Question 1

To fill in the unadjusted trial balance columns in a worksheet, the account balances before adjustments are copied directly from the ________.

Accepted Answer

A)  ledger 
B)  adjusted trial balance 
C)  chart of accounts 
D)  balance sheet of previous year 
A)  ledger 
B)  adjusted trial balance 
C)  chart of accounts 
D)  balance sheet of previous year A

Question 2

If a company fails to make an adjusting entry for accrued revenues, the net income will be overstated.

Accepted Answer

A) True 
 B)False  False

Question 3

The entry to record depreciation includes a credit to the ________ account.

Accepted Answer

A)  Depreciation Payable 
B)  Cash 
C)  Accumulated Depreciation 
D)  Depreciation Expense 
A)  Depreciation Payable 
B)  Cash 
C)  Accumulated Depreciation 
D)  Depreciation Expense C

Question 4

The revenue recognition principle requires companies to record revenue when (or as) the entity satisfies each performance obligation.

Accepted Answer

A) True 
 B)False

Question 5

The time period concept assumes that the activities of a business can be sliced into small time segments.

Accepted Answer

A) True 
 B)False

Question 6

The matching principle is also called the ________.

Accepted Answer

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

Question 7

Justice, Inc. purchased a machine for $15,000 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)  $12,000 
B)  $3,000 
C)  $16,500 
D)  $15,000 
A)  $12,000 
B)  $3,000 
C)  $16,500 
D)  $15,000

Question 8

Which of the following is the correct formula for calculating depreciation under the straight-line method?

Accepted Answer

A)  Straight-line depreciation = (Cost + Residual value) / Useful life 
B)  Straight-line depreciation = (Cost - Residual value) / Useful life 
C)  Straight-line depreciation = (Cost + Residual value) × Useful life 
D)  Straight-line depreciation = (Cost - Residual value) × Useful life 
A)  Straight-line depreciation = (Cost + Residual value) / Useful life 
B)  Straight-line depreciation = (Cost - Residual value) / Useful life 
C)  Straight-line depreciation = (Cost + Residual value) × Useful life 
D)  Straight-line depreciation = (Cost - Residual value) × Useful life

Question 9

List and briefly discuss three accounting concepts and principles that apply to accrual basis accounting.

Accepted Answer

1. Time period concept - A business's ac

Question 10

A business hired a repair service to overhaul its plumbing system. The repair service began work on September 15 and completed it on October 15. The business agreed to pay the service $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 repair service was paid in full. Provide the journal entry for the cash payment on October 15. (Ignore explanation).

Accepted Answer

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Question 11

Hudson Landscaping Service bought equipment for $9,600 on January 1, 2019. It has an estimated useful life of five years and zero residual value. Hudson uses the straight-line method to calculate depreciation and records depreciation expense in the books at the end of every month. As of June 30, 2019, the book value of this equipment shown on its balance sheet will be ________.

Accepted Answer

A)  $8,640 
B)  $9,600 
C)  $10,560 
D)  $9,760 
A)  $8,640 
B)  $9,600 
C)  $10,560 
D)  $9,760

Question 12

On March 1, 2016, Nortons, Inc. paid $60,000 as office rent covering the three-month period ending May 31, 2016. Journalize the entry on March 1 by using the alternative treatment of deferred expenses. Omit explanation.

Accepted Answer

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Question 13

Which of the following is NOT a type of adjusting entry?

Accepted Answer

A)  deferred expenses 
B)  accrued revenues 
C)  unearned expenses 
D)  deferred revenues 
A)  deferred expenses 
B)  accrued revenues 
C)  unearned expenses 
D)  deferred revenues

Question 14

ABC Tax Planning Service started business in January 2018. The company rented an office for $5,400 per month starting from January 1, 2018. On that day, ABC prepaid the rent through June 30. The company makes adjusting entries at the end of each month. What is the balance in the Prepaid Rent account as of April 30, 2018?

Accepted Answer

A)  $10,800 
B)  $900 
C)  $5,400 
D)  $2,700 
A)  $10,800 
B)  $900 
C)  $5,400 
D)  $2,700

Question 15

When does a company account for revenue if it uses cash basis accounting?

Accepted Answer

A)  when services are performed, even though cash may be received at a later date 
B)  before services are performed 
C)  when the services are being performed 
D)  when cash is received, either prior to, at the time of, or after the services are performed 
A)  when services are performed, even though cash may be received at a later date 
B)  before services are performed 
C)  when the services are being performed 
D)  when cash is received, either prior to, at the time of, or after the services are performed

Question 16

In the case of deferred revenue, the adjusting entry at the end of the period includes a debit to Service Revenue. Assume the deferred revenue is initially recorded as a liability.

Accepted Answer

A) True 
 B)False

Question 17

The matching principle ________.

Accepted Answer

A)  guides accounting for revenues and expenses 
B)  results in the matching of expenses incurred during the period to the cash paid for expenses 
C)  ensures that all expenses are recorded when they are incurred during the period 
D)  results from a natural link between all expenses and revenues 
A)  guides accounting for revenues and expenses 
B)  results in the matching of expenses incurred during the period to the cash paid for expenses 
C)  ensures that all expenses are recorded when they are incurred during the period 
D)  results from a natural link between all expenses and revenues

Question 18

A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Service Revenue } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$

Question 19

A worksheet is an internal document that helps summarize data for the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 20

On April 1, Beta, Inc. purchased office supplies for $1,500. At the end of April, Beta's employees took a count of the remaining supplies and found that there was $500 of supplies left. Provide the adjusting entry needed at the end of April. (Ignore explanation). Assume the office supplies were initially recorded as an asset. Assume there were no office supplies on hand prior to the purchase on April 1.

Accepted Answer

\[\begin{array} { | c | r | r

Exam 3: The Adjusting Process

To fill in the unadjusted trial balance columns in a worksheet, the account balances before adjustments are copied directly from the ________.

If a company fails to make an adjusting entry for accrued revenues, the net income will be overstated.

The entry to record depreciation includes a credit to the ________ account.

The revenue recognition principle requires companies to record revenue when (or as) the entity satisfies each performance obligation.

The time period concept assumes that the activities of a business can be sliced into small time segments.

The matching principle is also called the ________.

Justice, Inc. purchased a machine for $15,000 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.

Which of the following is the correct formula for calculating depreciation under the straight-line method?

List and briefly discuss three accounting concepts and principles that apply to accrual basis accounting.

On March 1, 2016, Nortons, Inc. paid $60,000 as office rent covering the three-month period ending May 31, 2016. Journalize the entry on March 1 by using the alternative treatment of deferred expenses. Omit explanation.

Which of the following is NOT a type of adjusting entry?

When does a company account for revenue if it uses cash basis accounting?

In the case of deferred revenue, the adjusting entry at the end of the period includes a debit to Service Revenue. Assume the deferred revenue is initially recorded as a liability.

The matching principle ________.

A company receives payment from one of its customers on August 5 for services performed on July 21. Which of the following entries would be recorded if the company uses accrual basis accounting?

A worksheet is an internal document that helps summarize data for the preparation of financial statements.

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

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