Under the alternative method for recording prepaid expenses, which is the correct set of journal entries? A) $\begin{array}{|l|l|} \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\ \hline \text { Prepaid Insurance } & \text { Cash } \\ \hline \text { Insurance Expense } & \text { Prepaid Insurance } \\ \hline \end{array}$ B) $\begin{array}{|l|l|} \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\ \hline \text { Prepaid Insurance } & \text { Insurance Expense } \\ \hline \text { Cash } & \text { Prepaid Insurance } \\ \hline \end{array}$ C) $\begin{array}{|l|l|} \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\ \hline \text { Prepaid Insurance } & \text { Prepaid Insurance } \\ \hline \text { Cash } & \text { Insurance Expense } \\ \hline \end{array}$ D) $\begin{array}{|l|l|} \hline{\text { Initial Entry }} & {\text { Adjusting Entry }} \\ \hline \text { Insurance Expense } & \text { Prepaid Insurance } \\ \hline \text { Cash } & \text { Insurance Expense } \\ \hline \end{array}$ E) $\begin{array}{|l|l|} \hline {\text { Initial Entry }} &{\text { Adjusting Entry }} \\ \hline \text { Cash } & \text { Prepaid Insurance } \\ \hline \text { Insurance Expense } & \text { Insurance Expense } \\ \hline \end{array}$

The answer of Under the alternative method for recording prepaid...

Exam 3: Adjusting Accounts and Preparing Financial Statements

Match the following types of adjustments (a though d)with the transactions.

Used to record revenue earned for which cash has not been received.

Accrued expense

Used to record wages owed, but not yet paid.

Unearned revenue

Used to record expiration or use of prepaid insurance.

Accrued revenue

Correct Answer:

Verified

Used to record revenue earned for which cash has not been received.

Used to record wages owed, but not yet paid.

Used to record expiration or use of prepaid insurance.

Used to record revenue earned for which cash was received in advance.

(Matching)

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Question 81

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

(Multiple Choice)

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Question 82

A company performs 20 days of work on a 30-day contract before the end of the year. The total contract is valued at $6,000, with payment received in advance. The $6,000 cash receipt was initially recorded as Unearned Revenue. The required adjusting entry includes a $4,000 debit to Unearned Revenue.

(True/False)

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Question 83

On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the year ended December 31?

(Multiple Choice)

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Question 84

Which of the following does not require an adjusting entry at year-end?

(Multiple Choice)

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Question 85

An annual reporting period consisting of any twelve consecutive months is known as:

(Multiple Choice)

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Question 86

Adjusting entries are made after the preparation of financial statements.

(True/False)

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Question 87

Prior to recording adjusting entries on December 31, a company's Office Supplies account had an $780 debit balance. A physical count of the supplies showed $425 of unused supplies available as of December 31. Prepare the required adjusting entry.

(Short Answer)

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Question 88

Profit margin is defined as:

(Multiple Choice)

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Question 89

Under the alternative method for recording prepaid expenses, which is the correct set of journal entries? A) Initial Entry Adjusting Entry Prepaid Insurance Cash Insurance Expense Prepaid Insurance B) Initial Entry Adjusting Entry Prepaid Insurance Insurance Expense Cash Prepaid Insurance C) Initial Entry Adjusting Entry Prepaid Insurance Prepaid Insurance Cash Insurance Expense D) Initial Entry Adjusting Entry Insurance Expense Prepaid Insurance Cash Insurance Expense E) Initial Entry Adjusting Entry Cash Prepaid Insurance Insurance Expense Insurance Expense

(Short Answer)

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Question 90

All plant assets, including land, are depreciated.

(True/False)

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Question 91

Match the appropriate definition with the following terms.

A balance sheet that lists items vertically in the order of assets, liabilities and equity.

Unadjusted trial balance

A listing of accounts and balances prepared after adjustments are recorded and posted to the ledger.

Accounting period

Items paid for in advance of receiving their benefits; recorded as an asset when purchased and expensed when used.

Accrued expenses

Correct Answer:

Verified

A balance sheet that lists items vertically in the order of assets, liabilities and equity.

A listing of accounts and balances prepared after adjustments are recorded and posted to the ledger.

Items paid for in advance of receiving their benefits; recorded as an asset when purchased and expensed when used.

Any length of time that an organization's activities are divided into and reported by financial statements.

Costs that are incurred in a period but are both unpaid and unrecorded, requiring an adjustment at the end of the period.

A listing of accounts and balances prepared after external transactions are recorded but before adjustments are recorded.

A useful measure of a company's operating results determined by dividing net income by net sales.

A 12-month period, used by companies with seasonal variation, that ends when a company's sales activities are at their lowest point.

A journal entry made at the end of an accounting period to reflect a transaction or event that is not yet recorded; affects one or more income statement account and one or more balance sheet account, but never cash.

An account linked with another account and having an opposite normal balance.

(Matching)

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Question 92

Which of the following statements related to U.S. GAAP and IFRS is incorrect?

(Multiple Choice)

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Question 93

A company pays its employees $4,000 each Friday, which amounts to $800 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:

(Multiple Choice)

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Question 94

The adjusting entry to record the salaries earned due to employees for services provided but unpaid at the end of the accounting period affects the accounts in which of the following ways?

(Multiple Choice)

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Question 95

List the three-steps of the adjusting process.

(Essay)

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Question 96

A fiscal year refers to an organization's accounting period that spans twelve consecutive months or 52 weeks.

(True/False)

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Question 97

Which of the following statements is incorrect?

(Multiple Choice)

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Question 98

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

(Multiple Choice)

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Question 99

The balances in Sanchez Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375, respectively. If the office supplies expense for the month is $1,900, what amount of office supplies was purchased during February?

(Multiple Choice)

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Question 100

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period, the financial statements prepared at that time would show:

A company performs 20 days of work on a 30-day contract before the end of the year. The total contract is valued at $6,000, with payment received in advance. The $6,000 cash receipt was initially recorded as Unearned Revenue. The required adjusting entry includes a $4,000 debit to Unearned Revenue.

On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the year ended December 31?

Which of the following does not require an adjusting entry at year-end?

An annual reporting period consisting of any twelve consecutive months is known as:

Adjusting entries are made after the preparation of financial statements.

Prior to recording adjusting entries on December 31, a company's Office Supplies account had an $780 debit balance. A physical count of the supplies showed $425 of unused supplies available as of December 31. Prepare the required adjusting entry.

Profit margin is defined as:

All plant assets, including land, are depreciated.

Which of the following statements related to U.S. GAAP and IFRS is incorrect?

The adjusting entry to record the salaries earned due to employees for services provided but unpaid at the end of the accounting period affects the accounts in which of the following ways?

List the three-steps of the adjusting process.

A fiscal year refers to an organization's accounting period that spans twelve consecutive months or 52 weeks.

Which of the following statements is incorrect?

A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would:

The balances in Sanchez Accounting Services' office supplies account on February 1 and February 28 were $1,200 and $375, respectively. If the office supplies expense for the month is $1,900, what amount of office supplies was purchased during February?

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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