Question 1

The main purpose of adjusting entries is to:

Accepted Answer

A)  Record external transactions and events. 
B)  Record internal transactions and events. 
C)  Recognize assets purchased during the period. 
D)  Recognize debts paid during the period. 
E)  Correct errors in the accounting records. 
A)  Record external transactions and events. 
B)  Record internal transactions and events. 
C)  Recognize assets purchased during the period. 
D)  Recognize debts paid during the period. 
E)  Correct errors in the accounting records.

Question 2

An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200.Assuming the company does not prepare reversing entries,which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 3,000 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 3,000 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 1,200 & \
\hline \text { Salaries Payable } & & 1,200 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 1,200 & \
\hline \text { Salaries Expense } & 1,800 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 3,000 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 3,000 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 1,200 & \
\hline \text { Cash } & & 1,200 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 1,200 & \
\hline \text { Salaries Payable } & & 1,200 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 1,200 & \
\hline \text { Salaries Expense } & 1,800 & \
\hline \text { Cash } & & 3,000 \
\hline
\end{array}$$

Question 3

Interim financial statements refer to financial reports:

Accepted Answer

A)  That cover less than one year, usually spanning one, three, or six-month periods. 
B)  That are prepared before any adjustments have been recorded. 
C)  That show the assets above the liabilities and the liabilities above the equity. 
D)  Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid. 
E)  Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues. 
A)  That cover less than one year, usually spanning one, three, or six-month periods. 
B)  That are prepared before any adjustments have been recorded. 
C)  That show the assets above the liabilities and the liabilities above the equity. 
D)  Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid. 
E)  Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.

Question 4

Torsten had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

Accepted Answer

A) True 
 B)False

Question 5

Adjusting entries are usually entered in the work sheet before they are entered in the general journal.

Accepted Answer

A) True 
 B)False

Question 6

If a company plans to continue business into the future,closing entries are not required.

Accepted Answer

A) True 
 B)False

Question 7

The current ratio is used to help assess a company's ability to pay its debts in the near future.

Accepted Answer

A) True 
 B)False

Question 8

Match the following terms with the appropriate definition.
-A set of financial statements that covers less than one year,typically one,three,or six months of activity.

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 9

Describe the two alternate methods used to account for prepaid expenses.

Accepted Answer

The first method places all prepaid expe

Question 10

On December 1,Simpson Marketing Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Accepted Answer

A)  a debit to Earned Fees for $3,600. 
B)  a debit to Unearned Fees for $1,800. 
C)  a credit to Unearned Fees for $1,800. 
D)  a debit to Earned Fees for $1,800. 
E)  a credit to Earned Fees for $3,600. 
A)  a debit to Earned Fees for $3,600. 
B)  a debit to Unearned Fees for $1,800. 
C)  a credit to Unearned Fees for $1,800. 
D)  a debit to Earned Fees for $1,800. 
E)  a credit to Earned Fees for $3,600.

Question 11

Match the following types of adjustments with the appropriate transactions.
-Unearned revenue

Accepted Answer

A) Used to record wages owed, but not yet paid. 
B) Used to record revenue earned for which cash was received in advance. 
C) Used to record revenue earned for which cash has not been received. 
D) Used to record expiration or use of prepaid insurance. 
A) Used to record wages owed, but not yet paid. 
B) Used to record revenue earned for which cash was received in advance. 
C) Used to record revenue earned for which cash has not been received. 
D) Used to record expiration or use of prepaid insurance.

Question 12

Which of the following statements is incorrect?

Accepted Answer

A)  An income statement reports revenues earned less expenses incurred. 
B)  An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C)  Interim financial reports can be based on one-month or three-month accounting periods. 
D)  The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period. 
E)  Property, plant, and equipment are referred to as plant assets. 
A)  An income statement reports revenues earned less expenses incurred. 
B)  An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments. 
C)  Interim financial reports can be based on one-month or three-month accounting periods. 
D)  The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period. 
E)  Property, plant, and equipment are referred to as plant assets.

Question 13

The current ratio is computed by dividing current liabilities by current assets.

