Question 1

Adjusting entries are made after the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Identify the types of adjusting entries and explain the purpose of each type.

Accepted Answer

Adjusting entries can be grouped into tw

Question 3

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Accepted Answer

A) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E) Debit Office Supplies $105 and credit Supplies Expense $254. 
A) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E) Debit Office Supplies $105 and credit Supplies Expense $254.

Question 4

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 5

The entry to record a cash receipt from a customer when the service to be provided has not yet been performed involves a debit to an unearned revenue account.

Accepted Answer

A) True 
 B)False

Question 6

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Accepted Answer

A) True 
 B)False

Question 7

Match between columns
                        Premises: Net income divided by net sales.
A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life.
The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.
Items paid for in advance of receiving their benefits.
The accounting system that recognizes revenues when earned and expenses when incurred.
The expense created by allocating the cost of plant and equipment to the periods in which they are used.
The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses.

Accepted Answer

The Answer of Time period principle and Accrual basis accounting is...

Question 8

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.The entry to record the adjusting entry should have been:

Accepted Answer

A) debit Salary Expense, $9,000; credit Cash, $9,000 
B) debit Salary Expense, $9,000; credit Fees Earned, $9,000 
C) debit Salary Expense, $9,000; credit Prepaid Salary, $9,000 
D) debit Salary Expense, $9,000; credit Salaries Payable, $9,000 
E) debit Salaries Payable, $9,000; credit Salary Expense 
A) debit Salary Expense, $9,000; credit Cash, $9,000 
B) debit Salary Expense, $9,000; credit Fees Earned, $9,000 
C) debit Salary Expense, $9,000; credit Prepaid Salary, $9,000 
D) debit Salary Expense, $9,000; credit Salaries Payable, $9,000 
E) debit Salaries Payable, $9,000; credit Salary Expense

Question 9

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) An operating 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) An operating activity on the statement of cash flows.

Question 10

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Accepted Answer

A) True 
 B)False

Question 11

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is incorrect?

Accepted Answer

A) An income statement reports revenues earned less expenses incurred. 
B) An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C) Interim financial reports can be based on one-month or three-month accounting periods. 
D) The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period. 
E) Property, plant, and equipment are referred to as plant assets. 
A) An income statement reports revenues earned less expenses incurred. 
B) An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C) Interim financial reports can be based on one-month or three-month accounting periods. 
D) The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period. 
E) Property, plant, and equipment are referred to as plant assets.

Question 13

Using the information given below,prepare a balance sheet for Martin Sky Taxi Services from the adjusted trial balance.Helena Martin did not make any additional investments in the company during the year.

Accepted Answer

Martin Sky Taxi Serv

Question 14

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

Accepted Answer

A) $2,700. 
B) $2,900. 
C) $3,300. 
D) $3,500. 
E) $3,700. 
A) $2,700. 
B) $2,900. 
C) $3,300. 
D) $3,500. 
E) $3,700.

Question 15

Explain how accounting adjustments affect financial statements.

Accepted Answer

Without accounting adjustments many acco

Question 16

An adjusting entry could be made for each of the following except:

Accepted Answer

A) Prepaid expenses. 
B) Depreciation. 
C) Owner withdrawals. 
D) Unearned revenues. 
E) Accrued revenues. 
A) Prepaid expenses. 
B) Depreciation. 
C) Owner withdrawals. 
D) Unearned revenues. 
E) Accrued revenues.

Question 17

The main purpose of adjusting entries is to:

Accepted Answer

A) Record external transactions and events. 
B) Record internal transactions and events. 
C) Recognize assets purchased during the period. 
D) Recognize debts paid during the period. 
E) Correct errors. 
A) Record external transactions and events. 
B) Record internal transactions and events. 
C) Recognize assets purchased during the period. 
D) Recognize debts paid during the period. 
E) Correct errors.

Question 18

On April 30,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31?

Accepted Answer

A) $500. 
B) $4,000. 
C) $6,000. 
D) $14,000. 
E) $18,000. 
A) $500. 
B) $4,000. 
C) $6,000. 
D) $14,000. 
E) $18,000.

Question 19

Based on the unadjusted trial balance for Bella's Beauty Salon and the adjusting information given below,prepare the adjusting journal entries for Bella's Beauty Salon.
Bella Beauty Salon's unadjusted trial balance for the current year follows:
   Additional information:
a.An insurance policy examination showed $1,240 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,$2,220.
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 earned 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...

Question 20

The cash basis of accounting is an accounting system in which revenues are recorded when cash is received and expenses are recorded when cash is paid.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

Adjusting entries are made after the preparation of financial statements.

Identify the types of adjusting entries and explain the purpose of each type.

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

The entry to record a cash receipt from a customer when the service to be provided has not yet been performed involves a debit to an unearned revenue account.

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.The entry to record the adjusting entry should have been:

Unearned revenue is reported in the financial statements as:

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Which of the following statements is incorrect?

Using the information given below,prepare a balance sheet for Martin Sky Taxi Services from the adjusted trial balance.Helena Martin did not make any additional investments in the company during the year.

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

Explain how accounting adjustments affect financial statements.

An adjusting entry could be made for each of the following except:

The main purpose of adjusting entries is to:

On April 30,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31?

The cash basis of accounting is an accounting system in which revenues are recorded when cash is received and expenses are recorded when cash is paid.

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

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