Question 1

Under accrual basis accounting,an expense is recorded ONLY when the cash is paid out.

Accepted Answer

A) True 
 B)False

Question 2

The financial statements should be prepared in this order: 1)income statement,2)balance sheet,and 3)owner's equity.

Accepted Answer

A) True 
 B)False

Question 3

An adjusting entry that debits Accounts receivable is an example of a(n):

Accepted Answer

A)  prepaid expense. 
B)  accrued revenue. 
C)  accrued expense. 
D)  unearned revenue. 
A)  prepaid expense. 
B)  accrued revenue. 
C)  accrued expense. 
D)  unearned revenue.

Question 4

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salary expense } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Service revenue } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$

Question 5

Unearned revenue is revenue that:

Accepted Answer

A)  will be collected and earned in the future. 
B)  the business has collected, but not yet earned. 
C)  has been collected and earned. 
D)  the business has earned, but not collected. 
A)  will be collected and earned in the future. 
B)  the business has collected, but not yet earned. 
C)  has been collected and earned. 
D)  the business has earned, but not collected.

Question 6

At January 1,Smith has $1,200 of supplies on hand.During January,Smith purchases $3,000 worth of new supplies.At the end of the month,a count reveals $500 worth of supplies remaining on the shelves.The adjustment entry needed will include a debit to Supply expense of $3,700.

Accepted Answer

A) True 
 B)False

Question 7

The accountant for Hobson Electrical Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is TRUE?

Accepted Answer

A)  Total revenue is overstated. 
B)  Total revenue is understated. 
C)  Total expenses are overstated. 
D)  Total expenses are understated. 
A)  Total revenue is overstated. 
B)  Total revenue is understated. 
C)  Total expenses are overstated. 
D)  Total expenses are understated.

Question 8

Financial statements are prepared from a(n):

Accepted Answer

A)  general journal. 
B)  general ledger. 
C)  unadjusted trial balance. 
D)  adjusted trial balance. 
A)  general journal. 
B)  general ledger. 
C)  unadjusted trial balance. 
D)  adjusted trial balance.

Question 9

Ensuring that accounting information is updated each period is the purpose of the:

Accepted Answer

A)  matching principle. 
B)  revenue principle. 
C)  time-period concept. 
D)  expense principle 
A)  matching principle. 
B)  revenue principle. 
C)  time-period concept. 
D)  expense principle

Question 10

Entries that record cash collected before the revenues are earned are:

Accepted Answer

A)  accrued revenues. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  accrued expenses. 
A)  accrued revenues. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  accrued expenses.

Question 11

Entries that record revenues earned before the cash is collected are:

Accepted Answer

A)  accrued revenues. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  accrued expenses. 
A)  accrued revenues. 
B)  prepaid expenses. 
C)  unearned revenues. 
D)  accrued expenses.

Question 12

Smith borrows $10,000 on a one year Note payable that bears interest at 12% per year.He will repay the principal and interest at the end of the one-year period.Smith makes accrual adjustments and each month,he records interest expense of $1,200.

Accepted Answer

A) True 
 B)False

Question 13

Accrual accounting records transactions ONLY when cash is received or paid.

Accepted Answer

A) True 
 B)False

Question 14

Net income from the income statement is reported in the assets section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 15

A business pays salaries of $140,000 on the first and fifteenth day of every month.Which of the following is the adjusting entry required on December 31,2011?
A) A debit $140,000 to Salaries expense and a credit $140,000 to Salaries payable.
B) A debit $140,000 to Salaries receivable and a credit $140,000 to Salaries payable.
C) A debit $140,000 to Salaries expense and a credit $140,000 to Salaries receivable.
D) No adjusting entry is required.

Accepted Answer

The answer of A business pays salaries of $140,000 on...

Question 16

Real Losers,a diet magazine,collected $360,000 in subscription revenue in May.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue.
-The company uses the accrual method of accounting.What adjusting entry is needed at June 30?
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \
\hline
\end{array}$$

Accepted Answer

This question is no

Question 17

At the end of the current year,the accountant for Navistar Graphics forgot to make an adjusting entry to accrue Wages payable to the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is one of the effects of this error?

Accepted Answer

A)  Net income is overstated. 
B)  Liabilities are overstated. 
C)  Net income is understated. 
D)  Expenses are overstated. 
A)  Net income is overstated. 
B)  Liabilities are overstated. 
C)  Net income is understated. 
D)  Expenses are overstated.

