Question 1

Correcting entries are a specialized type of adjusting entry

Accepted Answer

A) True 
 B)False

Question 2

MegaTech Company has total monthly revenues of $325,000 and expenses of
$198,000 for the month ended July 31 before monthly adjusting entries are made. The following data are provided on the end of month adjustments to be made:
a. Insurance expired in July, $2,520.
b. Unbilled amounts to customers for July is $4,200.
c. Salaries earned by employees but not yet paid by MegaTech for the last week of July, $13,125.
d. Depreciation on equipment for July, $1,290.
e. Supplies used in July, $1,650.
f. Fees collected in advance from customers which have now been earned during
July, $23,400.

Complete the schedule below to determine the profit of MegaTech for July after these adjustments are recorded. Begin your schedule with income before
adjusting entries and then show the effect of each adjustment to arrive at profit
after adjustment.

Accepted Answer

The answer of MegaTech Company has total monthly revenues of...

Question 3

A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday. If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the adjusting entry to record the salaries earned but unpaid is:

Accepted Answer

A) Debit Office Salaries Expense $120 and credit Salaries Payable $120. 
B) Debit Office Salaries Expense $240 and credit Salaries Payable $240. 
C) Debit Salaries Expense $240 and credit Cash $240. 
D) Debit Unpaid Salaries $120 and credit Salaries Payable $120. 
E) Debit Salaries Payable $240 and credit Office Salaries Expense $240. 
A) Debit Office Salaries Expense $120 and credit Salaries Payable $120. 
B) Debit Office Salaries Expense $240 and credit Salaries Payable $240. 
C) Debit Salaries Expense $240 and credit Cash $240. 
D) Debit Unpaid Salaries $120 and credit Salaries Payable $120. 
E) Debit Salaries Payable $240 and credit Office Salaries Expense $240.

Question 4

The Creative Company has several insurance policies in force with payments due atvarious times. The following information refers to prepaid insurance and insurance expense on two successive dates.   The amount of cash paid for insurance by Creative Company in 2016 was:

Accepted Answer

A) $4,500. 
B) $3,750. 
C) $5,000. 
D) $3,250. 
E) $8,750. 
A) $4,500. 
B) $3,750. 
C) $5,000. 
D) $3,250. 
E) $8,750.

Question 5

Adjusting entries are always dated at the end of the accounting period

Accepted Answer

A) True 
 B)False

Question 6

Discuss the types of adjusting entries used for prepaid expenses, depreciation,and unearned revenues.

Accepted Answer

Prepaid expenses are deferrals, or expen

Question 7

Adjusting entries are posted to the general ledger

Accepted Answer

A) True 
 B)False

Question 8

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:

Accepted Answer

A) Debit Salaries Expense and credit Salaries Payable. 
B) Debit Salaries Payable and credit Salaries Expense. 
C) Debit Salaries Expense and credit Cash. 
D) Debit Unpaid Salaries and credit Salaries Payable. 
E) Debit Cash and credit Salaries Expense. 
A) Debit Salaries Expense and credit Salaries Payable. 
B) Debit Salaries Payable and credit Salaries Expense. 
C) Debit Salaries Expense and credit Cash. 
D) Debit Unpaid Salaries and credit Salaries Payable. 
E) Debit Cash and credit Salaries Expense.

Question 9

An adjusting entry may include an entry to Cash

Accepted Answer

A) True 
 B)False

Question 10

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

Accepted Answer

A) The matching principle. 
B) The operating cycle of a business. 
C) Cash basis accounting. 
D) Accrual basis accounting. 
E) The revenue recognition principle. 
A) The matching principle. 
B) The operating cycle of a business. 
C) Cash basis accounting. 
D) Accrual basis accounting. 
E) The revenue recognition principle.

Question 11

The equipment has a useful life of 8 years. Compute the book value of theequipment after the proper June adjustment has been made.

Accepted Answer

24,000/8 years/12 months = 250

Question 12

On December 31, 2015, the accountant for a proprietorship forgot to record$7,000 of depreciation on office equipment. In the 2015 financial statements, what is the effect of this error on assets, profit, and equity?

Accepted Answer

(1) Assets are overstated by $

Question 13

The expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

Accepted Answer

A) The cash basis of accounting. 
B) Allowance for depreciation. 
C) Accumulated depreciation. 
D) Depreciation. 
E) The matching principle. 
A) The cash basis of accounting. 
B) Allowance for depreciation. 
C) Accumulated depreciation. 
D) Depreciation. 
E) The matching principle.

Question 14

A trial balance prepared before any adjustments have been recorded is

Accepted Answer

A) An adjusted trial balance. 
B) An unadjusted trial balance. 
C) Used to prepare the financial statements. 
D) Will not have the debits equal to the credits. 
E) Correct with respect to proper balance sheet and income statement amounts. 
A) An adjusted trial balance. 
B) An unadjusted trial balance. 
C) Used to prepare the financial statements. 
D) Will not have the debits equal to the credits. 
E) Correct with respect to proper balance sheet and income statement amounts.

