Question 1

The adjusted trial balance helps to identify:

Accepted Answer

A) account balances after adjustments. 
B) revenue accounts only. 
C) account balances before adjustments. 
D) amounts that are out of balance. 
A) account balances after adjustments. 
B) revenue accounts only. 
C) account balances before adjustments. 
D) amounts that are out of balance.

Question 2

An expense that has been incurred but not yet paid is called a(n):

Accepted Answer

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

Question 3

The accountant of Ovenly Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the unearned revenue was initially recorded as a liability. Which of the following statements is true?

Accepted Answer

A) The total revenue will be overstated. 
B) The total revenue will be understated. 
C) The total expenses will be overstated. 
D) The total expenses will be understated. 
A) The total revenue will be overstated. 
B) The total revenue will be understated. 
C) The total expenses will be overstated. 
D) The total expenses will be understated.

Question 4

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 24 when services were rendered.

Accepted Answer

The answer of Luminous Electrical Repair performed services costing $8,000...

Question 5

The accountant for Sparks Electric Company failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which of the following statements is true?

Accepted Answer

A) The total liabilities will be overstated. 
B) The total liabilities will be understated. 
C) The total assets will be overstated. 
D) The total assets will be understated. 
A) The total liabilities will be overstated. 
B) The total liabilities will be understated. 
C) The total assets will be overstated. 
D) The total assets will be understated.

Question 6

The employees of Robert Rogers, CPA, worked on the last two weeks of December, 2014. They received their paychecks on January 2. Which of the following accounts should appear on the income statement for the year ended December 31, 2014, as per the matching principle?

Accepted Answer

A) Salary Expense 
B) Prepaid Expense 
C) Salaries Payable 
D) Unearned Revenue 
A) Salary Expense 
B) Prepaid Expense 
C) Salaries Payable 
D) Unearned Revenue

Question 7

Under cash basis accounting, an expense is recorded only when cash is paid.

Accepted Answer

A) True 
 B)False

Question 8

The assumption that the financial statements of a business can be prepared for specific periods is made by the:

Accepted Answer

A) matching principle. 
B) revenue recognition principle. 
C) time period concept. 
D) adjusting entry principle. 
A) matching principle. 
B) revenue recognition principle. 
C) time period concept. 
D) adjusting entry principle.

Question 9

Viva Inc. had bought machine X for $15,500 two years ago. The machine had no residual value and had an estimated useful life of 10 years. If the company uses the straight line depreciation method, calculate the current book value of the machine.

Accepted Answer

A) $12,400 
B) $3,100 
C) $18,600 
D) $15,500 
A) $12,400 
B) $3,100 
C) $18,600 
D) $15,500

Question 10

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost, $6,720 with useful life of 8 years; Furniture: Cost, $18,000 with useful life of 12 years; and Computer: Cost, $12,000 with useful life of 4 years. Ursula's monthly depreciation expense calculated using the straight-line method is: (Assume salvage value of all the assets to be zero)

Accepted Answer

A) $250. 
B) $125. 
C) $70. 
D) $445. 
A) $250. 
B) $125. 
C) $70. 
D) $445.

Question 11

On March 1, 2014, Nuggets Inc. paid $60,000 for office rent covering the three-month period ending May 31, 2014. Journalize the entry on March 1 by using the alternative treatment of prepaid expenses.

Accepted Answer

The answer of On March 1, 2014, Nuggets Inc. paid...

Question 12

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 31 when the cash was received.

Accepted Answer

The answer of Luminous Electrical Repair performed services costing $8,000...

Question 13

In the case of a prepaid expense, the adjusting entry required at the end of a period will consist of a credit to the Prepaid Expense account. Assume the prepaid expense was initially recorded as an asset.

Accepted Answer

A) True 
 B)False

Question 14

The Accumulated Depreciation account is:

Accepted Answer

A) a record of the sum of all the depreciation expense recorded. 
B) the price quoted to the buyer of a used asset. 
C) an expense account. 
D) the expense account used to expense the cost of an asset. 
A) a record of the sum of all the depreciation expense recorded. 
B) the price quoted to the buyer of a used asset. 
C) an expense account. 
D) the expense account used to expense the cost of an asset.

Question 15

What is the effect of the adjusting entry for Depreciation Expense?

Accepted Answer

A) It increases total liabilities and increases total expenses. 
B) It increases total assets and increases total expenses. 
C) It decreases total assets and increases total expenses. 
D) It decreases total liabilities and increases total expenses. 
A) It increases total liabilities and increases total expenses. 
B) It increases total assets and increases total expenses. 
C) It decreases total assets and increases total expenses. 
D) It decreases total liabilities and increases total expenses.

Question 16

The accountant of Linda Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true?

Accepted Answer

A) The total liabilities will be overstated. 
B) The equity will be understated. 
C) The total assets will be overstated. 
D) The total assets will be understated. 
A) The total liabilities will be overstated. 
B) The equity will be understated. 
C) The total assets will be overstated. 
D) The total assets will be understated.

Question 17

The partial worksheet of Ruth Furniture follows   Calculate and enter the amounts for the Adjusted Trial Balance columns.

Accepted Answer

The answer of The partial worksheet of Ruth Furniture follows...

Question 18

Accrued revenue is revenue that:

Accepted Answer

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

Question 19

Which of the following entries would be made because of the matching principle?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

Two weeks earlier, a business had rendered services to one of its customers on account for which the payment was received today. Which of the following entries would be recorded if the company uses accrual basis accounting?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 3: The Adjusting Process

The adjusted trial balance helps to identify:

An expense that has been incurred but not yet paid is called a(n):

The accountant of Ovenly Inc. failed to make an adjusting entry to record $6,000 of unearned service revenue that has now been earned. Assume the unearned revenue was initially recorded as a liability. Which of the following statements is true?

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 24 when services were rendered.

The accountant for Sparks Electric Company failed to make an adjusting entry to record $3,000 of telephone expenses for the last two months of the year. Which of the following statements is true?

The employees of Robert Rogers, CPA, worked on the last two weeks of December, 2014. They received their paychecks on January 2. Which of the following accounts should appear on the income statement for the year ended December 31, 2014, as per the matching principle?

Under cash basis accounting, an expense is recorded only when cash is paid.

The assumption that the financial statements of a business can be prepared for specific periods is made by the:

Viva Inc. had bought machine X for $15,500 two years ago. The machine had no residual value and had an estimated useful life of 10 years. If the company uses the straight line depreciation method, calculate the current book value of the machine.

On March 1, 2014, Nuggets Inc. paid $60,000 for office rent covering the three-month period ending May 31, 2014. Journalize the entry on March 1 by using the alternative treatment of prepaid expenses.

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 31 when the cash was received.

In the case of a prepaid expense, the adjusting entry required at the end of a period will consist of a credit to the Prepaid Expense account. Assume the prepaid expense was initially recorded as an asset.

The Accumulated Depreciation account is:

What is the effect of the adjusting entry for Depreciation Expense?

The accountant of Linda Legal Services failed to make an adjusting entry for supplies that had been used for the year. Assume the supplies were initially recorded as an asset. Which of the following statements is true?

The partial worksheet of Ruth Furniture follows Calculate and enter the amounts for the Adjusted Trial Balance columns.

Accrued revenue is revenue that:

Which of the following entries would be made because of the matching principle?

Two weeks earlier, a business had rendered services to one of its customers on account for which the payment was received today. Which of the following entries would be recorded if the company uses accrual basis accounting?

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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