Question 1

The accounting principle that requires revenue to be recorded when earned is the:

Accepted Answer

A) Matching principle. 
B) Revenue recognition principle. 
C) Time period assumption. 
D) Accrual reporting principle. 
E) Going-concern assumption. 
A) Matching principle. 
B) Revenue recognition principle. 
C) Time period assumption. 
D) Accrual reporting principle. 
E) Going-concern assumption.

Question 2

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

Accepted Answer

The answer of Using the table below,indicate the impact of...

Question 3

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

Accepted Answer

A) Account form balance sheet. 
B) Report form balance sheet. 
C) Interim balance sheet. 
D) Classified balance sheet. 
E) Unclassified balance sheet. 
A) Account form balance sheet. 
B) Report form balance sheet. 
C) Interim balance sheet. 
D) Classified balance sheet. 
E) Unclassified balance sheet.

Question 4

All of the following statements regarding profit margin are true except:

Accepted Answer

A) Profit margin reflects the percent of profit in each dollar of revenue. 
B) Profit margin is also called return on sales. 
C) Profit margin can be used to compare a firm's performance to its competitors. 
D) Profit margin is calculated by dividing net income by net sales. 
E) Profit margin is not a useful measure of a company's operating results. 
A) Profit margin reflects the percent of profit in each dollar of revenue. 
B) Profit margin is also called return on sales. 
C) Profit margin can be used to compare a firm's performance to its competitors. 
D) Profit margin is calculated by dividing net income by net sales. 
E) Profit margin is not a useful measure of a company's operating results.

Question 5

An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

Accepted Answer

A) Accrued expense. 
B) Contra account. 
C) Accrued revenue. 
D) Intangible asset. 
E) Adjunct account. 
A) Accrued expense. 
B) Contra account. 
C) Accrued revenue. 
D) Intangible asset. 
E) Adjunct account.

Question 6

From the information provided,calculate Wooden's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.
2011 2010 2009
Net income $ 2,630 $ 2,100 $ 1,850
Net Sales 36,500 32,850 31,200
Total Assets 400,000 385,000 350,000

Accepted Answer

@#IMG-DLM& Analysis comment: The profit margin has

Question 7

On June 30 Apricot Co.paid $7,500 cash for management services to be performed over a two-year period.Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On June 30 Apricot should record:

Accepted Answer

A) A credit to an expense for $7,500. 
B) A debit to an expense for $7,500. 
C) A debit to a prepaid expense for $7,500. 
D) A credit to a prepaid expense for $7,500. 
E) A debit to Cash for $7,500. 
A) A credit to an expense for $7,500. 
B) A debit to an expense for $7,500. 
C) A debit to a prepaid expense for $7,500. 
D) A credit to a prepaid expense for $7,500. 
E) A debit to Cash for $7,500.

Question 8

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

Accepted Answer

A) True 
 B)False

Question 9

On March 31,Phoenix,Inc.paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Melanie Publishing Company for each year of the subscription assuming Melanie uses a calendar reporting period?

Accepted Answer

A) $15,480; $0; $0; $0. 
B) $5,160; $5,160; $5,160. 
C) $3,870; $5,160; $5,160; $1,290. 
D) $0; $0; $0; $15,480. 
E) The answer cannot be determined based on the information given. 
A) $15,480; $0; $0; $0. 
B) $5,160; $5,160; $5,160. 
C) $3,870; $5,160; $5,160; $1,290. 
D) $0; $0; $0; $15,480. 
E) The answer cannot be determined based on the information given.

Question 10

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Accepted Answer

A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability. 
A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability.

Question 11

The time period assumption assumes that an organization's activities can be divided into specific time periods including all of the following except:

Accepted Answer

A) Months. 
B) Quarters. 
C) Fiscal years. 
D) Calendar years. 
E) Days. 
A) Months. 
B) Quarters. 
C) Fiscal years. 
D) Calendar years. 
E) Days.

Question 12

A trial balance prepared before any adjustments have been recorded is:

Accepted Answer

A) An adjusted trial balance. 
B) Used to prepare financial statements. 
C) An unadjusted trial balance. 
D) Correct with respect to proper balance sheet and income statement amounts. 
E) Only prepared once a year. 
A) An adjusted trial balance. 
B) Used to prepare financial statements. 
C) An unadjusted trial balance. 
D) Correct with respect to proper balance sheet and income statement amounts. 
E) Only prepared once a year.

