Question 1

Expense recognition is tied to revenue recognition when

Accepted Answer

A)  cash has been received for the revenue. 
B)  efforts should be matched with accomplishments. 
C)  when there is a direct association with the costs incurred and when the revenue is earned. 
D)  cash payments have been expended in the same accounting period. 
A)  cash has been received for the revenue. 
B)  efforts should be matched with accomplishments. 
C)  when there is a direct association with the costs incurred and when the revenue is earned. 
D)  cash payments have been expended in the same accounting period. C

Question 2

Companies reporting under IFRS must prepare adjusting entries every

Accepted Answer

A)  month. 
B)  day. 
C)  year. 
D)  quarter. 
A)  month. 
B)  day. 
C)  year. 
D)  quarter. D

Question 3

An adjusted trial balance

Accepted Answer

A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  proves that all adjusting journal entries have been made. 
A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  proves that all adjusting journal entries have been made. B

Question 4

The fiscal year of the company must be the same as a calendar year.

Accepted Answer

A) True 
 B)False

Question 5

In a service-type business, revenue is considered earned

Accepted Answer

A)  at the end of the month. 
B)  at the end of the year. 
C)  when the service is performed. 
D)  when cash is received. 
A)  at the end of the month. 
B)  at the end of the year. 
C)  when the service is performed. 
D)  when cash is received.

Question 6

Which of the statements below is NOT true?

Accepted Answer

A)  An adjusted trial balance should show ledger account balances. 
B)  An adjusted trial balance can be used to prepare financial statements. 
C)  An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D)  An adjusted trial balance is prepared before all transactions have been journalized. 
A)  An adjusted trial balance should show ledger account balances. 
B)  An adjusted trial balance can be used to prepare financial statements. 
C)  An adjusted trial balance proves the mathematical equality of debits and credits in the ledger. 
D)  An adjusted trial balance is prepared before all transactions have been journalized.

Question 7

Lauren Hall University borrowed $20,000 from the bank signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements and uses months rather than days to calculate interest, the adjusting entry that the company should make for interest on September 30, would be

Accepted Answer

A)  debit Interest Expense, $400; credit Interest Payable, $400. 
B)  debit Interest Expense, $100; credit Interest Payable, $100. 
C)  debit Note Payable, $1,200; credit Cash, $1,200. 
D)  debit Cash, $100; credit Interest Payable, $100. 
A)  debit Interest Expense, $400; credit Interest Payable, $400. 
B)  debit Interest Expense, $100; credit Interest Payable, $100. 
C)  debit Note Payable, $1,200; credit Cash, $1,200. 
D)  debit Cash, $100; credit Interest Payable, $100.

Question 8

A company spends $10 million dollars for an office building. Over what period of time should the cost be written off?

Accepted Answer

A)  when the $10 million is expended in cash 
B)  all in the first year 
C)  over the useful life of the building 
D)  over the physical life of the building 
A)  when the $10 million is expended in cash 
B)  all in the first year 
C)  over the useful life of the building 
D)  over the physical life of the building

Question 9

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Accepted Answer

A) True 
 B)False

Question 10

To decrease an unearned revenue account, a credit entry to that account must be made.

Accepted Answer

A) True 
 B)False

Question 11

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

Accepted Answer

A) True 
 B)False

Question 12

Many business transactions will affect more than one accounting period.

Accepted Answer

A) True 
 B)False

Question 13

Martin's Cove Marina has a September 30 year end. On August 15, 2017, it purchased a new marine crane to assist it with the autumn pull out of the boats in the marina. The physical life of the crane is expected to be 15 years, but Martin plans to keep the crane for only 10 years as this represents the asset's useful life to the company and at which point they will trade it in for a newer model. The original cost of the crane is $50,000. The amount of depreciation that Martin should show in its financial statements for the year ended September 30, 2017 is

Accepted Answer

A)  $3,333. 
B)  $5,000. 
C)  $ 417. 
D)  $ 625. 
A)  $3,333. 
B)  $5,000. 
C)  $ 417. 
D)  $ 625.

Question 14

In calculating depreciation, the number of years of useful life of the asset is

Accepted Answer

A)  known with certainty. 
B)  an estimate. 
C)  the estimated time period before repairs or maintenance will be required. 
D)  based on the cost of the asset. 
A)  known with certainty. 
B)  an estimate. 
C)  the estimated time period before repairs or maintenance will be required. 
D)  based on the cost of the asset.

Question 15

Accumulated depreciation is a contra asset account.

Accepted Answer

A) True 
 B)False

Question 16

In the adjusted trial balance, if some of your adjusting entries have been posted twice, the debit totals will equal the credit totals on the trial balance.

