Question 1

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Accepted Answer

A) True 
 B)False

Question 2

Discuss the two alternate methods used to account for prepaid expenses

Accepted Answer

The first method places all prepaid expe

Question 3

On July 1, 2017, JazzE Ltd. purchased a 3-year insurance policy and paid a premium of$60,000. JazzE has a December 31 year end. Under accrual accounting, which of the following statements best describes the effect of this transaction?

Accepted Answer

A) The insurance expense account for the period ending December 31, 2017 will be $20,000. 
B) The balance in the prepaid insurance account on December 31, 2017 will be $50,000. 
C) The insurance expense account for the period ending December 31, 2017 will be $40,000. 
D) The balance in the prepaid insurance account on December 31, 2017 will be $40,000. 
E) The balance in the prepaid insurance account on December 31, 2017 will be $60,000. 
A) The insurance expense account for the period ending December 31, 2017 will be $20,000. 
B) The balance in the prepaid insurance account on December 31, 2017 will be $50,000. 
C) The insurance expense account for the period ending December 31, 2017 will be $40,000. 
D) The balance in the prepaid insurance account on December 31, 2017 will be $40,000. 
E) The balance in the prepaid insurance account on December 31, 2017 will be $60,000.

Question 4

The economic effect of an expense is incurred when the benefit expires or is used up, not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation attempts to adjust the ledger account balances for assets to equate to their current market value.

Accepted Answer

A) True 
 B)False

Question 6

If equipment were purchased from an outside party, the using up of the equipment's 7)economic benefit would be considered an external transaction.

Accepted Answer

A) True 
 B)False

Question 7

Unearned Premium Revenue at December 31, 2018 is

Accepted Answer

A) $360 
B) $540 
C) $900 
D) $1,440 
E) $60 
A) $360 
B) $540 
C) $900 
D) $1,440 
E) $60

Question 8

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Accepted Answer

A) True 
 B)False

Question 9

It is acceptable to credit unearned revenues to revenue accounts when cash is received

Accepted Answer

A) True 
 B)False

Question 10

Using the form below, indicate if each error would cause the trial balance to be
out of balance, the amount of any imbalance, and if a correcting entry is required.

Accepted Answer

The answer of Using the form below, indicate if each...

Question 11

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Accepted Answer

A) True 
 B)False

Question 12

Expenses incurred during an accounting period but that, before end-of-periodadjustments, remain unrecorded because payment is not due are referred to as accrued expenses.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following assets is not depreciated? 113)

Accepted Answer

A) Trucks. 
B) Store fixtures. 
C) Land. 
D) Computers. 
E) Buildings. 
A) Trucks. 
B) Store fixtures. 
C) Land. 
D) Computers. 
E) Buildings.

Question 14

Adjusting entries may affect only balance sheet accounts

Accepted Answer

A) True 
 B)False

Question 15

A company paid the $1,350 premium on a three-year insurance policy on April 1, 2015.The policy gave protection beginning on that date. How many dollars of the premium will appear as an expense on the calendar year 2015 income statement assuming the accrual basis of accounting? Assuming the cash basis of accounting?

Accepted Answer

A) $450 accrual basis; $450 cash basis. 
B) $1,350 accrual basis; $1,350 cash basis. 
C) $337.50 accrual basis; $1,350 cash basis. 
D) $1,012.50 accrual basis; $1,350 cash basis. 
E) $1,350 accrual basis; $337.50 cash basis. 
A) $450 accrual basis; $450 cash basis. 
B) $1,350 accrual basis; $1,350 cash basis. 
C) $337.50 accrual basis; $1,350 cash basis. 
D) $1,012.50 accrual basis; $1,350 cash basis. 
E) $1,350 accrual basis; $337.50 cash basis.

Question 16

The accounting principle that requires revenue to be reported when earned is the

Accepted Answer

A) Matching principle. 
B) Revenue recognition principle. 
C) Going concern principle. 
D) Cost principle. 
E) Timeliness principle. 
A) Matching principle. 
B) Revenue recognition principle. 
C) Going concern principle. 
D) Cost principle. 
E) Timeliness principle.

Question 17

Adjusting entries are designed primarily to correct errors made by bookkeepers

Accepted Answer

A) True 
 B)False

Question 18

On January 1, 2017, NEW Company purchased a new building for $9,000,000. Itis estimated that the Building will have a useful life of 12 years and have a salvage value of $1,000,000.At the end of the year, a similar warehouse across the street from NEW's building sold for $10,000,000. NEW's bookkeeper decides not to record any depreciation expense on the new building in the financial statements for the year endedDecember 31, 2017 because the building has not declined in value.Required - Identify and explain which accounting principle has been violated by not reporting depreciation expense on the new warehouse for the year ended December 31, 2017. How would this omission affect the credibility of thefinancial statements? Name two user groups that would be impacted by the omission?

Accepted Answer

Not reporting depreciation expense on th

Question 19

A balance sheet that places the liabilities and equity to the right of the assets is calleda(n):

Accepted Answer

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

Question 20

Discuss how accrual accounting adds usefulness to financial statements

Accepted Answer

The accrual accounting method

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Discuss the two alternate methods used to account for prepaid expenses

On July 1, 2017, JazzE Ltd. purchased a 3-year insurance policy and paid a premium of$60,000. JazzE has a December 31 year end. Under accrual accounting, which of the following statements best describes the effect of this transaction?

The economic effect of an expense is incurred when the benefit expires or is used up, not when cash is paid.

Depreciation attempts to adjust the ledger account balances for assets to equate to their current market value.

If equipment were purchased from an outside party, the using up of the equipment's 7)economic benefit would be considered an external transaction.

Unearned Premium Revenue at December 31, 2018 is

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

It is acceptable to credit unearned revenues to revenue accounts when cash is received

Using the form below, indicate if each error would cause the trial balance to be out of balance, the amount of any imbalance, and if a correcting entry is required.

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Expenses incurred during an accounting period but that, before end-of-periodadjustments, remain unrecorded because payment is not due are referred to as accrued expenses.

Which of the following assets is not depreciated? 113)

Adjusting entries may affect only balance sheet accounts

The accounting principle that requires revenue to be reported when earned is the

Adjusting entries are designed primarily to correct errors made by bookkeepers

A balance sheet that places the liabilities and equity to the right of the assets is calleda(n):

Discuss how accrual accounting adds usefulness to financial statements

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

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Discuss the two alternate methods used to account for prepaid expenses

On July 1, 2017, JazzE Ltd. purchased a 3-year insurance policy and paid a premium of$60,000. JazzE has a December 31 year end. Under accrual accounting, which of the following statements best describes the effect of this transaction?

The economic effect of an expense is incurred when the benefit expires or is used up, not when cash is paid.

Depreciation attempts to adjust the ledger account balances for assets to equate to their current market value.

If equipment were purchased from an outside party, the using up of the equipment's 7)economic benefit would be considered an external transaction.

Unearned Premium Revenue at December 31, 2018 is

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

It is acceptable to credit unearned revenues to revenue accounts when cash is received

Using the form below, indicate if each error would cause the trial balance to be out of balance, the amount of any imbalance, and if a correcting entry is required.

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Expenses incurred during an accounting period but that, before end-of-periodadjustments, remain unrecorded because payment is not due are referred to as accrued expenses.

Which of the following assets is not depreciated? 113)

Adjusting entries may affect only balance sheet accounts

The accounting principle that requires revenue to be reported when earned is the

Adjusting entries are designed primarily to correct errors made by bookkeepers

A balance sheet that places the liabilities and equity to the right of the assets is calleda(n):

Discuss how accrual accounting adds usefulness to financial statements

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