Question 1

Identify the effect, if any, that each of the following transactions would have upon cash and retained earnings. Show the dollar amount and the effect (+, -, N).

Accepted Answer

The answer of Identify the effect, if any, that each...

Question 2

If a company fails to adjust for accrued revenues:

Accepted Answer

A)  liabilities will be understated and revenues will be understated. 
B)  liabilities will be overstated and revenues will be understated. 
C)  assets will be overstated and revenues will be understated. 
D)  assets will be understated and revenues will be understated. 
A)  liabilities will be understated and revenues will be understated. 
B)  liabilities will be overstated and revenues will be understated. 
C)  assets will be overstated and revenues will be understated. 
D)  assets will be understated and revenues will be understated.

Question 3

Adjusting entries are:

Accepted Answer

A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to balance sheet accounts only. 
A)  not necessary if the accounting system is operating properly. 
B)  usually required before financial statements are prepared. 
C)  made whenever management desires to change an account balance. 
D)  made to balance sheet accounts only.

Question 4

If a company fails to adjust an Unearned Rent Revenue account for rent that has been earned, what effect will this have on that month's financial statements?

Accepted Answer

A)  Assets will be understated and revenues will be understated. 
B)  Liabilities will be understated and revenues will be understated. 
C)  Liabilities will be overstated and revenues will be understated. 
D)  Assets will be overstated and revenues will be understated. 
A)  Assets will be understated and revenues will be understated. 
B)  Liabilities will be understated and revenues will be understated. 
C)  Liabilities will be overstated and revenues will be understated. 
D)  Assets will be overstated and revenues will be understated.

Question 5

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 6

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

Accepted Answer

A)  Net income will be overstated for the current year. 
B)  Total assets will be understated at the end of the current year. 
C)  The balance sheet and income statement will be misstated but the Retained Earnings statement will be correct for the current year. 
D)  Total expenses will be overstated at the end of the current year. 
A)  Net income will be overstated for the current year. 
B)  Total assets will be understated at the end of the current year. 
C)  The balance sheet and income statement will be misstated but the Retained Earnings statement will be correct for the current year. 
D)  Total expenses will be overstated at the end of the current year.

Question 7

On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is:

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $30,000. 
D)  $36,000. 
A)  $0. 
B)  $6,000. 
C)  $30,000. 
D)  $36,000.

Question 8

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. $\begin{array}{lr}
\text { Cash received from customers } & \$ 48,000 \
\text { Accounts receivable } & 12,000 \
\text { Cash paid for expenses } & 26,000 \
\text { Accounts payable (related to expenses) } & 3,000 \
\text { Prepaid rent for next period } & 7,000
\end{array}$

Accepted Answer

A)  $22,000 
B)  $31,000 
C)  $24,000 
D)  $15,000 
A)  $22,000 
B)  $31,000 
C)  $24,000 
D)  $15,000

Question 9

Leyland Realty Company received a check for $15,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $15,000. Financial statements will be prepared on July 31. Leyland Realty should make the following adjusting entry on July 31:

Accepted Answer

A)  debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500. 
B)  debit Rent Revenue, $2,500; credit Unearned Rent Revenue, $2,500. 
C)  debit Unearned Rent Revenue, $15,000; credit Rent Revenue, $15,000. 
D)  debit Cash, $15,000; credit Rent Revenue, $15,000. 
A)  debit Unearned Rent Revenue, $2,500; credit Rent Revenue, $2,500. 
B)  debit Rent Revenue, $2,500; credit Unearned Rent Revenue, $2,500. 
C)  debit Unearned Rent Revenue, $15,000; credit Rent Revenue, $15,000. 
D)  debit Cash, $15,000; credit Rent Revenue, $15,000.

Question 10

The difference between the balance of a plant asset account and the related accumulated depreciation account is termed:

Accepted Answer

A)  market value. 
B)  contra asset. 
C)  book value. 
D)  liability. 
A)  market value. 
B)  contra asset. 
C)  book value. 
D)  liability.

Question 11

Darting Company purchased a computer system for $7,200 on January 1, 2014. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is:

Accepted Answer

A)  $0. 
B)  $200. 
C)  $2,400. 
D)  $7,200. 
A)  $0. 
B)  $200. 
C)  $2,400. 
D)  $7,200.

Question 12

On December 31, 2014, Çolski Company prepared an income statement and balance sheet and failed to take into account three adjusting entries. The incorrect income statement showed net income of $40,000. The balance sheet showed total assets, $130,000; total liabilities, $60,000; and stockholders' equity, $70,000.
The data for the three adjusting entries were:
(1) Depreciation of $9,000 was not recorded on equipment.
(2) Salaries and Wages amounting to $10,000 for the last two days in December were not paid and not recorded. The next payroll will be in January.
(3) Rent of $8,000 was paid for two months in advance on December 1. The entire amount was debited to Prepaid Rent when paid.
Instructions:
Complete the following tabulation to correct the financial statement amounts shown (indicate deductions with parentheses):

Accepted Answer

The answer of On December 31, 2014, Çolski Company prepared...