Accepted Answer

A) True 
 B)False

Question 17

The fiscal year of a business is usually determined by

Accepted Answer

A)  the Canada Revenue Agency. 
B)  the Tax Act. 
C)  the business. 
D)  provincial securities and exchange commissions. 
A)  the Canada Revenue Agency. 
B)  the Tax Act. 
C)  the business. 
D)  provincial securities and exchange commissions.

Question 18

Laura Diamonds purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry

Accepted Answer

A)  debit Depreciation Expense, $100; credit Computer, $100. 
B)  debit Depreciation Expense, $100; credit Accumulated Depreciation, $100. 
C)  debit Depreciation Expense, $1,200; credit Accumulated Depreciation, $1,200. 
D)  debit Cash, $100; credit Accumulated Depreciation, $100. 
A)  debit Depreciation Expense, $100; credit Computer, $100. 
B)  debit Depreciation Expense, $100; credit Accumulated Depreciation, $100. 
C)  debit Depreciation Expense, $1,200; credit Accumulated Depreciation, $1,200. 
D)  debit Cash, $100; credit Accumulated Depreciation, $100.

Question 19

On July 1 the Don Harry Gallery paid $4,000 to Fairy Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on August 31, the adjusting entry to be made by the Don Harry is

Accepted Answer

A)  debit Rent Expense, $3,000; credit Prepaid Rent, $1,000. 
B)  debit Prepaid Rent, $2,000; credit Rent Expense, $2,000. 
C)  debit Rent Expense, $1,000; credit Prepaid Rent, $3,000. 
D)  debit Rent Expense, $2,000; credit Prepaid Rent, $2,000. 
A)  debit Rent Expense, $3,000; credit Prepaid Rent, $1,000. 
B)  debit Prepaid Rent, $2,000; credit Rent Expense, $2,000. 
C)  debit Rent Expense, $1,000; credit Prepaid Rent, $3,000. 
D)  debit Rent Expense, $2,000; credit Prepaid Rent, $2,000.

Question 20

Depreciation Expense for a period can be calculated by taking the

Accepted Answer

A)  original cost of a long-lived asset - accumulated depreciation. 
B)  original cost of a long-lived asset ÷ depreciation rate. 
C)  original cost of a long-lived asset ÷ useful life. 
D)  fair value of a long-lived asset ÷ useful life. 
A)  original cost of a long-lived asset - accumulated depreciation. 
B)  original cost of a long-lived asset ÷ depreciation rate. 
C)  original cost of a long-lived asset ÷ useful life. 
D)  fair value of a long-lived asset ÷ useful life.

Expense recognition is tied to revenue recognition when

Companies reporting under IFRS must prepare adjusting entries every

An adjusted trial balance

The fiscal year of the company must be the same as a calendar year.

In a service-type business, revenue is considered earned

Which of the statements below is NOT true?

A company spends $10 million dollars for an office building. Over what period of time should the cost be written off?

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

To decrease an unearned revenue account, a credit entry to that account must be made.

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

Many business transactions will affect more than one accounting period.

In calculating depreciation, the number of years of useful life of the asset is

Accumulated depreciation is a contra asset account.

In the adjusted trial balance, if some of your adjusting entries have been posted twice, the debit totals will equal the credit totals on the trial balance.

The fiscal year of a business is usually determined by

Laura Diamonds purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry

On July 1 the Don Harry Gallery paid $4,000 to Fairy Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on August 31, the adjusting entry to be made by the Don Harry is

Depreciation Expense for a period can be calculated by taking the

Accounting in Action

The Recording Process

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters

Exam 3: Adjusting the Accounts

Expense recognition is tied to revenue recognition when

Companies reporting under IFRS must prepare adjusting entries every

An adjusted trial balance

The fiscal year of the company must be the same as a calendar year.

In a service-type business, revenue is considered earned

Which of the statements below is NOT true?

A company spends $10 million dollars for an office building. Over what period of time should the cost be written off?

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

To decrease an unearned revenue account, a credit entry to that account must be made.

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

Many business transactions will affect more than one accounting period.

In calculating depreciation, the number of years of useful life of the asset is

Accumulated depreciation is a contra asset account.

In the adjusted trial balance, if some of your adjusting entries have been posted twice, the debit totals will equal the credit totals on the trial balance.

The fiscal year of a business is usually determined by

Laura Diamonds purchased a computer for $3,600 on December 1. It is estimated that the useful life of the computer will be 3 years. If financial statements are to be prepared on December 31, the company should make the following adjusting entry

On July 1 the Don Harry Gallery paid $4,000 to Fairy Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on August 31, the adjusting entry to be made by the Don Harry is

Depreciation Expense for a period can be calculated by taking the

Accounting in Action

The Recording Process

Completion of the Accounting Cycle

Inventory Costing

Internal Control and Cash

Accounting for Receivables

Long-Lived Assets

Current Liabilities and Payroll

Filters