Question 1

Permanent accounts include all of the following except:

Accepted Answer

A)  Accumulated Depreciation-Equipment. 
B)  Prepaid Insurance. 
C)  Unearned Revenue. 
D)  Accounts Receivable. 
E)  Depreciation Expense-Equipment. 
A)  Accumulated Depreciation-Equipment. 
B)  Prepaid Insurance. 
C)  Unearned Revenue. 
D)  Accounts Receivable. 
E)  Depreciation Expense-Equipment. E

Question 2

Match the following terms with the appropriate definition.
-Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Accepted Answer

A) Adjusting entry 
B) Unadjusted trial balance 
C) Prepaid expenses 
D) Natural business year 
E) Accrued expenses
F)Adjusted trial balance
G)Report form balance sheet
H)Accounting period
I)Profit margin
J)Contra account 
A) Adjusting entry 
B) Unadjusted trial balance 
C) Prepaid expenses 
D) Natural business year 
E) Accrued expenses
F)Adjusted trial balance
G)Report form balance sheet
H)Accounting period
I)Profit margin
J)Contra account E

Question 3

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Accepted Answer

A)  Both U.S. GAAP and IFRS include guidance for adjusting entries. 
B)  Both U.S. GAAP and IFRS prepare the same four financial statements. 
C)  U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet. 
D)  U.S. GAAP balance sheets report current items first. 
E)  IFRS balance sheets normally present noncurrent items first. 
A)  Both U.S. GAAP and IFRS include guidance for adjusting entries. 
B)  Both U.S. GAAP and IFRS prepare the same four financial statements. 
C)  U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet. 
D)  U.S. GAAP balance sheets report current items first. 
E)  IFRS balance sheets normally present noncurrent items first. C

Question 4

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi

Question 5

Match the following terms with the appropriate definition.
-Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Accepted Answer

A) Accrued revenues 
B) Expense recognition (matching) principle 
C) Cash basis accounting 
D) Depreciation 
E) Accrual basis accounting
F)Interim financial statements
G)Straight-line depreciation
H)Time period assumption
I)Fiscal year 
A) Accrued revenues 
B) Expense recognition (matching) principle 
C) Cash basis accounting 
D) Depreciation 
E) Accrual basis accounting
F)Interim financial statements
G)Straight-line depreciation
H)Time period assumption
I)Fiscal year

Question 6

Which of the following is classified as a current asset?

Accepted Answer

A)  Office equipment. 
B)  Patent. 
C)  Unearned revenue. 
D)  Office supplies. 
E)  Land. 
A)  Office equipment. 
B)  Patent. 
C)  Unearned revenue. 
D)  Office supplies. 
E)  Land.

Question 7

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31.On February 9,it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9.Assuming the company does not prepare reversing entries,the January 31 and February 9 journal entries are:

Accepted Answer

A) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Payable ....................... } & 7,000 \
&\text { Salaries Expense .................... } & 1,400 \
&\text{Cash......................................}&&8,400
\end{array}$ 
B) 
$\begin{array}{lll}
1/31&\text { Salaries Payable .................... } & 1,400\
&\text { Salaries  Expense...................... } &&1,400 \
2/9&\text { Salaries Expense ....................... } & 5,600 \
&\text { Salaries Payable.................... } & 1,400 \
&\text{Cash.....................................}&&7,000
\end{array}$ 
C) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text{Cash......................................}&&1,400 \
2/9
&\text { Salaries Expense .................... } & 7,000 \
&\text{Cash......................................}&&7,000
\end{array}$ 
D) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Expense .................... } & 7,000 \
&\text{Cash......................................}&&7,000
\end{array}$ 
E) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Expense....................... } & 5,600 \
&\text { Salaries Payable  .................... } & 1,400 \
&\text{Cash......................................}&&7,000
\end{array}$ 
A) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Payable ....................... } & 7,000 \
&\text { Salaries Expense .................... } & 1,400 \
&\text{Cash......................................}&&8,400
\end{array}$ 
B) 
$\begin{array}{lll}
1/31&\text { Salaries Payable .................... } & 1,400\
&\text { Salaries  Expense...................... } &&1,400 \
2/9&\text { Salaries Expense ....................... } & 5,600 \
&\text { Salaries Payable.................... } & 1,400 \
&\text{Cash.....................................}&&7,000
\end{array}$ 
C) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text{Cash......................................}&&1,400 \
2/9
&\text { Salaries Expense .................... } & 7,000 \
&\text{Cash......................................}&&7,000
\end{array}$ 
D) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Expense .................... } & 7,000 \
&\text{Cash......................................}&&7,000
\end{array}$ 
E) 
$\begin{array}{lll}
1/31&\text { Salaries Expense .................... } & 1,400\
&\text { Salaries Payable ...................... } &&1,400 \
2/9&\text { Salaries Expense....................... } & 5,600 \
&\text { Salaries Payable  .................... } & 1,400 \
&\text{Cash......................................}&&7,000
\end{array}$

Question 8

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?

