Question 1

The accrual basis of accounting recognizes revenues when cash is received from customers,regardless of when the goods or services are provided.

Accepted Answer

A) True 
 B)False

Question 2

All of the following are true regarding prepaid expenses except:

Accepted Answer

A) They are paid for in advance of receiving their benefits. 
B) They are assets. 
C) When they are used,their costs become expenses. 
D) The adjusting entry for prepaid expenses increases expenses and decreases liabilities. 
E) The adjusting entry for prepaid expenses increases expenses and decreases assets. 
A) They are paid for in advance of receiving their benefits. 
B) They are assets. 
C) When they are used,their costs become expenses. 
D) The adjusting entry for prepaid expenses increases expenses and decreases liabilities. 
E) The adjusting entry for prepaid expenses increases expenses and decreases assets.

Question 3

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Accepted Answer

A) $13,562.50 
B) $12,250.00 
C) $12,500.00 
D) $13,500.00 
E) $13,625.00 
A) $13,562.50 
B) $12,250.00 
C) $12,500.00 
D) $13,500.00 
E) $13,625.00

Question 4

How is the current ratio calculated? How is it used to evaluate a company?

Accepted Answer

The current ratio is current assets divi

Question 5

For each of the following two separate situations,present both the April 30 adjusting entry and the subsequent entry during May to record the payment of the accrued expenses or receipt of the accrued revenue.Assume the company does not prepare reversing entries.
a.Nicolas Company has 5 employees,who earn a total of $2,900 in salaries each working day.They are paid on Monday for the five-day workweek ending on the previous Friday.Assume that fiscal year ended April 30,is a Thursday and all employees worked each day and will be paid salaries for five full days on the following Monday.
b.Services of $3,000 have been performed for Clevenger Company through April 30.The client will pay the entire amount of the contract when services are completed on May 23.
c.Paid the employees' salaries on May 4.
d.Received payment from Clevenger Company for services that are now completed on May 23.

Accepted Answer

The answer of For each of the following two separate...

Question 6

Adjusting is a three-step process (1)________,(2)________,and (3)________.

Accepted Answer

(1)determine the current accou

Question 7

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

Accepted Answer

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

Question 8

Depreciation measures the decline in market value of an asset.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

A) Debit Salaries Payable and credit Salaries Expense. 
B) Debit Salaries Expense and credit Cash. 
C) Debit Accrued Salaries and credit Salaries Payable. 
D) Debit Cash and credit Salaries Expense. 
E) Debit Salaries Expense and credit Salaries Payable. 
A) Debit Salaries Payable and credit Salaries Expense. 
B) Debit Salaries Expense and credit Cash. 
C) Debit Accrued Salaries and credit Salaries Payable. 
D) Debit Cash and credit Salaries Expense. 
E) Debit Salaries Expense and credit Salaries Payable.

Question 10

On November 1 of the current year,Salinger Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Salinger recorded the following entry:
  
Assuming Salinger only prepares adjustments at year-end, prepare the required adjusting entry at December 31 of the current year.

Accepted Answer

@#IMG-DLM&
($9,600/12 mo. = $8

Question 11

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 amount should appear in the Prepaid Subscription account for Otisco,Inc.after adjustments on December 31 of the second year assuming the company is using a calendar-year reporting period and the previous year adjustment had been made?

Accepted Answer

A) $1,548. 
B) $387. 
C) $516. 
D) $645. 
E) $0. 
A) $1,548. 
B) $387. 
C) $516. 
D) $645. 
E) $0.

Question 12

Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

Accepted Answer

The answer of Using the information presented below,prepare an income...

Question 13

Adjusting entries made at the end of an accounting period accomplish all of the following except:

Accepted Answer

A) Updating liability and asset accounts to their proper balances. 
B) Assigning revenues to the periods in which they are earned. 
C) Assigning expenses to the periods in which they are incurred. 
D) Assuring that financial statements reflect the revenues earned and the expenses incurred. 
E) Assuring that external transaction amounts remain unchanged. 
A) Updating liability and asset accounts to their proper balances. 
B) Assigning revenues to the periods in which they are earned. 
C) Assigning expenses to the periods in which they are incurred. 
D) Assuring that financial statements reflect the revenues earned and the expenses incurred. 
E) Assuring that external transaction amounts remain unchanged.

Question 14

Describe the two alternate methods used to account for prepaid expenses.

Accepted Answer

The first method places all prepaid expe

Question 15

The Unadjusted Trial Balance columns of a work sheet total $84,000.The Adjustments columns contain entries for the following: 
1.Office supplies used during the period,$1,200.
2.Expiration of prepaid rent,$700.
3.Accrued salaries expense,$500.
4.Depreciation expense,$800.
5.Accrued service fees receivable,$400.
The Adjusted Trial Balance columns total is:

Accepted Answer

A) $80,400. 
B) $84,000. 
C) $85,700. 
D) $85,900. 
E) $87,600. 
A) $80,400. 
B) $84,000. 
C) $85,700. 
D) $85,900. 
E) $87,600.

Question 16

The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account?

Accepted Answer

A) $75,500. 
B) $184,500. 
C) $99,500. 
D) $160,500. 
E) $130,000. 
A) $75,500. 
B) $184,500. 
C) $99,500. 
D) $160,500. 
E) $130,000.

Question 17

Which of the following accounts could not be classified as a current liability?

Accepted Answer

A) Unearned revenues. 
B) Accounts payable. 
C) Notes payable (due in 11 months). 
D) Current portion of long-term note payable. 
E) Notes payable (due in 5 years). 
A) Unearned revenues. 
B) Accounts payable. 
C) Notes payable (due in 11 months). 
D) Current portion of long-term note payable. 
E) Notes payable (due in 5 years).

Question 18

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

Accepted Answer

A) Intangible expenses. 
B) Prepaid expenses. 
C) Unearned expenses. 
D) Net expenses. 
E) Accrued expenses. 
A) Intangible expenses. 
B) Prepaid expenses. 
C) Unearned expenses. 
D) Net expenses. 
E) Accrued expenses.

Question 19

Unearned revenue is reported in the financial statements as:

Accepted Answer

A) A revenue on the balance sheet. 
B) A liability on the balance sheet. 
C) An unearned revenue on the income statement. 
D) An asset on the balance sheet. 
E) A financing activity on the statement of cash flows. 
A) A revenue on the balance sheet. 
B) A liability on the balance sheet. 
C) An unearned revenue on the income statement. 
D) An asset on the balance sheet. 
E) A financing activity on the statement of cash flows.

Question 20

A company purchased a new delivery van at a cost of $45,000 on July 1.The delivery van is estimated to have a useful life of 6 years and a salvage value of $3,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the van during the first year ended December 31?

Accepted Answer

A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000. 
A) $3,250. 
B) $3,500. 
C) $4,000. 
D) $6,500. 
E) $7,000.

Exam 3: Adjusting Accounts for Financial Statements

The accrual basis of accounting recognizes revenues when cash is received from customers,regardless of when the goods or services are provided.

All of the following are true regarding prepaid expenses except:

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

How is the current ratio calculated? How is it used to evaluate a company?

Adjusting is a three-step process (1)________,(2)________,and (3)________.

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

Depreciation measures the decline in market value of an asset.

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?

Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

Adjusting entries made at the end of an accounting period accomplish all of the following except:

Describe the two alternate methods used to account for prepaid expenses.

The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account?

Which of the following accounts could not be classified as a current liability?

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are:

Unearned revenue is reported in the financial statements as:

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

Adjusting is a three-step process (1),(2),and (3).