Question 1

Internal transactions often include cash payments

Accepted Answer

A) True 
 B)False

Question 2

Adjusting entries are made after the preparation of financial statements

Accepted Answer

A) True 
 B)False

Question 3

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Accepted Answer

A) True 
 B)False

Question 4

Financial statements can be prepared directly from the information in the adjusted trialbalance.

Accepted Answer

A) True 
 B)False

Question 5

Explain the difference between cash basis accounting and accrual basisaccounting.

Accepted Answer

Accrual basis accounting recog

Question 6

At June 30, supplies on hand were shown to be $350. What amount should beexpensed to the income statement for June? Make the needed adjusting entry.

Accepted Answer

1800 - 350

Question 7

A $6,440 debit to interest expense was incorrectly posted as a $644 debit. What is theeffect of this error on the trial balance and the interest expense accounts?

Accepted Answer

A) The debit column of the trial balance would be $5,796 overstated and interest expense would be understated by $5,796. 
B) The debit column of the trial balance would be $5,796 overstated and interest expense would be overstated by $5,796. 
C) The debit column of the trial balance would be $5,796 understated and interest expense would be overstated by $5,796. 
D) The debit column of the trial balance would be $5,796 understated and interest expense would be understated by $5,796. 
E) The debit column of the trial balance would be $6,440 understated and interest expense would be understated by $6,440. 
A) The debit column of the trial balance would be $5,796 overstated and interest expense would be understated by $5,796. 
B) The debit column of the trial balance would be $5,796 overstated and interest expense would be overstated by $5,796. 
C) The debit column of the trial balance would be $5,796 understated and interest expense would be overstated by $5,796. 
D) The debit column of the trial balance would be $5,796 understated and interest expense would be understated by $5,796. 
E) The debit column of the trial balance would be $6,440 understated and interest expense would be understated by $6,440.

Question 8

Adjusting entries

Accepted Answer

A) Affect only income statement accounts. 
B) Affect both income statement and balance sheet accounts. 
C) Affect only balance sheet accounts. 
D) Affect only statement of cash flows accounts. 
E) Affect only equity accounts. 
A) Affect only income statement accounts. 
B) Affect both income statement and balance sheet accounts. 
C) Affect only balance sheet accounts. 
D) Affect only statement of cash flows accounts. 
E) Affect only equity accounts.

Question 9

Accrued expenses reflect transactions where cash is paid before a related expense isrecognized.

Accepted Answer

A) True 
 B)False

Question 10

The cash basis of accounting is an accounting system in which revenues are reported in the income statement when cash is received and expenses are reported when cash ispaid.

Accepted Answer

A) True 
 B)False

Question 11

On December 31, Cartier Company had performed $8,000 of managementservices for clients that had not yet been billed to the clients. Prepare an adjusting entry to record these fees.

Accepted Answer

The answer of On December 31, Cartier Company had performed...

Question 12

The accrual basis of accounting is a system of accounting in which the adjustmentprocess is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

Accepted Answer

A) True 
 B)False

Question 13

The purpose of depreciation is to

Accepted Answer

A) Recognize the reduced usefulness of an asset. 
B) Adjust the ledger account balances for assets to equate to their current market value. 
C) Adjust the carrying value of an asset to market value. 
D) Measure the change in an asset's value. 
E) Allocate the asset's cost to the periods benefiting from its use. 
A) Recognize the reduced usefulness of an asset. 
B) Adjust the ledger account balances for assets to equate to their current market value. 
C) Adjust the carrying value of an asset to market value. 
D) Measure the change in an asset's value. 
E) Allocate the asset's cost to the periods benefiting from its use.

Question 14

Interim financial reports are financial reports

Accepted Answer

A) In which the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues. 
B) That show the assets above the liabilities and the liabilities above the equity. 
C) That are prepared before any adjustments have been recorded. 
D) Covering less than one year, usually based on one- or three-month periods. 
E) In which revenues are reported in the income statement when cash is received and expenses are reported when cash is paid. 
A) In which the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues. 
B) That show the assets above the liabilities and the liabilities above the equity. 
C) That are prepared before any adjustments have been recorded. 
D) Covering less than one year, usually based on one- or three-month periods. 
E) In which revenues are reported in the income statement when cash is received and expenses are reported when cash is paid.

Question 15

A balance sheet that places the assets above the liabilities and equity is called a(n)

Accepted Answer

A) Report form balance sheet. 
B) Unadjusted balance sheet. 
C) Account form balance sheet. 
D) The accounting equation. 
E) Adjusted balance sheet. 
A) Report form balance sheet. 
B) Unadjusted balance sheet. 
C) Account form balance sheet. 
D) The accounting equation. 
E) Adjusted balance sheet.

