Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Duncan Services initially records prepaid expenses as expenses, and unearned revenues as revenues. Then at the end of the year, they make the necessary adjustments to accrual basis. On December 15, Duncan collected revenues of $1,000 in advance from a new client, and agreed to provide services to the client for the period of December 15 through January 15 of the following year. Please provide the adjusting entry that would be needed at year-end.

Accepted Answer

The answer of Duncan Services initially records prepaid expenses as...

Question 3

The matching principle means which of the following?

Accepted Answer

A) Revenues are subtracted from expenses. 
B) Expenses are subtracted from revenues. 
C) Assets are subtracted from liabilities. 
D) Liabilities are subtracted from expenses. 
A) Revenues are subtracted from expenses. 
B) Expenses are subtracted from revenues. 
C) Assets are subtracted from liabilities. 
D) Liabilities are subtracted from expenses.

Question 4

Smith owns manufacturing equipment that originally cost $12,600 and has an estimated useful life of 7 years. Smith records depreciation monthly in the amount of $100.

Accepted Answer

A) True 
 B)False

Question 5

Prepaid rent is an expense account.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The owner of Recipes.org purchases $2,000 of supplies on account. Under the accrual basis of accounting, no entry is made until the $2,000 is paid.

Accepted Answer

A) True 
 B)False

Question 8

A business hired a repairman to overhaul their plumbing system. The repairman began working on September 15 and will finish the work on October 15. The business will pay him $4,000 when the work is 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. Please provide that adjusting entry.

Accepted Answer

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

Question 9

Pattie's Event Planning Service has just prepared the unadjusted trial balance, which shows the following balances:   On the first day of January, Pattie borrowed $1,800 on a one-year note payable bearing interest at 4% per year. The note specifies that principal and interest is to be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show what amount for Interest expense?

Accepted Answer

A) Debit balance of $36 
B) Credit balance of $36 
C) Debit balance of $72 
D) Debit balance of $6 
A) Debit balance of $36 
B) Credit balance of $36 
C) Debit balance of $72 
D) Debit balance of $6

Question 10

An example of an interim accounting period is one year.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

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

Robert Rogers, CPA owns a computer used by the business. The matching principle would require that which of the following accounts appear on the balance sheet for the year ended December 31?

Accepted Answer

A) Depreciation expense 
B) Service revenue 
C) Accumulated depreciation 
D) Equipment expense 
A) Depreciation expense 
B) Service revenue 
C) Accumulated depreciation 
D) Equipment expense

Question 14

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?

Accepted Answer

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. 
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.

Question 15

Contra asset accounts like Accumulated depreciation have normal debit balances.

Accepted Answer

A) True 
 B)False

Question 16

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 needs to make an adjusting entry to accrue service revenue. Please provide that adjusting entry.

Accepted Answer

The answer of Century Security Services had a new customer...

Question 17

The table below represents Able Company's supplies account. Please supply the missing amount.

Accepted Answer

A) $9,000 
B) $5,000 
C) $11,000 
D) $13,000 
A) $9,000 
B) $5,000 
C) $11,000 
D) $13,000

Question 18

In the case of Unearned revenue, the adjusting entry at the end of the period includes a debit to Service revenue.

Accepted Answer

A) True 
 B)False

Question 19

What type of account is Accumulated depreciation and what is its normal balance?

Accepted Answer

A) Revenue and debit 
B) Expense and debit 
C) Contra asset and credit 
D) Liability and credit 
A) Revenue and debit 
B) Expense and debit 
C) Contra asset and credit 
D) Liability and credit

Question 20

Which of the following is TRUE?

Accepted Answer

A) Accrual accounting is required by generally accepted accounting principles. 
B) Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid. 
C) Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received. 
D) All of the above are true. 
A) Accrual accounting is required by generally accepted accounting principles. 
B) Accrual accounting records expenses when incurred. Cash-basis accounting records expenses when cash is paid. 
C) Accrual accounting records revenue when services are rendered. Cash-basis accounting records revenue when cash is received. 
D) All of the above are true.

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

The matching principle means which of the following?

Smith owns manufacturing equipment that originally cost $12,600 and has an estimated useful life of 7 years. Smith records depreciation monthly in the amount of $100.

Prepaid rent is an expense account.

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

The owner of Recipes.org purchases $2,000 of supplies on account. Under the accrual basis of accounting, no entry is made until the $2,000 is paid.

An example of an interim accounting period is one year.

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

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.

Robert Rogers, CPA owns a computer used by the business. The matching principle would require that which of the following accounts appear on the balance sheet for the year ended December 31?

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?

Contra asset accounts like Accumulated depreciation have normal debit balances.

The table below represents Able Company's supplies account. Please supply the missing amount.

In the case of Unearned revenue, the adjusting entry at the end of the period includes a debit to Service revenue.

What type of account is Accumulated depreciation and what is its normal balance?

Which of the following is TRUE?

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

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Filters

Exam 3: The Adjusting Process

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

The matching principle means which of the following?

Smith owns manufacturing equipment that originally cost $12,600 and has an estimated useful life of 7 years. Smith records depreciation monthly in the amount of $100.

Prepaid rent is an expense account.

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

The owner of Recipes.org purchases $2,000 of supplies on account. Under the accrual basis of accounting, no entry is made until the $2,000 is paid.

An example of an interim accounting period is one year.

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

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.

Robert Rogers, CPA owns a computer used by the business. The matching principle would require that which of the following accounts appear on the balance sheet for the year ended December 31?

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?

Contra asset accounts like Accumulated depreciation have normal debit balances.

The table below represents Able Company's supplies account. Please supply the missing amount.

In the case of Unearned revenue, the adjusting entry at the end of the period includes a debit to Service revenue.

What type of account is Accumulated depreciation and what is its normal balance?

Which of the following is TRUE?

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

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Filters