Question 1

Unearned revenue is classified as

Accepted Answer

A) an asset account. 
B) a revenue account. 
C) a contra-revenue account. 
D) a liability account. 
A) an asset account. 
B) a revenue account. 
C) a contra-revenue account. 
D) a liability account.

Question 2

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

Accepted Answer

A) True 
 B)False

Question 3

At March 1, Psychocandy Inc.reported a balance in Supplies of $200.During March, the company purchased supplies for $750 and consumed supplies of $800.If no adjusting entry is made for supplies

Accepted Answer

A) stockholders' equity will be overstated by $800. 
B) expenses will be understated by $750. 
C) assets will be understated by $250. 
D) net income will be understated by $800. 
A) stockholders' equity will be overstated by $800. 
B) expenses will be understated by $750. 
C) assets will be understated by $250. 
D) net income will be understated by $800.

Question 4

The expense recognition principle requires that expenses be matched with revenues.

Accepted Answer

A) True 
 B)False

Question 5

Crue Company had the following transactions during 2022: F1F1F1S1
F1F1F10F1F1F1S1F1F1F10Sales of $4,800 on account to 1.F1F1F1S1
F1F1F10F1F1F1S1F1F1F10Collected $2,000 for services to 1.F1F1F1S1
F1F1F10F1F1F1S1F1F1F10Paid $1,625 cash in salaries
F1F1F1S1
F1F1F10F1F1F1S1F1F1F10Purchased airline tickets for $250 in December for a trip to take place in 2023
What is Crue's 2022 net income using accrual accounting-basis?

Accepted Answer

A) $2,925 
B) $3,175 
C) $4,925 
D) $5,175 
A) $2,925 
B) $3,175 
C) $4,925 
D) $5,175

Question 6

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) Rent Revenue. 
A) Cash. 
B) Prepaid Rent. 
C) Unearned Rent Revenue. 
D) Rent Revenue.

Question 7

If an adjusting entry is not made for an accrued revenue,

Accepted Answer

A) assets will be overstated. 
B) expenses will be understated. 
C) stockholders' equity will be understated. 
D) revenues will be overstated. 
A) assets will be overstated. 
B) expenses will be understated. 
C) stockholders' equity will be understated. 
D) revenues will be overstated.

Question 8

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 9

The expense recognition principle matches

Accepted Answer

A) customers with businesses. 
B) expenses with revenues. 
C) assets with liabilities. 
D) creditors with businesses. 
A) customers with businesses. 
B) expenses with revenues. 
C) assets with liabilities. 
D) creditors with businesses.

Question 10

A common application of the cost constraint is weighing the factual nature of cost figures versus the relevance of fair value.

Accepted Answer

A) True 
 B)False

Question 11

Alternative adjusting entries do not apply to

Accepted Answer

A) accrued revenues and accrued expenses. 
B) prepaid expenses. 
C) unearned revenues. 
D) prepaid expenses and unearned revenues. 
A) accrued revenues and accrued expenses. 
B) prepaid expenses. 
C) unearned revenues. 
D) prepaid expenses and unearned revenues.

Question 12

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 13

Blue Guitar Music School borrowed $30,000 from the bank signing an 8%, six-month note on November 1.Principal and interest are payable to the bank on May 1.If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar)?

Accepted Answer

The answer of Blue Guitar Music School borrowed $30,000 from...

Question 14

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows:   The effect of this entry is to

Accepted Answer

A) adjust the accounts to their proper amounts on December 31. 
B) understate total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31. 
A) adjust the accounts to their proper amounts on December 31. 
B) understate total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31.

Question 15

At December 31, 2022, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800.It was determined that $2,800 of the Prepaid Insurance had expired.The adjusted balance for Insurance Expense for the year would be

Accepted Answer

A) $2,450. 
B) $3,450. 
C) $2,800. 
D) $5,250. 
A) $2,450. 
B) $3,450. 
C) $2,800. 
D) $5,250.

Question 16

On January 1, 2022, Superfuzz Company purchased equipment for $40,000.The company is depreciating the equipment at a rate of $800 per month.The book value of the equipment at December 31, 2022 is

Accepted Answer

A) $0. 
B) $9,600. 
C) $30,400. 
D) $40,000. 
A) $0. 
B) $9,600. 
C) $30,400. 
D) $40,000.

Question 17

Adjusting entries can be classified as

Accepted Answer

A) postponements and advances. 
B) accruals and deferrals. 
C) deferrals and postponements. 
D) accruals and advances. 
A) postponements and advances. 
B) accruals and deferrals. 
C) deferrals and postponements. 
D) accruals and advances.

Question 18

Accrued revenues are revenues that have been recognized and received before financial statements have been prepared.

Accepted Answer

A) True 
 B)False

Question 19

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

Accepted Answer

A) True 
 B)False

Question 20

If a company fails to make an adjusting entry to record supplies expense, then

Accepted Answer

A) stockholders' equity will be understated. 
B) expense will be understated. 
C) assets will be understated. 
D) net income will be understated. 
A) stockholders' equity will be understated. 
B) expense will be understated. 
C) assets will be understated. 
D) net income will be understated.

Unearned revenue is classified as

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

At March 1, Psychocandy Inc.reported a balance in Supplies of $200.During March, the company purchased supplies for $750 and consumed supplies of $800.If no adjusting entry is made for supplies

The expense recognition principle requires that expenses be matched with revenues.

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

If an adjusting entry is not made for an accrued revenue,

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

The expense recognition principle matches

A common application of the cost constraint is weighing the factual nature of cost figures versus the relevance of fair value.

Alternative adjusting entries do not apply to

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows: The effect of this entry is to

On January 1, 2022, Superfuzz Company purchased equipment for $40,000.The company is depreciating the equipment at a rate of $800 per month.The book value of the equipment at December 31, 2022 is

Adjusting entries can be classified as

Accrued revenues are revenues that have been recognized and received before financial statements have been prepared.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

If a company fails to make an adjusting entry to record supplies expense, then

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control and Cash

Accounting for Receivables

Plant Assets, Natural Resources and Intangible Assets

Liabilities

Corporations: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters

Exam 3: Adjusting the Accounts

Unearned revenue is classified as

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

At March 1, Psychocandy Inc.reported a balance in Supplies of $200.During March, the company purchased supplies for $750 and consumed supplies of $800.If no adjusting entry is made for supplies

The expense recognition principle requires that expenses be matched with revenues.

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

If an adjusting entry is not made for an accrued revenue,

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

The expense recognition principle matches

A common application of the cost constraint is weighing the factual nature of cost figures versus the relevance of fair value.

Alternative adjusting entries do not apply to

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

A new accountant working for Spirit Walker Company records $900 Depreciation Expense on store equipment as follows: The effect of this entry is to

On January 1, 2022, Superfuzz Company purchased equipment for $40,000.The company is depreciating the equipment at a rate of $800 per month.The book value of the equipment at December 31, 2022 is

Adjusting entries can be classified as

Accrued revenues are revenues that have been recognized and received before financial statements have been prepared.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

If a company fails to make an adjusting entry to record supplies expense, then

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control and Cash

Accounting for Receivables

Plant Assets, Natural Resources and Intangible Assets

Liabilities

Corporations: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Time Value of Money

Payroll Accounting

Other Significant Liabilities

Filters