Question 18

Century Security Services had a new customer come in to their office and request their services for a two-month period.Century will collect a total of $10,000 from the customer at the end of the two-month period.Century began providing services on June 1.On June 30,Century accrued service revenue for the first one-month period.On July 31,Century completed the services and collected $10,000 from the customer.Please provide the journal entry made to record the collection of cash from the customer on July 31.
 $$\begin{array} { | l | r | r | } 
\hline \quad\quad\quad&\quad&\quad \
\hline \\hline \
\hline
\end{array}$$

Accepted Answer

This question is no

Question 19

Prepaid rent is an expense account.

Accepted Answer

A) True 
 B)False

Question 20

The Supplies account for Vulcan Cleaning Services had a debit balance of $200 at the beginning of the month.Additional supplies of $1,400 were purchased during the month.A physical count of supplies revealed that $600 of supplies was still on hand at the end of the month.What was total Supplies expense for the month?
A) $1,400
B) $100
C) $1,000
D) $600

Accepted Answer

C) Calcul

Under accrual basis accounting,an expense is recorded ONLY when the cash is paid out.

The financial statements should be prepared in this order: 1)income statement,2)balance sheet,and 3)owner's equity.

An adjusting entry that debits Accounts receivable is an example of a(n):

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Unearned revenue is revenue that:

At January 1,Smith has $1,200 of supplies on hand.During January,Smith purchases $3,000 worth of new supplies.At the end of the month,a count reveals $500 worth of supplies remaining on the shelves.The adjustment entry needed will include a debit to Supply expense of $3,700.

The accountant for Hobson Electrical Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is TRUE?

Financial statements are prepared from a(n):

Ensuring that accounting information is updated each period is the purpose of the:

Entries that record cash collected before the revenues are earned are:

Entries that record revenues earned before the cash is collected are:

Smith borrows $10,000 on a one year Note payable that bears interest at 12% per year.He will repay the principal and interest at the end of the one-year period.Smith makes accrual adjustments and each month,he records interest expense of $1,200.

Accrual accounting records transactions ONLY when cash is received or paid.

Net income from the income statement is reported in the assets section of the balance sheet.

Real Losers,a diet magazine,collected $360,000 in subscription revenue in May.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue. -The company uses the accrual method of accounting.What adjusting entry is needed at June 30?

At the end of the current year,the accountant for Navistar Graphics forgot to make an adjusting entry to accrue Wages payable to the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is one of the effects of this error?

Prepaid rent is an expense account.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 3: The Adjusting Process

Under accrual basis accounting,an expense is recorded ONLY when the cash is paid out.

The financial statements should be prepared in this order: 1)income statement,2)balance sheet,and 3)owner's equity.

An adjusting entry that debits Accounts receivable is an example of a(n):

Which of the following entries would be recorded ONLY if a company is using the accrual method of accounting?

Unearned revenue is revenue that:

At January 1,Smith has $1,200 of supplies on hand.During January,Smith purchases $3,000 worth of new supplies.At the end of the month,a count reveals $500 worth of supplies remaining on the shelves.The adjustment entry needed will include a debit to Supply expense of $3,700.

The accountant for Hobson Electrical Repair Company failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year.Which of the following is TRUE?

Financial statements are prepared from a(n):

Ensuring that accounting information is updated each period is the purpose of the:

Entries that record cash collected before the revenues are earned are:

Entries that record revenues earned before the cash is collected are:

Smith borrows $10,000 on a one year Note payable that bears interest at 12% per year.He will repay the principal and interest at the end of the one-year period.Smith makes accrual adjustments and each month,he records interest expense of $1,200.

Accrual accounting records transactions ONLY when cash is received or paid.

Net income from the income statement is reported in the assets section of the balance sheet.

Real Losers,a diet magazine,collected $360,000 in subscription revenue in May.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue. -The company uses the accrual method of accounting.What adjusting entry is needed at June 30?

At the end of the current year,the accountant for Navistar Graphics forgot to make an adjusting entry to accrue Wages payable to the company's employees for the last week in December.The wages will be paid to the employees in January.Which of the following is one of the effects of this error?

Prepaid rent is an expense account.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters