Question 1

Advance cash payments of future expenses are called ________.

Accepted Answer

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

Question 2

There is a natural link between some expenses and revenues.

Accepted Answer

A) True 
 B)False  True

Question 3

Accrual basis accounting requires the business to review the unadjusted trial balance and determine whether any additional revenues and expenses need to be recorded.

Accepted Answer

A) True 
 B)False  True

Question 4

What is the term used for the difference between the Equipment account balance and the Accumulated Depreciation-Equipment account balance?

Accepted Answer

A)  contra asset 
B)  market value 
C)  historical cost 
D)  book value 
A)  contra asset 
B)  market value 
C)  historical cost 
D)  book value

Question 5

Dynamic Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,the related account that should appear on the income statement for the year ended December 31,2018 is ________.

Accepted Answer

A)  Depreciation Expense - Equipment 
B)  Service Revenue 
C)  Accumulated Depreciation - Equipment 
D)  Equipment Expense 
A)  Depreciation Expense - Equipment 
B)  Service Revenue 
C)  Accumulated Depreciation - Equipment 
D)  Equipment Expense

Question 6

A performance obligation is a contractual promise with a customer to transfer a distinct good or service.

Accepted Answer

A) True 
 B)False

Question 7

A company received $5,000 for 100 one-year subscriptions on July 1.The journal entry to record this cash receipt would include a ________.The company uses a liability account for revenue received in advance.

Accepted Answer

A)  credit to Accounts Payable for $5,000 
B)  debit to Prepaid Expenses for $5,000 
C)  credit to Unearned Revenue for $5,000 
D)  debit to Note Payable for $5,000 
A)  credit to Accounts Payable for $5,000 
B)  debit to Prepaid Expenses for $5,000 
C)  credit to Unearned Revenue for $5,000 
D)  debit to Note Payable for $5,000

Question 8

The Pediatric Dental Company prepays the rent on its dental office.On July 1,the company paid $18,000 for 6 months of rent.The rent period begins on July 1.How much Rent Expense should the company record for the three months ended September 30 under the cash basis? Why?

Accepted Answer

Pediatric Dental should report

Question 9

An internal document that helps summarize data for the preparation of financial statements is called a ________.

Accepted Answer

A)  journal 
B)  ledger 
C)  worksheet 
D)  chart of accounts 
A)  journal 
B)  ledger 
C)  worksheet 
D)  chart of accounts

Question 10

In applying the revenue recognition principle,which of the following statements regarding multiple performance obligations is incorrect?

Accepted Answer

A)  If the transaction has multiple performance obligations, the transaction price is allocated among the different performance obligations. 
B)  The business can recognize revenue when (or as) it satisfies each performance obligation by transferring a good or service to a customer. 
C)  A contract might have multiple performance obligations. 
D)  Revenue is recognized after all performance obligations are satisfied. 
A)  If the transaction has multiple performance obligations, the transaction price is allocated among the different performance obligations. 
B)  The business can recognize revenue when (or as) it satisfies each performance obligation by transferring a good or service to a customer. 
C)  A contract might have multiple performance obligations. 
D)  Revenue is recognized after all performance obligations are satisfied.

Question 11

If an adjusting entry includes a debit to Rent Expense,it indicates that the payment of rent had been previously recorded as a(n)________.

Accepted Answer

A)  deferred expense 
B)  depreciation expense 
C)  accrued expense 
D)  accrued revenue 
A)  deferred expense 
B)  depreciation expense 
C)  accrued expense 
D)  accrued revenue

Question 12

Watson Tax Planning Service has the following plant assets: Communications Equipment: Cost,$7,200 with useful life of eight years; Furniture: Cost,$24,000 with useful life of 12 years; and Computer: Cost,$13,200 with useful life of four years.(Assume residual value of all the assets is zero.)Watson's monthly depreciation expense calculated using the straight-line method is ________.(Round any intermediate calculations and your final answer to the nearest cent.)

Accepted Answer

A)  $275.00 
B)  $166.67 
C)  $75.00 
D)  $516.67 
A)  $275.00 
B)  $166.67 
C)  $75.00 
D)  $516.67

Question 13

Adkins Company is hired on December 15,2018 to perform services,beginning on December 16,2018.Under this agreement,Adkins will earn $3,900 monthly and receive payment on January 15,2019.What amount of service revenue should be recorded for the year ending December 31,2018?

Accepted Answer

A)  0 
B)  $1,950 
C)  $3,900 
D)  There is not enough information to answer this. 
A)  0 
B)  $1,950 
C)  $3,900 
D)  There is not enough information to answer this.

