Question 1

An adjusting entry that increases a revenue and decreases a liability is known as a(n):

Accepted Answer

A) Accrued expense. 
B) Deferred expense. 
C) Deferred revenue. 
D) Accrued revenue. 
E) Depreciation. 
A) Accrued expense. 
B) Deferred expense. 
C) Deferred revenue. 
D) Accrued revenue. 
E) Depreciation.

Question 2

Adjusting entries:

Accepted Answer

A) Affect only income statement accounts. 
B) Affect only balance sheet accounts. 
C) Affect both income statement and balance sheet accounts. 
D) Affect cash accounts. 
E) Affect only equity accounts. 
A) Affect only income statement accounts. 
B) Affect only balance sheet accounts. 
C) Affect both income statement and balance sheet accounts. 
D) Affect cash accounts. 
E) Affect only equity accounts.

Question 3

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

Accepted Answer

Adjusting entries are necessary for tran

Question 4

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired rent of $200.This adjusting entry results in:

Accepted Answer

A) $200 decrease in net income. 
B) $200 increase in net income. 
C) $200 difference between the debit and credit columns of the Unadjusted Trial Balance. 
D) $200 of prepaid insurance. 
E) An error in the financial statements. 
A) $200 decrease in net income. 
B) $200 increase in net income. 
C) $200 difference between the debit and credit columns of the Unadjusted Trial Balance. 
D) $200 of prepaid insurance. 
E) An error in the financial statements.

Question 5

Carroll Co.is a multi-million dollar business.The business results for the year have been impacted significantly by a slowing economy.The company wants to increase its net income.It has incurred $2,900,000 in unpaid salaries at the end of the year and wants to leave those amounts unrecorded at the end of the year.(a)How would this omission affect the financial statements of Carroll? (b)Which accrual basis of accounting principles does this omission violate? (c)Would this be considered an ethical problem?

Accepted Answer

a.The net income would be overstated bec

Question 6

On April 1,Otisco,Inc.paid Garcia Publishing Company $1,548 for 36-month subscriptions to several different magazines.Otisco debited the prepayment to a Prepaid Subscriptions account,and the subscriptions started immediately.
-What is the amount of revenue that should be recorded by Otisco Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?

Accepted Answer

A) $0. 
B) $516. 
C) $387. 
D) $129. 
E) $430. 
A) $0. 
B) $516. 
C) $387. 
D) $129. 
E) $430.

Question 7

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 8

The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

Accepted Answer

A) True 
 B)False

Question 9

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings Credit column,the cause could be:

Accepted Answer

A) An expense entered in the Balance Sheet and Statement of Retained Earnings Debit column. 
B) A revenue entered in the Balance Sheet and Statement of Retained Earnings Credit column. 
C) An asset amount entered in the Income Statement and Statement of Retained Earnings Debit column. 
D) A liability amount entered in the Income Statement and Statement of Retained Earnings Credit column. 
E) An expense entered in the Balance Sheet and Statement of Retained Earnings Credit column. 
A) An expense entered in the Balance Sheet and Statement of Retained Earnings Debit column. 
B) A revenue entered in the Balance Sheet and Statement of Retained Earnings Credit column. 
C) An asset amount entered in the Income Statement and Statement of Retained Earnings Debit column. 
D) A liability amount entered in the Income Statement and Statement of Retained Earnings Credit column. 
E) An expense entered in the Balance Sheet and Statement of Retained Earnings Credit column.

Question 10

A physical count of supplies on hand at the end of May for Masters,Inc.indicated $1,250 of supplies on hand.The general ledger balance before any adjustment is $2,100.What is the adjusting entry for office supplies that should be recorded on May 31?

Accepted Answer

A) Debit Supplies Expense $1,250 and credit Supplies $1,250. 
B) Debit Prepaid Supplies $850 and credit Supplies Expense $850. 
C) Debit Supplies Expense $1,250 and credit Supplies $2,100. 
D) Debit Supplies $1,250 and credit Cash $1,250. 
E) Debit Supplies Expense $850 and credit Supplies $850. 
A) Debit Supplies Expense $1,250 and credit Supplies $1,250. 
B) Debit Prepaid Supplies $850 and credit Supplies Expense $850. 
C) Debit Supplies Expense $1,250 and credit Supplies $2,100. 
D) Debit Supplies $1,250 and credit Cash $1,250. 
E) Debit Supplies Expense $850 and credit Supplies $850.

Question 11

The assets section of a classified balance sheet usually includes the subgroups:

Accepted Answer

A) Current assets,long-term investments,plant assets,and intangible assets. 
B) Current assets,long-term assets,revenues,and intangible assets. 
C) Current assets,long-term investments,plant assets,and equity. 
D) Current liabilities,long-term investments,plant assets,and intangible assets. 
E) Current assets,liabilities,plant assets,and intangible assets. 
A) Current assets,long-term investments,plant assets,and intangible assets. 
B) Current assets,long-term assets,revenues,and intangible assets. 
C) Current assets,long-term investments,plant assets,and equity. 
D) Current liabilities,long-term investments,plant assets,and intangible assets. 
E) Current assets,liabilities,plant assets,and intangible assets.

