Question 1

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) Expense recognition (matching)principle. 
B) Going-concern assumption. 
C) Time period assumption. 
D) Accrual reporting principle. 
E) Revenue recognition principle. 
A) Expense recognition (matching)principle. 
B) Going-concern assumption. 
C) Time period assumption. 
D) Accrual reporting principle. 
E) Revenue recognition principle.

Question 3

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded.

Accepted Answer

A) True 
 B)False

Question 4

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Accepted Answer

A) Debit Legal Fees Earned and credit Unearned Legal Fees. 
B) Debit Unearned Legal Fees and credit Accounts Receivable. 
C) Debit Cash and credit Legal Fees Earned. 
D) Debit Cash and credit Unearned Legal Fees. 
E) Debit Unearned Legal Fees and credit Legal Fees Earned. 
A) Debit Legal Fees Earned and credit Unearned Legal Fees. 
B) Debit Unearned Legal Fees and credit Accounts Receivable. 
C) Debit Cash and credit Legal Fees Earned. 
D) Debit Cash and credit Unearned Legal Fees. 
E) Debit Unearned Legal Fees and credit Legal Fees Earned.

Question 5

On January 1, Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000. Imlay uses the straight-line depreciation method to allocate costs, and only prepares adjustments at year-end. The adjusting entry needed on December 31 of the first year is:

Accepted Answer

A) Debit Depreciation Expense, $18,000; credit Equipment, $18,000. 
B) Debit Depreciation Expense, $9,000; credit Accumulated Depreciation, $9,000. 
C) Debit Depreciation Expense, $18,000; credit Accumulated Depreciation, $18,000. 
D) Debit Depreciation Expense, $9,000; credit Equipment, $9,000. 
E) Debit Depreciation Expense, $90,000; credit Accumulated Depreciation, $90,000. 
A) Debit Depreciation Expense, $18,000; credit Equipment, $18,000. 
B) Debit Depreciation Expense, $9,000; credit Accumulated Depreciation, $9,000. 
C) Debit Depreciation Expense, $18,000; credit Accumulated Depreciation, $18,000. 
D) Debit Depreciation Expense, $9,000; credit Equipment, $9,000. 
E) Debit Depreciation Expense, $90,000; credit Accumulated Depreciation, $90,000.

Question 6

Glisten Co. leases an office to a tenant at the rate of $3,000 per month. The tenant contacted Glisten and arranged to pay the rent for December on January 8 of the following year. Glisten agrees to this arrangement.
a.)Prepare the journal entry that Glisten must make at year ended December 31 to record the accrued rent revenue.
b.)Prepare the journal entry to record the receipt of the rent on January 8 of the following year (Assume no reversing entries were made).

Accepted Answer

The answer of Glisten Co. leases an office to a...

Question 7

Profit margin can also be called return on sales.

Accepted Answer

A) True 
 B)False

Question 8

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Accepted Answer

A) True 
 B)False

Question 9

A company had $7,000,000 in net income for the year. Its net sales were $15,200,000 for the same period. Calculate its profit margin.

Accepted Answer

A) 85.4%. 
B) 46.1%. 
C) 53.9%. 
D) 217.1%. 
E) 117.1%. 
A) 85.4%. 
B) 46.1%. 
C) 53.9%. 
D) 217.1%. 
E) 117.1%.

Question 10

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 11

Wilson Company paid $4,800 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously. The adjusting entry required on December 31 is:

Accepted Answer

A) Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400. 
B) Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400. 
C) Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200. 
D) Debit Cash, $4,800; Credit Prepaid Insurance, $4,800. 
E) Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200. 
A) Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400. 
B) Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400. 
C) Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200. 
D) Debit Cash, $4,800; Credit Prepaid Insurance, $4,800. 
E) Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200.

Question 12

The expense recognition (matching)principle does not aim to record expenses in the same accounting period as the revenue earned as a result of these expenses.

Accepted Answer

A) True 
 B)False

Question 13

Under the alternative method for accounting for unearned revenue, which of the following pairs of journal entry formats is correct?
A)
$\begin{array}{|l|l|}
\hline {\text { Initial Entry }} & {\text { Adjusting Entry }} \
\hline \text { Consulting Revenue } & \text { Unearned Revenue } \
\hline \text { Cash } & \text { Consulting Revenue } \
\hline
\end{array}$
B)
$\begin{array}{|l|l|}
\hline {\text { Initial Entry }} & {\text { Adjusting Entry }} \
\hline \text { Cash } & \text { Unearned Revenue } \
\hline \text { Unearned Revenue } & \text { Cash } \
\hline
\end{array}$
C)
$\begin{array}{|l|l|}
\hline {\text { Initial Entry }} & {\text { Adjusting Entry }} \
\hline \text { Cash } & \text { Consulting Revenue } \
\hline \text { Consulting Revenue } & \text { Unearned Revenue } \
\hline
\end{array}$
D)
$\begin{array}{|l|l|}
\hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \
\hline \text { Cash } & \text { Unearned Consulting Revenue } \
\hline \text { Unearned Consulting Revenue } & \text { Consulting Revenue } \
\hline
\end{array}$
E)
$\begin{array}{|l|l|}
\hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \
\hline \text { Cash } & \text { Consulting Revenue } \
\hline \text { Unearned Revenue } & \text { Unearned Revenue } \
\hline
\end{array}$

Accepted Answer

The answer of Under the alternative method for accounting for...