Question 14

Murphy Company prepaid $8,400 on October 1,2018 for a one-year insurance premium.Coverage begins October 1.On January 1,2019 (after December 31 adjustments),the Prepaid Insurance account will have a debit balance of ________.(Round any intermediate calculations to two decimal places,and your final answer to the nearest whole number.)

Accepted Answer

A)  $7,000 
B)  $9,100 
C)  $8,400 
D)  $6,300 
A)  $7,000 
B)  $9,100 
C)  $8,400 
D)  $6,300

Question 15

The revenue recognition principle guides accountants in ________.

Accepted Answer

A)  ensuring only revenues received in cash are recorded 
B)  determining when to record expenses 
C)  determining when to record revenues 
D)  ensuring expenses are deducted from revenues 
A)  ensuring only revenues received in cash are recorded 
B)  determining when to record expenses 
C)  determining when to record revenues 
D)  ensuring expenses are deducted from revenues

Question 16

Aspen Event Planning Services Company records deferred expenses and deferred revenues using alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On December 15,it collected $2,000 from a customer in advance for a series of events that will start late December and end in March.At the end of the year,it had performed approximately 10% of the services for its customer.The adjusting entry on December 31 will include a debit to Service Revenue for $1,800.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

On December 31,2018 the balance in Energy Exploration Company's Unearned Revenue account was a credit of $6,000.In January,2019,the company received an advance payment of $12,000 from a new customer for services to be performed.By January 31,adjustments were made to recognize $4,000 of the revenue that had been earned during January.What was the balance in Unearned Revenue on January 31,2019?

Accepted Answer

A)  $4,000 credit 
B)  $12,000 debit 
C)  $6,000 credit 
D)  $14,000 credit 
A)  $4,000 credit 
B)  $12,000 debit 
C)  $6,000 credit 
D)  $14,000 credit

Question 19

On the first day of January,Builders Company borrowed $1,000 on a one-year note payable bearing interest at 3% per year.The note specifies that principal and interest must be paid in full at the end of the one-year period.On June 30,the adjusted trial balance will show Interest Payable of ________.

Accepted Answer

A)  $15 credit 
B)  $15 debit 
C)  $30 credit 
D)  $30 debit 
A)  $15 credit 
B)  $15 debit 
C)  $30 credit 
D)  $30 debit

Question 20

Armstrong Services has a weekly payroll of $50,000.December 31 falls on Thursday and Armstrong will pay its employees the following Monday (January 4)for the previous full week.Assume that the company has a five-day workweek and has an unadjusted balance in Salaries Expense of $845,000 at December 31.Prepare the January 4 journal entry.Reversing entries are not made.

Accepted Answer

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Exam 3: The Adjusting Process

Advance cash payments of future expenses are called ________.

There is a natural link between some expenses and revenues.

Accrual basis accounting requires the business to review the unadjusted trial balance and determine whether any additional revenues and expenses need to be recorded.

What is the term used for the difference between the Equipment account balance and the Accumulated Depreciation-Equipment account balance?

Dynamic Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,the related account that should appear on the income statement for the year ended December 31,2018 is ________.

A performance obligation is a contractual promise with a customer to transfer a distinct good or service.

A company received $5,000 for 100 one-year subscriptions on July 1.The journal entry to record this cash receipt would include a ________.The company uses a liability account for revenue received in advance.

The Pediatric Dental Company prepays the rent on its dental office.On July 1,the company paid $18,000 for 6 months of rent.The rent period begins on July 1.How much Rent Expense should the company record for the three months ended September 30 under the cash basis? Why?

An internal document that helps summarize data for the preparation of financial statements is called a ________.

In applying the revenue recognition principle,which of the following statements regarding multiple performance obligations is incorrect?

If an adjusting entry includes a debit to Rent Expense,it indicates that the payment of rent had been previously recorded as a(n)________.

Adkins Company is hired on December 15,2018 to perform services,beginning on December 16,2018.Under this agreement,Adkins will earn $3,900 monthly and receive payment on January 15,2019.What amount of service revenue should be recorded for the year ending December 31,2018?

The revenue recognition principle guides accountants in ________.

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

On the first day of January,Builders Company borrowed $1,000 on a one-year note payable bearing interest at 3% per year.The note specifies that principal and interest must be paid in full at the end of the one-year period.On June 30,the adjusted trial balance will show Interest Payable of ________.

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

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