Accepted Answer

A) True 
 B)False

Question 14

For each of the following two separate situations,present both the April 30 adjusting entry and the subsequent entry during May to record the payment of the accrued expenses or receipt of the accrued revenue.Assume the company does not prepare reversing entries.
a.Nicolas Company has 5 employees,who earn a total of $2,900 in salaries each working day.They are paid on Monday for the five-day workweek ending on the previous Friday.Assume that fiscal year ended April 30,is a Thursday and all employees worked each day and will be paid salaries for five full days on the following Monday.
b.Services of $3,000 have been performed for Clevenger Company through April 30.The client will pay the entire amount of the contract when services are completed on May 23.
c.Paid the employees' salaries on May 4.
d.Received payment from Clevenger Company for services that are now completed on May 23.

Accepted Answer

The answer of For each of the following two separate...

Question 15

Match the following terms with the appropriate definition.
-A balance sheet that lists items vertically in the order of assets,liabilities and equity.

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

Question 16

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 17

The accrual basis of accounting reflects the principle that revenue is recorded when it is earned,not when cash is received.

Accepted Answer

A) True 
 B)False

Question 18

The following unadjusted and adjusted trial balances are from the current year's accounting system for Excelsior.   
Present the six adjusting entries in general journal form that explain the changes in the account balances from the unadjusted to the adjusted trial balance.

Accepted Answer

The answer of The following unadjusted and adjusted trial balances...

Question 19

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

Accepted Answer

The answer of ________ is the process of allocating the...

Question 20

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

Accepted Answer

A) True 
 B)False

The main purpose of adjusting entries is to:

An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200.Assuming the company does not prepare reversing entries,which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?

Interim financial statements refer to financial reports:

Torsten had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

Adjusting entries are usually entered in the work sheet before they are entered in the general journal.

If a company plans to continue business into the future,closing entries are not required.

The current ratio is used to help assess a company's ability to pay its debts in the near future.

Match the following terms with the appropriate definition. -A set of financial statements that covers less than one year,typically one,three,or six months of activity.

Describe the two alternate methods used to account for prepaid expenses.

On December 1,Simpson Marketing Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Match the following types of adjustments with the appropriate transactions. -Unearned revenue

Which of the following statements is incorrect?

The current ratio is computed by dividing current liabilities by current assets.

Match the following terms with the appropriate definition. -A balance sheet that lists items vertically in the order of assets,liabilities and equity.

A salary owed to employees is an example of an accrued expense.

The accrual basis of accounting reflects the principle that revenue is recorded when it is earned,not when cash is received.

The following unadjusted and adjusted trial balances are from the current year's accounting system for Excelsior. Present the six adjusting entries in general journal form that explain the changes in the account balances from the unadjusted to the adjusted trial balance.

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

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

The main purpose of adjusting entries is to:

An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200.Assuming the company does not prepare reversing entries,which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?

Interim financial statements refer to financial reports:

Torsten had total assets of $149,501,000,net income of $6,242,000,and net sales of $209,203,000.Its profit margin was 2.98%.

Adjusting entries are usually entered in the work sheet before they are entered in the general journal.

If a company plans to continue business into the future,closing entries are not required.

The current ratio is used to help assess a company's ability to pay its debts in the near future.

Match the following terms with the appropriate definition. -A set of financial statements that covers less than one year,typically one,three,or six months of activity.

Describe the two alternate methods used to account for prepaid expenses.

On December 1,Simpson Marketing Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year.The cash receipt was recorded as unearned fees.The adjusting entry for the year ended December 31 would include:

Match the following types of adjustments with the appropriate transactions. -Unearned revenue

Which of the following statements is incorrect?

The current ratio is computed by dividing current liabilities by current assets.

Match the following terms with the appropriate definition. -A balance sheet that lists items vertically in the order of assets,liabilities and equity.

A salary owed to employees is an example of an accrued expense.

The accrual basis of accounting reflects the principle that revenue is recorded when it is earned,not when cash is received.

The following unadjusted and adjusted trial balances are from the current year's accounting system for Excelsior. Present the six adjusting entries in general journal form that explain the changes in the account balances from the unadjusted to the adjusted trial balance.

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.

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