Question 1

The revenue recognition principle requires companies to follow a five-step process.List these five steps.

Accepted Answer

Step 1: Identify the contract with the c

Question 2

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.

Accepted Answer

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

Question 3

Sail Away,a cruise industry magazine,collected $480,000 in subscription revenue in May.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue.The company uses the accrual basis of accounting.Prepare the adjusting entry needed on June 30.(Ignore explanation).Assume the magazine initially records a liability for the subscription revenue.

Accepted Answer

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

Question 4

On December 31,2018,interest of $1,500 has accrued on a bank note.This interest payment is due on January 20,2019.If no adjusting entry is made on December 31,2018,indicate the effect on assets,liabilities,equity,and net income.
 $$\begin{array} { | l | l | } 
\hline & \text { Understated, Overstated, No Effect } \
\hline \text { Assets } & \
\hline \text { Liabilities } & \
\hline \text { Equity } & \
\hline \text { Net Income } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline &

Question 5

A good or service is considered transferred when the customer places an order or requests a service.

Accepted Answer

A) True 
 B)False

Question 6

On October 1,2019 Ranger Service Company paid $5,000 in rent for the next five months,beginning with October 2019.On that date,Ranger debited Prepaid Rent and credited Cash.If Ranger fails to make an adjusting entry on December 31,2019,indicate the effect on assets,liabilities,equity,and net income.

Accepted Answer

\[\begin{array} { | l | l | } 
\hline &

Question 7

Salaries are $4,000 per week for five working days and are paid weekly at the end of the day on Fridays.The end of the month falls on a Thursday.The accountant for Sunset Company made the appropriate accrual adjustment and posted it to the ledger.The balance of Salaries Payable,as shown on the adjusted trial balance,will be a ________.(Assume that there was no beginning balance in the Salaries Payable account.)

Accepted Answer

A)  credit balance of $3,200 
B)  debit balance of $800 
C)  debit balance of $3,200 
D)  credit balance of $800 
A)  credit balance of $3,200 
B)  debit balance of $800 
C)  debit balance of $3,200 
D)  credit balance of $800

Question 8

For accounting purposes,depreciation refers to the process of ________.

Accepted Answer

A)  allocating the cost of a plant asset to expense over its useful life 
B)  recording the decline in the market value of an asset to its book value 
C)  estimating an asset's current market value 
D)  determining the selling price of an asset 
A)  allocating the cost of a plant asset to expense over its useful life 
B)  recording the decline in the market value of an asset to its book value 
C)  estimating an asset's current market value 
D)  determining the selling price of an asset

Question 9

Reece Consultants had the following balances before preparing adjusting entries in the books on December 31,2019.
 $\begin{array}{ll}
\text { Cash } & \$ 6,000&\text {Reece,} \
\text { Withdrawals } & \$ 3,000 \
\text { Accounts Receivable } & 2,000 &\text {Service}\
\text { Revenue } & 10,600 \
\text { Office Supplies } & 1,800 &
\text {Salaries}\
\text { Expense } & 4,000\
\text { Equipment } & 15,000 &\text {Rent Expense 8}\
\text { Accumulated Depreciation- } & 9,000 &\text {Depreciation}\
\text { Expense- } & 1,500 \
\text { Equipment } & \text { Equipment } \
\text { Reece, Capital } & 15,000&\text {Supplies} \
\text { Expense } & 500
\end{array}$ Prepare the adjusted trial balance after considering these adjustments:
a.Office Supplies used,$800.Assume the office supplies were initially recorded as an asset.
b.Accrued salaries on December 31,$600.
c.Revenue earned but not recorded,$200.

Accepted Answer

None

Question 10

Under the revenue recognition principle,a good or service is considered transferred when ________.

