1) $9,800 of unearned revenue that was earned, 
(2) earned revenue that was not billed of $10,200, and 
(3) accrued wages of $7,000. Indicate the combined effect of the errors on 
(a) revenues, 
(b) expenses, and 
(c) net income.

Accepted Answer

(a) Revenues were understated

Question 11

Vertical analysis is useful for analyzing financial statement changes over time.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

Which of the following accounts would likely be included in an accrual adjusting entry?

Accepted Answer

A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent 
A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent

Question 14

Which of the following is not a characteristic of the accrual basis of accounting?

Accepted Answer

A)  Revenues and expenses are reported in the period in which cash is received or paid. 
B)  Revenues are reported on the income statement in the period in which they are earned. 
C)  The accrual basis of accounting supports the matching concept. 
D)  Expenses are reported in the same period as the revenues to which they relate. 
A)  Revenues and expenses are reported in the period in which cash is received or paid. 
B)  Revenues are reported on the income statement in the period in which they are earned. 
C)  The accrual basis of accounting supports the matching concept. 
D)  Expenses are reported in the same period as the revenues to which they relate.

Question 15

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Accepted Answer

A)  debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800 
B)  debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500 
C)  debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100 
D)  debit Prepaid Insurance, $1,800; credit Cash, $1,800 
A)  debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800 
B)  debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500 
C)  debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100 
D)  debit Prepaid Insurance, $1,800; credit Cash, $1,800

Question 16

A fixed asset's market value is reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Accepted Answer

$22,800/24 = $950 pe

Question 18

On March 1, a business paid $3,600 for a 12-month liability insurance policy. On April 1, the business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts:​
(a) Insurance expense for the month of March
(b) Balance in prepaid insurance as of March 31
(c) Equipment rent expense for the month of April
(d) Balance in prepaid equipment rental as of April 30

Accepted Answer

(a)$300 
($3,600/12 = $300)
(b

Question 19

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

Question 20

Prior to the adjusting process, accrued revenue has

Accepted Answer

A)  been earned and cash received 
B)  been earned and not recorded as revenue 
C)  not been earned but recorded as revenue 
D)  not been recorded as revenue but cash has been received 
A)  been earned and cash received 
B)  been earned and not recorded as revenue 
C)  not been earned but recorded as revenue 
D)  not been recorded as revenue but cash has been received

Exam 3: The Adjusting Process

Which of the following is considered to be an accrued expense?

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Accumulated depreciation is reported on the income statement.

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a (n)

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

Which of the following is an example of accrued revenue?

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Interest earned on a note receivable was not recorded.

Vertical analysis is useful for analyzing financial statement changes over time.

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

Which of the following accounts would likely be included in an accrual adjusting entry?

Which of the following is not a characteristic of the accrual basis of accounting?

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

A fixed asset's market value is reflected on the balance sheet.

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

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

Prior to the adjusting process, accrued revenue has

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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