Question 1

An adjusting entry that credits Salaries Payable is an example of a(n):

Accepted Answer

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

Question 2

Revenue is said to be earned when the business has:

Accepted Answer

A) entered into an agreement with the customer about the goods or services to be delivered. 
B) passed a journal entry to record revenue. 
C) received cash from the customer before goods or services are delivered. 
D) delivered a good or service to the customer. 
A) entered into an agreement with the customer about the goods or services to be delivered. 
B) passed a journal entry to record revenue. 
C) received cash from the customer before goods or services are delivered. 
D) delivered a good or service to the customer.

Question 3

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

Accepted Answer

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

Question 4

The sum of all the depreciation expense recorded to date for a depreciable asset is called residual value.

Accepted Answer

A) True 
 B)False

Question 5

A business hired a repairman to overhaul their plumbing system. The repairman began work on September 15 and completed it on October 15. The business agreed to pay him $4,000 when the work was completed. As of September 30, the work was 50% complete and the business made an adjusting entry to accrue repair expense as of the end of September. On October 15, the work was completed and the business paid the repairman in full. Provide the journal entry for the cash payment on October 15.

Accepted Answer

The answer of A business hired a repairman to overhaul...

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The liability created when a business collects cash from customers in advance of completing a service or delivering a product is called:

Accepted Answer

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

Question 8

Under accrual accounting, transactions are recorded only when cash is received or paid.

Accepted Answer

A) True 
 B)False

Question 9

The Generally Accepted Accounting Principles (GAAP)requires the use of accrual accounting.

Accepted Answer

A) True 
 B)False

Question 10

A business hired a repairman to overhaul their plumbing system. The repairman began work on September 15 and intends to complete it on October 15. The business will pay him $4,000 when the work is completed. As of September 30, the work was 50% complete. Provide the adjusting entry to accrue repair expense as of the end of September.

Accepted Answer

The answer of A business hired a repairman to overhaul...

Question 11

All of a company's accounts and their balances appear on the:

Accepted Answer

A) statement of retained earnings. 
B) balance sheet. 
C) adjusted trial balance. 
D) income statement. 
A) statement of retained earnings. 
B) balance sheet. 
C) adjusted trial balance. 
D) income statement.

Question 12

The time period concept states that:

Accepted Answer

A) financial statements can be prepared for specific periods. 
B) all expenses should be recorded when they are incurred during the period. 
C) companies should record revenue when it has been earned. 
D) expenses incurred during a period should be matched against the revenues of the period. 
A) financial statements can be prepared for specific periods. 
B) all expenses should be recorded when they are incurred during the period. 
C) companies should record revenue when it has been earned. 
D) expenses incurred during a period should be matched against the revenues of the period.

Question 13

Accrued revenues are the income that has been received but not earned.

Accepted Answer

A) True 
 B)False

Question 14

The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record.

Accepted Answer

A) True 
 B)False

Question 15

GAAP requires a public company to prepare a worksheet for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following entries would be recorded if a company uses the cash basis method of accounting?

Accepted Answer

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

Question 17

Which of the following is a contra account?

Accepted Answer

A) Depreciation Expense 
B) Accumulated Depreciation 
C) Unearned Revenue 
D) Earned Revenue 
A) Depreciation Expense 
B) Accumulated Depreciation 
C) Unearned Revenue 
D) Earned Revenue

Question 18

Which of the following entries would be made as the result of the revenue recognition principle?

Accepted Answer

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

Question 19

ABC Company signed a one-year $48,000 note payable at 8% interest on May 1, 2014. If ABC only adjusts their accounts once a year at year-end, how much interest expense was accrued on December 31, 2014?

Accepted Answer

A) $1,280 
B) $3,840 
C) $2,560 
D) $3,200 
A) $1,280 
B) $3,840 
C) $2,560 
D) $3,200

Question 20

Under accrual basis accounting, revenue is recorded only when cash is received.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

An adjusting entry that credits Salaries Payable is an example of a(n):

Revenue is said to be earned when the business has:

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

The sum of all the depreciation expense recorded to date for a depreciable asset is called residual value.

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

The liability created when a business collects cash from customers in advance of completing a service or delivering a product is called:

Under accrual accounting, transactions are recorded only when cash is received or paid.

The Generally Accepted Accounting Principles (GAAP)requires the use of accrual accounting.

All of a company's accounts and their balances appear on the:

The time period concept states that:

Accrued revenues are the income that has been received but not earned.

The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record.

GAAP requires a public company to prepare a worksheet for financial reporting purposes.

Which of the following entries would be recorded if a company uses the cash basis method of accounting?

Which of the following is a contra account?

Which of the following entries would be made as the result of the revenue recognition principle?

ABC Company signed a one-year $48,000 note payable at 8% interest on May 1, 2014. If ABC only adjusts their accounts once a year at year-end, how much interest expense was accrued on December 31, 2014?

Under accrual basis accounting, revenue is recorded only when cash is received.

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

Filters