Accepted Answer

A)  all performance obligations have been satisfied 
B)  the customer obtains control of the good or service 
C)  the business has received cash from the customer 
D)  the transaction price has been determined 
A)  all performance obligations have been satisfied 
B)  the customer obtains control of the good or service 
C)  the business has received cash from the customer 
D)  the transaction price has been determined

Question 11

ABC Tax Planning Service started business in January 2018.The company rented an office for $1,800 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)  $3,600 
B)  $300 
C)  $1,800 
D)  $900 
A)  $3,600 
B)  $300 
C)  $1,800 
D)  $900

Question 12

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|c|}
\hline \text { Prepaid Rent } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent Expense } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$$ 
B)  $\begin{array}{|l|r|c|}
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|c|}
\hline \text { Prepaid Rent } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Rent Expense } & 1,000 & \
\hline \text { Cash } & & 1,000 \
\hline
\end{array}$$

Question 13

The depreciation method that allocates an equal amount of depreciation to each year is called the straight-line method.

Accepted Answer

A) True 
 B)False

Question 14

Dress Designers Company has entered into a contract to design 10 new dresses for a customer.It will collect a total of $41,000 after the design services are complete.Dress Designers started design work on June 1.As of June 30,it finished 2 of the 10 designs.The company will make an adjusting entry at the end of June to accrue $10,250 of service revenue.

Accepted Answer

A) True 
 B)False

Question 15

Adjusting entries may involve any account,including Cash.

Accepted Answer

A) True 
 B)False

Question 16

Get Away,a travel magazine,collected $500,000 in subscription revenue in May.Each subscriber will receive an issue of the magazine for each of the next 12 months,beginning with the June issue.The company uses the accrual method of accounting.Prepare the journal entry for collection of cash in May.(Ignore explanation).Assume the magazine initially records a liability for the subscription revenue.

Accepted Answer

None

Question 17

The employees of Sinclair Services Company worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31?

Accepted Answer

A)  Accounts Payable 
B)  Salaries Payable 
C)  Salaries Expense 
D)  Prepaid Expense 
A)  Accounts Payable 
B)  Salaries Payable 
C)  Salaries Expense 
D)  Prepaid Expense

Question 18

Aquatic Supplies Company purchased $2,000 of supplies on account.Under the accrual basis of accounting,no entry is made until the amount is paid.

Accepted Answer

A) True 
 B)False

Question 19

Revenue that has been earned but not yet collected in cash is called a(n)________.

Accepted Answer

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

Question 20

The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

Accepted Answer

A) True 
 B)False

The revenue recognition principle requires companies to follow a five-step process.List these five steps.

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.

On December 31,2018,interest of $1,500 has accrued on a bank note.This interest payment is due on January 20,2019.If no adjusting entry is made on December 31,2018,indicate the effect on assets,liabilities,equity,and net income. Understated, Overstated, No Effect Assets Liabilities Equity Net Income

A good or service is considered transferred when the customer places an order or requests a service.

On October 1,2019 Ranger Service Company paid $5,000 in rent for the next five months,beginning with October 2019.On that date,Ranger debited Prepaid Rent and credited Cash.If Ranger fails to make an adjusting entry on December 31,2019,indicate the effect on assets,liabilities,equity,and net income.

For accounting purposes,depreciation refers to the process of ________.

Under the revenue recognition principle,a good or service is considered transferred when ________.

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

The depreciation method that allocates an equal amount of depreciation to each year is called the straight-line method.

Adjusting entries may involve any account,including Cash.

The employees of Sinclair Services Company worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31?

Aquatic Supplies Company purchased $2,000 of supplies on account.Under the accrual basis of accounting,no entry is made until the amount is paid.

Revenue that has been earned but not yet collected in cash is called a(n)________.

The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

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

Filters

Exam 3: The Adjusting Process

The revenue recognition principle requires companies to follow a five-step process.List these five steps.

The liability created when a business collects cash from its customers before completing a service or delivering a product is called ________.

A good or service is considered transferred when the customer places an order or requests a service.

For accounting purposes,depreciation refers to the process of ________.

Under the revenue recognition principle,a good or service is considered transferred when ________.

Which of the following entries would be recorded by a company that uses the cash basis method of accounting?

The depreciation method that allocates an equal amount of depreciation to each year is called the straight-line method.

Adjusting entries may involve any account,including Cash.

The employees of Sinclair Services Company worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31?

Aquatic Supplies Company purchased $2,000 of supplies on account.Under the accrual basis of accounting,no entry is made until the amount is paid.

Revenue that has been earned but not yet collected in cash is called a(n)________.

The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles.

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

Filters