Question 13

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

Accepted Answer

A)  cash. 
B)  prepaid rent. 
C)  unearned rent revenue. 
D)  accrued rent revenue. 
A)  cash. 
B)  prepaid rent. 
C)  unearned rent revenue. 
D)  accrued rent revenue.

Question 14

Which one of the following is not a justification for adjusting entries?

Accepted Answer

A)  Adjusting entries are necessary to ensure that the revenue recognition principle is followed. 
B)  Adjusting entries are necessary to ensure that the expense recognition principle is followed. 
C)  Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. 
D)  Adjusting entries are necessary to bring the general ledger accounts in line with the budget. 
A)  Adjusting entries are necessary to ensure that the revenue recognition principle is followed. 
B)  Adjusting entries are necessary to ensure that the expense recognition principle is followed. 
C)  Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. 
D)  Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Question 15

Accrued revenues are revenues that have been recognized but not yet recorded.

Accepted Answer

A) True 
 B)False

Question 16

Prepare adjusting entries for the following transactions. Omit explanations.
1. Unrecorded interest accrued on savings bonds is $200.
2. Property taxes incurred but not paid or recorded amount to $900.
3. Salaries incurred by year end but not yet paid or recorded amounted to $600.

Accepted Answer

The answer of Prepare adjusting entries for the following transactions....

Question 17

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

Accepted Answer

A)  Common stock 
B)  Prepaid rent 
C)  Unearned service revenue 
D)  Retained earnings 
A)  Common stock 
B)  Prepaid rent 
C)  Unearned service revenue 
D)  Retained earnings

Question 18

Briefly distinguish between a deferral and an accrual.

Accepted Answer

A deferral is the postponement of the re

Question 19

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. $$\begin{array} { l r } 
\text { Revenue earned } & \$ 16,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$$

Accepted Answer

A)  $6,500 
B)  $11,000 
C)  $4,700 
D)  $6,950 
A)  $6,500 
B)  $11,000 
C)  $4,700 
D)  $6,950

Question 20

Each of the following is a major type (or category) of adjusting entry except:

Accepted Answer

A)  earned expenses. 
B)  prepaid expenses. 
C)  accrued expenses. 
D)  accrued revenues. 
A)  earned expenses. 
B)  prepaid expenses. 
C)  accrued expenses. 
D)  accrued revenues.

Identify the effect, if any, that each of the following transactions would have upon cash and retained earnings. Show the dollar amount and the effect (+, -, N).

If a company fails to adjust for accrued revenues:

Adjusting entries are:

If a company fails to adjust an Unearned Rent Revenue account for rent that has been earned, what effect will this have on that month's financial statements?

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is:

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Cash received from customers \ 48,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000

The difference between the balance of a plant asset account and the related accumulated depreciation account is termed:

Darting Company purchased a computer system for $7,200 on January 1, 2014. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is:

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

Which one of the following is not a justification for adjusting entries?

Accrued revenues are revenues that have been recognized but not yet recorded.

Prepare adjusting entries for the following transactions. Omit explanations. 1. Unrecorded interest accrued on savings bonds is $200. 2. Property taxes incurred but not paid or recorded amount to $900. 3. Salaries incurred by year end but not yet paid or recorded amounted to $600.

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

Briefly distinguish between a deferral and an accrual.

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. Revenue earned \ 16,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800

Each of the following is a major type (or category) of adjusting entry except:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

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Exam 4: Accrual Accounting Concepts

Identify the effect, if any, that each of the following transactions would have upon cash and retained earnings. Show the dollar amount and the effect (+, -, N).

If a company fails to adjust for accrued revenues:

Adjusting entries are:

If a company fails to adjust an Unearned Rent Revenue account for rent that has been earned, what effect will this have on that month's financial statements?

Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

On January 1, 2013, M. Johanson Company purchased equipment for $36,000. The company is depreciating the equipment at the rate of $500 per month. The book value of the equipment at December 31, 2013 is:

Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting. Cash received from customers \ 48,000 Accounts receivable 12,000 Cash paid for expenses 26,000 Accounts payable (related to expenses) 3,000 Prepaid rent for next period 7,000

The difference between the balance of a plant asset account and the related accumulated depreciation account is termed:

Darting Company purchased a computer system for $7,200 on January 1, 2014. The company expects to use the computer system for 3 years. It has no salvage value. Monthly depreciation expense on the asset is:

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

Which one of the following is not a justification for adjusting entries?

Accrued revenues are revenues that have been recognized but not yet recorded.

Prepare adjusting entries for the following transactions. Omit explanations. 1. Unrecorded interest accrued on savings bonds is $200. 2. Property taxes incurred but not paid or recorded amount to $900. 3. Salaries incurred by year end but not yet paid or recorded amounted to $600.

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

Briefly distinguish between a deferral and an accrual.

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting. Revenue earned \ 16,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800

Each of the following is a major type (or category) of adjusting entry except:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

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