Question 14

On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the second year?

Accepted Answer

A) debit Unearned Fees, $387; credit Fees Earned, $387. 
B) debit Unearned Fees, $1,161; credit Fees Earned, $1,161. 
C) debit Unearned Fees, $129; credit Fees Earned, $129. 
D) debit Unearned Fees, $1,548; credit Fees Earned, $1,548. 
E) debit Unearned Fees, $516; credit Fees Earned, $516. 
A) debit Unearned Fees, $387; credit Fees Earned, $387. 
B) debit Unearned Fees, $1,161; credit Fees Earned, $1,161. 
C) debit Unearned Fees, $129; credit Fees Earned, $129. 
D) debit Unearned Fees, $1,548; credit Fees Earned, $1,548. 
E) debit Unearned Fees, $516; credit Fees Earned, $516.

Question 15

On December 1, Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank. The note payable plus interest will not be paid until April 1 of the following year. The company's annual accounting period ends on December 31 and adjustments are only made at year-end. The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Interest Expense, $250; credit Interest Payable, $250. 
B) Debit Interest Expense, $250; credit Note Payable, $250. 
C) Debit Interest Payable, $1,000; credit Interest Expense, $1,000. 
D) Debit Interest Expense, $1,000; credit Interest Payable, $1,000. 
E) No entry required. 
A) Debit Interest Expense, $250; credit Interest Payable, $250. 
B) Debit Interest Expense, $250; credit Note Payable, $250. 
C) Debit Interest Payable, $1,000; credit Interest Expense, $1,000. 
D) Debit Interest Expense, $1,000; credit Interest Payable, $1,000. 
E) No entry required.

Question 16

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Accepted Answer

A) Prepaid Depreciation. 
B) Unearned Depreciation. 
C) Book Value. 
D) Depreciation Expense. 
E) Depreciation Value. 
A) Prepaid Depreciation. 
B) Unearned Depreciation. 
C) Book Value. 
D) Depreciation Expense. 
E) Depreciation Value.

Question 17

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a. Estimated depreciation on equipment for the year, $4,500.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of insurance policies shows $600 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies shows $950 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31.
e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is
$700 per month. The $4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $1,000 per month

has not paid his rent for December.

Accepted Answer

The answer of Prepare general journal entries on December 31...

Question 18

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

Accepted Answer

A) Classified balance sheet. 
B) Account form balance sheet. 
C) Unclassified balance sheet. 
D) Report form balance sheet. 
E) Unadjusted balance sheet. 
A) Classified balance sheet. 
B) Account form balance sheet. 
C) Unclassified balance sheet. 
D) Report form balance sheet. 
E) Unadjusted balance sheet.

Question 19

Werner Company had $1,300 of store supplies at the beginning of the current year. During this year, Werner purchased $6,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Werner Company's store supplies expense for the current year.

Accepted Answer

Beginning balance +

Question 20

Profit margin measures the relation of debt to assets.

Accepted Answer

A) True 
 B)False

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

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

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Profit margin can also be called return on sales.

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

A company had $7,000,000 in net income for the year. Its net sales were $15,200,000 for the same period. Calculate its profit margin.

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

The expense recognition (matching)principle does not aim to record expenses in the same accounting period as the revenue earned as a result of these expenses.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

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

Werner Company had $1,300 of store supplies at the beginning of the current year. During this year, Werner purchased $6,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Werner Company's store supplies expense for the current year.

Profit margin measures the relation of debt to assets.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 3: Adjusting Accounts and Preparing Financial Statements

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

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

Prior to recording adjusting entries at the end of an accounting period, some accounts may not show correct balances even though all transactions were properly recorded.

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees, the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Profit margin can also be called return on sales.

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

A company had $7,000,000 in net income for the year. Its net sales were $15,200,000 for the same period. Calculate its profit margin.

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

The expense recognition (matching)principle does not aim to record expenses in the same accounting period as the revenue earned as a result of these expenses.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

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

Werner Company had $1,300 of store supplies at the beginning of the current year. During this year, Werner purchased $6,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Werner Company's store supplies expense for the current year.

Profit margin measures the relation of debt to assets.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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