Question 15

Accrued revenues

Accepted Answer

A) Are paid in advance. 
B) Are also called unearned revenues. 
C) Are listed on the balance sheet as liabilities. 
D) At the end of one accounting period often result in cash receipts from customers in the next period. 
E) At the end of one accounting period often result in cash payments in the next period. 
A) Are paid in advance. 
B) Are also called unearned revenues. 
C) Are listed on the balance sheet as liabilities. 
D) At the end of one accounting period often result in cash receipts from customers in the next period. 
E) At the end of one accounting period often result in cash payments in the next period.

Question 16

Explain the difference between the book value and the market value of an asset

Accepted Answer

The book value of an asset is its cost m

Question 17

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

Question 18

Adjusting entries are journal entries made at the end of an accounting period for the purpose of:

Accepted Answer

A) Recording internal transactions. 
B) Updating related liability and asset accounts. 
C) Assigning revenues to the period in which they are earned. 
D) Assigning expenses to the period in which the expiration of benefit has incurred. 
E) All of these answers are correct. 
A) Recording internal transactions. 
B) Updating related liability and asset accounts. 
C) Assigning revenues to the period in which they are earned. 
D) Assigning expenses to the period in which the expiration of benefit has incurred. 
E) All of these answers are correct.

Question 19

Which of the following accounts is most likely to be associated with an accruedexpense?

Accepted Answer

A) Salaries Payable. 
B) Service revenue. 
C) Accounts receivable. 
D) Unearned revenue. 
E) Depreciation expense. 
A) Salaries Payable. 
B) Service revenue. 
C) Accounts receivable. 
D) Unearned revenue. 
E) Depreciation expense.

Question 20

The timeliness principle assumes that an organization's activities can be divided intospecific time periods including:

Accepted Answer

A) Quarters. 
B) Calendar year. 
C) Fiscal year. 
D) One month. 
E) Any of the above. 
A) Quarters. 
B) Calendar year. 
C) Fiscal year. 
D) One month. 
E) Any of the above.

Correcting entries are a specialized type of adjusting entry

A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday. If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the adjusting entry to record the salaries earned but unpaid is:

The Creative Company has several insurance policies in force with payments due atvarious times. The following information refers to prepaid insurance and insurance expense on two successive dates. The amount of cash paid for insurance by Creative Company in 2016 was:

Adjusting entries are always dated at the end of the accounting period

Discuss the types of adjusting entries used for prepaid expenses, depreciation,and unearned revenues.

Adjusting entries are posted to the general ledger

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:

An adjusting entry may include an entry to Cash

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

The equipment has a useful life of 8 years. Compute the book value of theequipment after the proper June adjustment has been made.

On December 31, 2015, the accountant for a proprietorship forgot to record$7,000 of depreciation on office equipment. In the 2015 financial statements, what is the effect of this error on assets, profit, and equity?

The expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

A trial balance prepared before any adjustments have been recorded is

Accrued revenues

Explain the difference between the book value and the market value of an asset

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

Adjusting entries are journal entries made at the end of an accounting period for the purpose of:

Which of the following accounts is most likely to be associated with an accruedexpense?

The timeliness principle assumes that an organization's activities can be divided intospecific time periods including:

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Appendix

Filters

Exam 3: Adjusting Accounts for Financial Statements

Correcting entries are a specialized type of adjusting entry

A business pays each of its two office employees each Friday at the rate of $60 per day for a five-day week that begins on Monday. If the accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the adjusting entry to record the salaries earned but unpaid is:

The Creative Company has several insurance policies in force with payments due atvarious times. The following information refers to prepaid insurance and insurance expense on two successive dates. The amount of cash paid for insurance by Creative Company in 2016 was:

Adjusting entries are always dated at the end of the accounting period

Discuss the types of adjusting entries used for prepaid expenses, depreciation,and unearned revenues.

Adjusting entries are posted to the general ledger

The adjusting entry to record the earned but unpaid salaries of employees at the end of the accounting period is:

An adjusting entry may include an entry to Cash

The approach to preparing financial statements based on recognizing revenues when they are earned and matching expenses to those revenues is:

The equipment has a useful life of 8 years. Compute the book value of theequipment after the proper June adjustment has been made.

On December 31, 2015, the accountant for a proprietorship forgot to record$7,000 of depreciation on office equipment. In the 2015 financial statements, what is the effect of this error on assets, profit, and equity?

The expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

A trial balance prepared before any adjustments have been recorded is

Accrued revenues

Explain the difference between the book value and the market value of an asset

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

Adjusting entries are journal entries made at the end of an accounting period for the purpose of:

Which of the following accounts is most likely to be associated with an accruedexpense?

The timeliness principle assumes that an organization's activities can be divided intospecific time periods including:

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Appendix

Filters