Question 1

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Accepted Answer

A)  records revenues when they are earned and expenses when they are paid 
B)  records revenues and expenses when they are incurred. 
C)  records revenues when cash is received and expenses when they are incurred. 
D)  records revenues and expenses when the company needs to apply for a loan. 
A)  records revenues when they are earned and expenses when they are paid 
B)  records revenues and expenses when they are incurred. 
C)  records revenues when cash is received and expenses when they are incurred. 
D)  records revenues and expenses when the company needs to apply for a loan. B

Question 2

The supplies account has a balance of $2,100 at the beginning of the year and was debited during the year for $2,300, representing the total of supplies purchased during the year. If $400 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is

Accepted Answer

A)  $400 
B)  $200 
C)  $4,800 
D)  $4,000 
A)  $400 
B)  $200 
C)  $4,800 
D)  $4,000 D

Question 3

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

Accepted Answer

A) True 
 B)False  False

Question 4

The adjustment for accrued fees was debited to Accounts Payable instead of Accounts Receivable. This error will be detected when the Adjusted Trial Balance is prepared.

Accepted Answer

A) True 
 B)False

Question 5

Adjusting entries are

Accepted Answer

A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies 
A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies

Question 6

One of the accounting concepts upon which deferrals and accruals are based is

Accepted Answer

A)  matching 
B)  cost 
C)  price-level adjustment 
D)  conservatism 
A)  matching 
B)  cost 
C)  price-level adjustment 
D)  conservatism

Question 7

Prior to the adjusting process, accrued expenses have

Accepted Answer

A)  not yet been incurred, paid, or recorded 
B)  been incurred, not paid, but have been recorded 
C)  been incurred, not paid, and not recorded 
D)  been paid but have not yet been incurred 
A)  not yet been incurred, paid, or recorded 
B)  been incurred, not paid, but have been recorded 
C)  been incurred, not paid, and not recorded 
D)  been paid but have not yet been incurred

Question 8

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Accepted Answer

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

Question 9

The account type and normal balance of Unearned Revenue is

Accepted Answer

A)  revenue, credit 
B)  expense, debit 
C)  liability, credit 
D)  asset, debit 
A)  revenue, credit 
B)  expense, debit 
C)  liability, credit 
D)  asset, debit

Question 10

On January 2nd, Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account. Prepare the January 31st adjusting entry for rent expense.

Accepted Answer

The answer of On January 2nd, Dog Mart prepaid $30,000...

Question 11

A fixed asset's market value is reflected in the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 12

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

Accepted Answer

A)  $18,000 
B)  $90,000 
C)  $54,000 
D)  $36,000 
A)  $18,000 
B)  $90,000 
C)  $54,000 
D)  $36,000

Question 13

An adjusting entry to accrue an incurred expense will affect total liabilities.

Accepted Answer

A) True 
 B)False

Question 14

A company depreciates its equipment $500 a year. The adjusting entry for December 31 is credit Depreciation Expense, $500 and debit Equipment, $500.

Accepted Answer

A) True 
 B)False

Question 15

The adjusting entry to record the depreciation of equipment for the fiscal period is

Accepted Answer

A)  debit Depreciation Expense; credit Equipment 
B)  debit Depreciation Expense; credit Accumulated Depreciation 
C)  debit Accumulated Depreciation; credit Depreciation Expense 
D)  debit Equipment; credit Depreciation Expense 
A)  debit Depreciation Expense; credit Equipment 
B)  debit Depreciation Expense; credit Accumulated Depreciation 
C)  debit Accumulated Depreciation; credit Depreciation Expense 
D)  debit Equipment; credit Depreciation Expense

Question 16

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Accepted Answer

A)  $56,700 
B)  $58,000 
C)  $55,800 
D)  $54,500 
A)  $56,700 
B)  $58,000 
C)  $55,800 
D)  $54,500

Question 17

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

Accepted Answer

A)  expenses understated and therefore net income overstated 
B)  revenues understated and therefore net income understated 
C)  expenses understated and therefore net income understated 
D)  expenses overstated and therefore net income understated 
A)  expenses understated and therefore net income overstated 
B)  revenues understated and therefore net income understated 
C)  expenses understated and therefore net income understated 
D)  expenses overstated and therefore net income understated

Question 18

Accumulated Depreciation accounts are liability accounts.

Accepted Answer

A) True 
 B)False

Question 19

The entry to adjust the accounts for wages accrued at the end of the accounting period is

Accepted Answer

A)  debit Wages Payable; credit Wages Income 
B)  debit Wages Income; credit Wages Payable 
C)  debit Wages Payable; credit Wages Expense 
D)  debit Wages Expense; credit Wages Payable 
A)  debit Wages Payable; credit Wages Income 
B)  debit Wages Income; credit Wages Payable 
C)  debit Wages Payable; credit Wages Expense 
D)  debit Wages Expense; credit Wages Payable

Question 20

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Accepted Answer

A)  expense 
B)  asset 
C)  contra asset 
D)  liability 
A)  expense 
B)  asset 
C)  contra asset 
D)  liability

Exam 3: The Adjusting Process

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

The adjustment for accrued fees was debited to Accounts Payable instead of Accounts Receivable. This error will be detected when the Adjusted Trial Balance is prepared.

Adjusting entries are

One of the accounting concepts upon which deferrals and accruals are based is

Prior to the adjusting process, accrued expenses have

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

The account type and normal balance of Unearned Revenue is

On January 2nd, Dog Mart prepaid $30,000 rent for the year and recorded the prepayment in an asset account. Prepare the January 31st adjusting entry for rent expense.

A fixed asset's market value is reflected in the Balance Sheet.

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

An adjusting entry to accrue an incurred expense will affect total liabilities.

A company depreciates its equipment $500 a year. The adjusting entry for December 31 is credit Depreciation Expense, $500 and debit Equipment, $500.

The adjusting entry to record the depreciation of equipment for the fiscal period is

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

Accumulated Depreciation accounts are liability accounts.

The entry to adjust the accounts for wages accrued at the end of the accounting period is

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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