Question 13

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

Accepted Answer

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

Question 14

If a company failed to make the end-of-period adjustment to remove from the Unearned Management Fees account the amount of management fees that were earned,this omission would cause:

Accepted Answer

A) An overstatement of net income. 
B) An overstatement of assets. 
C) An overstatement of liabilities. 
D) An overstatement of equity. 
E) An understatement of liabilities. 
A) An overstatement of net income. 
B) An overstatement of assets. 
C) An overstatement of liabilities. 
D) An overstatement of equity. 
E) An understatement of liabilities.

Question 15

A company has 20 employees who each earn $500 per week for a 5-day week that begins on Monday.December 31 of Year 1 is a Monday,and all 20 employees worked that day.
a)Prepare the required adjusting journal entry to record accrued salaries on December 31,Year 1.
b)Prepare the journal entry to record the payment of salaries on January 4,Year 2.

Accepted Answer

@#IMG-DLM& (20 employees * $50

Question 16

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements,and a "0" for no effect.The first one is done as an example.
Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end.
1.Failed to accrue salaries expense of $1,200.
2.Forgot to record $2,700 of depreciation on office equipment.
3.Failed to accrue $300 of interest on a note receivable.

Accepted Answer

The answer of Given the table below,indicate the impact of...

Question 17

A company had $9,000,000 in net income for the year.Its net sales were $13,200,000 for the same period.Calculate its profit margin.

Accepted Answer

A) 17.5%. 
B) 28.0%. 
C) 62.5%. 
D) 160.0%. 
E) 68.2% 
A) 17.5%. 
B) 28.0%. 
C) 62.5%. 
D) 160.0%. 
E) 68.2%

Question 18

Alex Company rents space to a tenant for $2,200 per month.The tenant currently owes two months rent,November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Rent Receivable, $6,600; credit Rent Earned, $6,600. 
B) Debit Unearned Rent, $4,400; credit Rent Earned, $4,400. 
C) Debit Unearned Rent, $2,200; credit Rent Earned, $2,200. 
D) Debit Rent Receivable, $4,400; credit Rent Earned, $4,400. 
E) Debit Rent Receivable, $2,200; credit Rent Earned, $2,200. 
A) Debit Rent Receivable, $6,600; credit Rent Earned, $6,600. 
B) Debit Unearned Rent, $4,400; credit Rent Earned, $4,400. 
C) Debit Unearned Rent, $2,200; credit Rent Earned, $2,200. 
D) Debit Rent Receivable, $4,400; credit Rent Earned, $4,400. 
E) Debit Rent Receivable, $2,200; credit Rent Earned, $2,200.

Question 19

Interim financial statements refer to financial reports:

Accepted Answer

A) That cover less than one year, usually spanning one, three, or six-month periods. 
B) That are prepared before any adjustments have been recorded. 
C) That show the assets above the liabilities and the liabilities above the equity. 
D) Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid. 
E) Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues. 
A) That cover less than one year, usually spanning one, three, or six-month periods. 
B) That are prepared before any adjustments have been recorded. 
C) That show the assets above the liabilities and the liabilities above the equity. 
D) Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid. 
E) Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

Question 20

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

The accounting principle that requires revenue to be recorded when earned is the:

Using the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" for overstatements,a "-" for understatements,and a "0" for no effect.The first one is provided as an example.

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

All of the following statements regarding profit margin are true except:

An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account is a(n):

On June 30 Apricot Co.paid $7,500 cash for management services to be performed over a two-year period.Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On June 30 Apricot should record:

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

The time period assumption assumes that an organization's activities can be divided into specific time periods including all of the following except:

A trial balance prepared before any adjustments have been recorded is:

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

If a company failed to make the end-of-period adjustment to remove from the Unearned Management Fees account the amount of management fees that were earned,this omission would cause:

A company had $9,000,000 in net income for the year.Its net sales were $13,200,000 for the same period.Calculate its profit margin.

Alex Company rents space to a tenant for $2,200 per month.The tenant currently owes two months rent,November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Interim financial statements refer to financial reports:

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

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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