Question 12

A classified balance sheet differs from an unclassified balance sheet in that:

Accepted Answer

A) An unclassified balance sheet is never used by large companies. 
B) A classified balance sheet groups items into the broad categories of asset,liability,and equity. 
C) A classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio. 
D) A classified balance sheet will include more accounts than an unclassified balance sheet for the same company on the same date. 
E) A classified balance sheet is not usually provided to outside parties. 
A) An unclassified balance sheet is never used by large companies. 
B) A classified balance sheet groups items into the broad categories of asset,liability,and equity. 
C) A classified balance sheet presents information in a manner that makes it easier to calculate a company's current ratio. 
D) A classified balance sheet will include more accounts than an unclassified balance sheet for the same company on the same date. 
E) A classified balance sheet is not usually provided to outside parties.

Question 13

A company had no supplies available at the beginning of August.A company purchased $6,000 worth of supplies in August and recorded the purchase in the Supplies account.On August 31,the fiscal year-end,the physical count of supplies indicates the cost of unused supplies is $3,200.The adjusting entry would include a $2,800 debit to Supplies.

Accepted Answer

A) True 
 B)False

Question 14

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Retained Earnings Credit column.

Accepted Answer

A) True 
 B)False

Question 15

The trial balance prepared after all closing entries have been journalized and posted is called the:

Accepted Answer

A) Unadjusted trial balance. 
B) Post-closing trial balance. 
C) General ledger. 
D) Adjusted trial balance. 
E) Work sheet. 
A) Unadjusted trial balance. 
B) Post-closing trial balance. 
C) General ledger. 
D) Adjusted trial balance. 
E) Work sheet.

Question 16

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

Accepted Answer

A) $325 debit. 
B) $325 credit. 
C) $425 debit. 
D) $750 debit. 
E) $425 credit. 
A) $325 debit. 
B) $325 credit. 
C) $425 debit. 
D) $750 debit. 
E) $425 credit.

Question 17

List and explain the steps in preparing a 10-column worksheet.

Accepted Answer

1.Enter the unadjusted trial balance.Lis

Question 18

Adjusting entries result in a better matching of revenues and expenses for the period.

Accepted Answer

A) True 
 B)False

Question 19

A company paid $9,000 for a twelve-month insurance policy on February 1.The policy coverage began on February 1.On February 28,$750 of insurance expense must be recorded.

Accepted Answer

A) True 
 B)False

Question 20

Based on the unadjusted trial balance for Highlight Styling and the adjusting information given below,prepare the adjusting journal entries for Highlight Styling.
Highlight Stylings' $\bold{\text{unadjusted trial balance}}$ for the current year follows:
   Additional information:
a.An insurance policy examination showed $1,040 of expired insurance.
b.An inventory count showed $210 of unused shop supplies still available.
c.Depreciation expense on shop equipment,$350.
d.Depreciation expense on the building,$2,020.
e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared.
f.$800 of the Unearned Rent account balance was still unearned by year-end.
g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid.
h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded.
i.One month's interest on the note payable,$600,has accrued but is unrecorded.

Accepted Answer

The answer of Based on the unadjusted trial balance for...

Exam 3: Adjusting Accounts for Financial Statements

An adjusting entry that increases a revenue and decreases a liability is known as a(n):

Adjusting entries:

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

A company shows a $600 balance in Prepaid Rent in the Unadjusted Trial Balance columns of the work sheet.The Adjustments columns show expired rent of $200.This adjusting entry results in:

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 accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

If the Balance Sheet and Statement of Retained Earnings columns of a work sheet fail to balance when the net income is added to the Balance Sheet and Statement of Retained Earnings Credit column,the cause could be:

A physical count of supplies on hand at the end of May for Masters,Inc.indicated $1,250 of supplies on hand.The general ledger balance before any adjustment is $2,100.What is the adjusting entry for office supplies that should be recorded on May 31?

The assets section of a classified balance sheet usually includes the subgroups:

A classified balance sheet differs from an unclassified balance sheet in that:

On the work sheet,net income is entered in the Income Statement Credit column as well as the Balance Sheet or Statement of Retained Earnings Credit column.

The trial balance prepared after all closing entries have been journalized and posted is called the:

The Unadjusted Trial Balance columns of a company's work sheet shows the Store Supplies account with a balance of $750.The Adjustments columns shows a credit of $425 for supplies used during the period.The amount shown as Store Supplies in the Balance Sheet columns of the work sheet is:

List and explain the steps in preparing a 10-column worksheet.

Adjusting entries result in a better matching of revenues and expenses for the period.

A company paid $9,000 for a twelve-month insurance policy on February 1.The policy coverage began on February 1.On February 28,$750 of insurance expense must be recorded.

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters