Question 1

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Accepted Answer

A)  Record payment of fees earned. 
B)  Record fees earned at the end of the month. 
C)  Record fees that have not been earned at the end of the month. 
D)  Record the payment of fees to be earned. 
A)  Record payment of fees earned. 
B)  Record fees earned at the end of the month. 
C)  Record fees that have not been earned at the end of the month. 
D)  Record the payment of fees to be earned.

Question 2

Which of the following is an example of an accrued expense?

Accepted Answer

A)  Salary owed but not yet paid 
B)  Fees received but not yet earned 
C)  Supplies on hand 
D)  A two-year premium paid on a fire insurance policy 
A)  Salary owed but not yet paid 
B)  Fees received but not yet earned 
C)  Supplies on hand 
D)  A two-year premium paid on a fire insurance policy

Question 3

Adjusting journal entries are dated on the last day of the period.

Accepted Answer

A) True 
 B)False

Question 4

What is the purpose of an adjusted trial balance? What types of errors does it detect? What types of errors does it not detect?

Accepted Answer

The purpose of an adjusted trial balance

Question 5

The unexpired insurance at the end of the fiscal period represents

Accepted Answer

A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense 
A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense

Question 6

On January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account was omitted. Which items will be incorrectly stated because of the error on (a) the income statement for January and (b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

Accepted Answer

The answer of On January 31, the end of the...

Question 7

Which one of the accounts below would likely be included in an accrual adjusting entry?

Accepted Answer

A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent 
A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent

Question 8

Adjusting entries affect at least one

Accepted Answer

A)  income statement account and one balance sheet account 
B)  revenue and the dividends account 
C)  asset and one stockholders' equity account 
D)  revenue and one capital stock account 
A)  income statement account and one balance sheet account 
B)  revenue and the dividends account 
C)  asset and one stockholders' equity account 
D)  revenue and one capital stock account

Question 9

The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past periods.

Accepted Answer

A) True 
 B)False

Question 10

The updating of accounts is called the adjusting process.

Accepted Answer

A) True 
 B)False

Question 11

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

Accepted Answer

A) True 
 B)False

Question 12

On January 2, Safe Boating Monthly received a check for $96 from a subscriber for a 12-month subscription. The January issue was mailed on January 15th. Prepare the necessary entries for the month of January.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& The second entry can be made

Question 13

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Accepted Answer

A)  debit Supplies $1,500, credit Supplies Expense $1,500 
B)  debit Supplies Expense $4,750, credit Supplies $4,750 
C)  debit Supplies Expense $1,500, credit Supplies $1,500 
D)  debit Supplies $4,750, credit Supplies Expense $4,750 
A)  debit Supplies $1,500, credit Supplies Expense $1,500 
B)  debit Supplies Expense $4,750, credit Supplies $4,750 
C)  debit Supplies Expense $1,500, credit Supplies $1,500 
D)  debit Supplies $4,750, credit Supplies Expense $4,750

Question 14

A company pays an employee $3,000 for a five day work week, Monday - Friday. The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense, $1,800 and credit Wages Payable, $1,800.

Accepted Answer

A) True 
 B)False

Question 15

On December 31, the balance in the Office Supplies account is $1,385. A count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies.

Accepted Answer

$1,385 - $

Question 16

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

How will the following adjusting journal entry affect the accounting equation?

Accepted Answer

A)  increase assets, increase revenues 
B)  increase liabilities, increase revenues 
C)  decrease liabilities, increase revenues 
D)  decrease liabilities, decrease revenues 
A)  increase assets, increase revenues 
B)  increase liabilities, increase revenues 
C)  decrease liabilities, increase revenues 
D)  decrease liabilities, decrease revenues

Question 18

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

Accepted Answer

A)  depreciation 
B)  deferral 
C)  accrual 
D)  inventory 
A)  depreciation 
B)  deferral 
C)  accrual 
D)  inventory

Question 19

Vertical analysis is useful for analyzing financial statement changes over time.

Accepted Answer

A) True 
 B)False

Question 20

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Which of the following is an example of an accrued expense?

Adjusting journal entries are dated on the last day of the period.

What is the purpose of an adjusted trial balance? What types of errors does it detect? What types of errors does it not detect?

The unexpired insurance at the end of the fiscal period represents

Which one of the accounts below would likely be included in an accrual adjusting entry?

Adjusting entries affect at least one

The Accumulated Depreciation's account balance is the sum of the depreciation expense recorded in past periods.

The updating of accounts is called the adjusting process.

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

On January 2, Safe Boating Monthly received a check for $96 from a subscriber for a 12-month subscription. The January issue was mailed on January 15th. Prepare the necessary entries for the month of January.

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

A company pays an employee $3,000 for a five day work week, Monday - Friday. The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense, $1,800 and credit Wages Payable, $1,800.

On December 31, the balance in the Office Supplies account is $1,385. A count shows $435 worth of supplies on hand. Prepare the adjusting entry for supplies.

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

How will the following adjusting journal entry affect the accounting equation?

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

Vertical analysis is useful for analyzing financial statement changes over time.

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

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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