Question 1

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 2

A company paid $9,000 for a six-month insurance policy.The policy coverage began on February 1.On February 28,$150 of insurance expense must be recorded.

Accepted Answer

A) True 
 B)False

Question 3

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Accepted Answer

The answer of ______________________ are required at the end of...

Question 4

Financial statements can be prepared directly from the information in the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation expense is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 6

The following two separate situations require adjusting journal entries to prepare financial statements as of the fiscal year ended April 30.For each situation,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.
a.Cage Company has 10 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 will be paid salaries for five full days on the following Monday.All employees worked each day.
b.Services of $4,000 have been performed for a client 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 the client in the amount of $11,500 for services that are now completed on May 23.

Accepted Answer

The answer of The following two separate situations require adjusting...

Question 7

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Accepted Answer

unadjusted

Question 8

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 9

The 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 10

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets,is called:

Accepted Answer

A) Accumulated depreciation. 
B) A contra account. 
C) The matching principle. 
D) Depreciation expense. 
E) An accrued account. 
A) Accumulated depreciation. 
B) A contra account. 
C) The matching principle. 
D) Depreciation expense. 
E) An accrued account.

Question 11

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Accepted Answer

A) It will have no effect on income. 
B) It will overstate assets and liabilities by $9,000 
C) It will understate net income by $9,000. 
D) It will understate assets by $9,000. 
E) It will understate expenses and overstate net income by $9,000. 
A) It will have no effect on income. 
B) It will overstate assets and liabilities by $9,000 
C) It will understate net income by $9,000. 
D) It will understate assets by $9,000. 
E) It will understate expenses and overstate net income by $9,000.

Question 12

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

Accepted Answer

A) Understate net income by $28,000. 
B) Overstate net income by $28,000. 
C) Have no effect on net income. 
D) Overstate assets by $28,000. 
E) Understate assets by $28,000. 
A) Understate net income by $28,000. 
B) Overstate net income by $28,000. 
C) Have no effect on net income. 
D) Overstate assets by $28,000. 
E) Understate assets by $28,000.

Question 13

Accrual accounting and the adjusting process rely on two principles:
 the ___________________ principle and the ________________________ principle.

Accepted Answer

revenue recognition;

Question 14

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Accepted Answer

A) True 
 B)False

Question 15

In accrual accounting,accrued revenues are recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 16

Two main accounting principles used in accrual accounting are matching and full closure.

Accepted Answer

A) True 
 B)False

Question 17

A company purchased new computers at a cost of $14,000 on September 30.The computers are estimated to have a useful life of 4 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the computers for the first year ended December 31?

Accepted Answer

A) $250 
B) $750 
C) $875 
D) $1,000 
E) $3,000 
A) $250 
B) $750 
C) $875 
D) $1,000 
E) $3,000

Question 18

___________________ is the process of allocating the cost of plant assets to their expected useful lives.

Accepted Answer

The answer of ___________________ is the process of allocating the...

Question 19

Which of the following statements in incorrect:

Accepted Answer

A) An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded. 
B) An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger. 
C) Each trial balance amount is used in preparing the financial statements. 
D) Financial statements should be prepared directly from information in the unadjusted trial balance. 
E) Financial statements can be prepared directly from information in the adjusted trial balance. 
A) An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded. 
B) An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger. 
C) Each trial balance amount is used in preparing the financial statements. 
D) Financial statements should be prepared directly from information in the unadjusted trial balance. 
E) Financial statements can be prepared directly from information in the adjusted trial balance.

Question 20

If a company reporting on a calendar year basis,paid $18,000 cash on January 1 for one year of rent in advance and adjusting entries are made at the end of each month,the balance of Prepaid Rent as of December 1 should be $1,500.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

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

A company paid $9,000 for a six-month insurance policy.The policy coverage began on February 1.On February 28,$150 of insurance expense must be recorded.

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Financial statements can be prepared directly from the information in the adjusted trial balance.

Depreciation expense is an example of an accrued expense.

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

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

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets,is called:

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

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

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

The cash basis of accounting recognizes revenues when cash payments from customers are received.

In accrual accounting,accrued revenues are recorded as liabilities.

Two main accounting principles used in accrual accounting are matching and full closure.

___________________ is the process of allocating the cost of plant assets to their expected useful lives.

Which of the following statements in incorrect:

If a company reporting on a calendar year basis,paid $18,000 cash on January 1 for one year of rent in advance and adjusting entries are made at the end of each month,the balance of Prepaid Rent as of December 1 should be $1,500.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, 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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters

Accrual accounting and the adjusting process rely on two principles: the _ principle and the ______ principle.