Accepted Answer

A)  $0. 
B)  $516. 
C)  $387. 
D)  $129. 
E)  $430. 
A)  $0. 
B)  $516. 
C)  $387. 
D)  $129. 
E)  $430.

Question 9

The adjusting entry to record an accrued expense is:

Accepted Answer

A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability. 
A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability.

Question 10

All of the following statements regarding a work sheet are true except:

Accepted Answer

A)  A worksheet aids in the preparation of financial statements. 
B)  A worksheet reduces possible errors when working with many accounts and adjustments. 
C)  A worksheet is not useful in planning and organizing an audit of financial statements. 
D)  A worksheet helps in preparing interim financial statements. 
E)  A worksheet shows the effects of proposed or "what-if" transactions. 
A)  A worksheet aids in the preparation of financial statements. 
B)  A worksheet reduces possible errors when working with many accounts and adjustments. 
C)  A worksheet is not useful in planning and organizing an audit of financial statements. 
D)  A worksheet helps in preparing interim financial statements. 
E)  A worksheet shows the effects of proposed or "what-if" transactions.

Question 11

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Accepted Answer

A) True 
 B)False

Question 13

Match the following terms with the appropriate definition.
-A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

Accepted Answer

A) Stockholders' equity 
B) Unclassified balance sheet 
C) Long-term investments 
D) Current liabilities 
E) Closing entries
F)Current ratio
G)Plant assets
H)Current assets
I)Intangible assets
J)Classified balance sheet 
A) Stockholders' equity 
B) Unclassified balance sheet 
C) Long-term investments 
D) Current liabilities 
E) Closing entries
F)Current ratio
G)Plant assets
H)Current assets
I)Intangible assets
J)Classified balance sheet

Question 14

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Accepted Answer

A) True 
 B)False

Question 15

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Accepted Answer

A) True 
 B)False

Question 16

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

Accepted Answer

A)  A debit to Cash and a credit to Salaries Payable. 
B)  A debit to Cash and a credit to Prepaid Salaries. 
C)  A debit to Salaries Payable and a credit to Cash. 
D)  A debit to Salaries Payable and a credit to Salaries Expense. 
E)  No entry would be necessary on January 5. 
A)  A debit to Cash and a credit to Salaries Payable. 
B)  A debit to Cash and a credit to Prepaid Salaries. 
C)  A debit to Salaries Payable and a credit to Cash. 
D)  A debit to Salaries Payable and a credit to Salaries Expense. 
E)  No entry would be necessary on January 5.

Question 17

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Accepted Answer

A) True 
 B)False

Question 18

On July 1 of the current calendar year,Plum Co.paid $7,500 cash for management services to be performed over a two-year period beginning July 1.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.The adjusting entry on December 31 of the current year for Plum would include:

Accepted Answer

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

Question 19

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

Accepted Answer

A) True 
 B)False

Question 20

The Dividends account is normally closed by debiting it.

Accepted Answer

A) True 
 B)False

Permanent accounts include all of the following except:

Match the following terms with the appropriate definition. -Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Discuss the importance of periodic reporting and the time period assumption.

Match the following terms with the appropriate definition. -Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Which of the following is classified as a current asset?

The adjusting entry to record an accrued expense is:

All of the following statements regarding a work sheet are true except:

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Match the following terms with the appropriate definition. -A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

The Dividends account is normally closed by debiting it.

Accounting in Business

Analyzing for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 3: Adjusting Accounts for Financial Statements

Permanent accounts include all of the following except:

Match the following terms with the appropriate definition. -Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Discuss the importance of periodic reporting and the time period assumption.

Match the following terms with the appropriate definition. -Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Which of the following is classified as a current asset?

The adjusting entry to record an accrued expense is:

All of the following statements regarding a work sheet are true except:

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Match the following terms with the appropriate definition. -A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

The Dividends account is normally closed by debiting it.

Accounting in Business

Analyzing for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

Filters