Question 1

An adjusting entry often includes an entry to Cash.

Accepted Answer

A) True 
 B)False

Question 2

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Accepted Answer

A) True 
 B)False

Question 3

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

Accepted Answer

A) True 
 B)False

Question 4

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

Accepted Answer

overstated

Question 5

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Accepted Answer

A) Assets overstated and equity understated. 
B) Assets and equity both understated. 
C) Assets overstated, net income understated, and equity overstated. 
D) Assets, net income, and equity understated. 
E) Assets, net income, and equity overstated. 
A) Assets overstated and equity understated. 
B) Assets and equity both understated. 
C) Assets overstated, net income understated, and equity overstated. 
D) Assets, net income, and equity understated. 
E) Assets, net income, and equity overstated.

Question 8

Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 9

All of the following are true regarding unearned revenues except:

Accepted Answer

A) They are payments received in advance of services performed. 
B) The adjusting entry for unearned revenues increases assets and increases revenues. 
C) The adjusting entry for unearned revenues increases revenues and decreases liabilities. 
D) They are liabilities. 
E) As they are earned, they become revenues. 
A) They are payments received in advance of services performed. 
B) The adjusting entry for unearned revenues increases assets and increases revenues. 
C) The adjusting entry for unearned revenues increases revenues and decreases liabilities. 
D) They are liabilities. 
E) As they are earned, they become revenues.

Question 10

The accrual basis of accounting:

Accepted Answer

A) Is generally accepted for external reporting because it is more useful than cash basis for most business decisions. 
B) Is flawed because it gives complete information about cash flows. 
C) Recognizes revenues when received in cash. 
D) Recognizes expenses when paid in cash. 
E) Eliminates the need for adjusting entries at the end of each period. 
A) Is generally accepted for external reporting because it is more useful than cash basis for most business decisions. 
B) Is flawed because it gives complete information about cash flows. 
C) Recognizes revenues when received in cash. 
D) Recognizes expenses when paid in cash. 
E) Eliminates the need for adjusting entries at the end of each period.

Question 11

Ben had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

Accepted Answer

A) True 
 B)False

Question 12

______________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ______________ revenues are liabilities requiring delivery of...

Question 13

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 only cash flow statement 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 only cash flow statement accounts. 
E) Affect only equity accounts.

Question 14

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry:

Accepted Answer

The answer of On October 1 of the current year,Morton...

Question 15

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

Accepted Answer

receipts (

Question 16

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

Accepted Answer

A) True 
 B)False

Question 17

The balance in Tee Tax Services' office supplies account on February 1 and February 28 was $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

Accepted Answer

A) $1,075 
B) $1,500 
C) $1,525 
D) $2,325 
E) $3,100 
A) $1,075 
B) $1,500 
C) $1,525 
D) $2,325 
E) $3,100

Question 18

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Accepted Answer

A) True 
 B)False

Question 19

In preparing statements from the adjusted trial balance,the balance sheet must be prepared first.

Accepted Answer

A) True 
 B)False

Question 20

On June 30 of the current calendar year,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.The adjusting entry on December 31 for Apricot would include:

Accepted Answer

A) A debit to an expense for $5,625. 
B) A debit to a prepaid expense for $5,625. 
C) A debit to an expense for $1,875. 
D) A debit to a prepaid expense for $1,875. 
E) A credit to a liability for $1,875. 
A) A debit to an expense for $5,625. 
B) A debit to a prepaid expense for $5,625. 
C) A debit to an expense for $1,875. 
D) A debit to a prepaid expense for $1,875. 
E) A credit to a liability for $1,875.

Exam 3: Adjusting Accounts and Preparing Financial Statements

An adjusting entry often includes an entry to Cash.

Accrued expenses at the end of one accounting period are expected to result in cash payments in a future period.

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of its related asset.

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ___________________ and equity would be ___________________.

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

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

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Under the alternative method for accounting for unearned revenue,which of the following pairs of journal entry formats is correct?

All of the following are true regarding unearned revenues except:

The accrual basis of accounting:

Ben had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

______________ revenues are liabilities requiring delivery of products and for services.

Adjusting entries:

On October 1 of the current year,Morton Company paid $9,600 cash for a one-year insurance policy that took effect on that day.On the date of the payment,Morton recorded the following entry:

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

The balance in Tee Tax Services' office supplies account on February 1 and February 28 was $1,200 and $375,respectively.If the office supplies expense for the month is $1,900,what amount of office supplies was purchased during February?

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

In preparing statements from the adjusted trial balance,the balance sheet must be prepared first.

On June 30 of the current calendar year,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.The adjusting entry on December 31 for Apricot would include:

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

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be _ and equity would be _.