Question 16

Gallery Corp. paid $6,000 for a six-month insurance policy for the company van. The policy coverage began on January 1. On January 31, $1,000 of insurance expense must be reported.

Accepted Answer

A) True 
 B)False

Question 17

Karumba Designs' bookkeeper incorrectly recorded a $900 cash purchase of office supplies as a debit to cash and a credit to supplies. Which of the following journal entries would correct this error and reflect the effect of the original transaction?

Accepted Answer

A)   
B)   
C)   
D)   
E)   
A)   
B)   
C)   
D)   
E)

Question 18

Since the revenue recognition principle requires that revenues be earned, there is no such thing as unearned revenues in accounting.

Accepted Answer

A) True 
 B)False

Question 19

Internal transactions have no effect on the accounting equation

Accepted Answer

A) True 
 B)False

Question 20

Canadian ASPE allows accrual accounting as an option whereas IFRS requires accrual accounting.

Accepted Answer

A) True 
 B)False

Internal transactions often include cash payments

Adjusting entries are made after the preparation of financial statements

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Financial statements can be prepared directly from the information in the adjusted trialbalance.

Explain the difference between cash basis accounting and accrual basisaccounting.

At June 30, supplies on hand were shown to be $350. What amount should beexpensed to the income statement for June? Make the needed adjusting entry.

A $6,440 debit to interest expense was incorrectly posted as a $644 debit. What is theeffect of this error on the trial balance and the interest expense accounts?

Adjusting entries

Accrued expenses reflect transactions where cash is paid before a related expense isrecognized.

The cash basis of accounting is an accounting system in which revenues are reported in the income statement when cash is received and expenses are reported when cash ispaid.

On December 31, Cartier Company had performed $8,000 of managementservices for clients that had not yet been billed to the clients. Prepare an adjusting entry to record these fees.

The accrual basis of accounting is a system of accounting in which the adjustmentprocess is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

The purpose of depreciation is to

Interim financial reports are financial reports

A balance sheet that places the assets above the liabilities and equity is called a(n)

Gallery Corp. paid $6,000 for a six-month insurance policy for the company van. The policy coverage began on January 1. On January 31, $1,000 of insurance expense must be reported.

Karumba Designs' bookkeeper incorrectly recorded a $900 cash purchase of office supplies as a debit to cash and a credit to supplies. Which of the following journal entries would correct this error and reflect the effect of the original transaction?

Since the revenue recognition principle requires that revenues be earned, there is no such thing as unearned revenues in accounting.

Internal transactions have no effect on the accounting equation

Canadian ASPE allows accrual accounting as an option whereas IFRS requires accrual accounting.

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

Internal transactions often include cash payments

Adjusting entries are made after the preparation of financial statements

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Financial statements can be prepared directly from the information in the adjusted trialbalance.

Explain the difference between cash basis accounting and accrual basisaccounting.

At June 30, supplies on hand were shown to be $350. What amount should beexpensed to the income statement for June? Make the needed adjusting entry.

A $6,440 debit to interest expense was incorrectly posted as a $644 debit. What is theeffect of this error on the trial balance and the interest expense accounts?

Adjusting entries

Accrued expenses reflect transactions where cash is paid before a related expense isrecognized.

The cash basis of accounting is an accounting system in which revenues are reported in the income statement when cash is received and expenses are reported when cash ispaid.

On December 31, Cartier Company had performed $8,000 of managementservices for clients that had not yet been billed to the clients. Prepare an adjusting entry to record these fees.

The accrual basis of accounting is a system of accounting in which the adjustmentprocess is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

The purpose of depreciation is to

Interim financial reports are financial reports

A balance sheet that places the assets above the liabilities and equity is called a(n)

Gallery Corp. paid $6,000 for a six-month insurance policy for the company van. The policy coverage began on January 1. On January 31, $1,000 of insurance expense must be reported.

Karumba Designs' bookkeeper incorrectly recorded a $900 cash purchase of office supplies as a debit to cash and a credit to supplies. Which of the following journal entries would correct this error and reflect the effect of the original transaction?

Since the revenue recognition principle requires that revenues be earned, there is no such thing as unearned revenues in accounting.

Internal transactions have no effect on the accounting equation

Canadian ASPE allows accrual accounting as an option whereas IFRS requires accrual accounting.

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