Question 1

A contra asset account for Land will normally appear in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 of premiums paid during the year. Journalize the adjusting entry required at the end of the year assuming the amount of unexpired insurance related to future periods is $4,100.

Accepted Answer

The answer of The prepaid insurance account had a beginning...

Question 3

Under the accrual basis, some accounts in the ledger require updating. Discuss the three main reasons for this updating and give an example of each.

Accepted Answer

1. Some expenses are not recorded daily.

Question 4

Which of the following pairs of accounts could not appear in the same adjusting entry?

Accepted Answer

A)  Service Revenue and Unearned Revenue 
B)  Interest Income and Interest Expense 
C)  Rent Expense and Prepaid Rent 
D)  Salaries Payable and Salaries Expense 
A)  Service Revenue and Unearned Revenue 
B)  Interest Income and Interest Expense 
C)  Rent Expense and Prepaid Rent 
D)  Salaries Payable and Salaries Expense

Question 5

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Accepted Answer

The answer of The balance in the unearned fees account,...

Question 6

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30, journalize the adjusting entry necessary at the end of the fiscal period (December 31).

Accepted Answer

$20,000/10

Question 7

The company determines that the interest expense on a note payable for period ending December 31st is $775. This amount is payable on January 1st. Prepare the journal entries required on December 31st and January 1st.

Accepted Answer

The answer of The company determines that the interest expense...

Question 8

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

Accepted Answer

A)  $2,100 
B)  $12,900 
C)  $6,700 
D)  $8,300 
A)  $2,100 
B)  $12,900 
C)  $6,700 
D)  $8,300

Question 9

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Accepted Answer

A)  decreases the balance of a stockholders' equity account 
B)  increases the balance of a liability account 
C)  increases the balance of an asset account 
D)  decreases the balance of an expense account 
A)  decreases the balance of a stockholders' equity account 
B)  increases the balance of a liability account 
C)  increases the balance of an asset account 
D)  decreases the balance of an expense account

Question 10

A company pays $36,000 for twelve month's rent on October 1. The adjusting entry on December 31 is debit Rent Expense, $9,000 and credit Prepaid Rent, $9,000.

Accepted Answer

A) True 
 B)False

Question 11

The matching concept

Accepted Answer

A)  addresses the relationship between the journal and the balance sheet 
B)  determines whether the normal balance of an account is a debit or credit 
C)  requires that the dollar amount of debits equal the dollar amount of credits on a trial balance 
D)  states that expenses related to revenue be reported at the same time the revenue is reported 
A)  addresses the relationship between the journal and the balance sheet 
B)  determines whether the normal balance of an account is a debit or credit 
C)  requires that the dollar amount of debits equal the dollar amount of credits on a trial balance 
D)  states that expenses related to revenue be reported at the same time the revenue is reported

Question 12

Using accrual accounting, revenue is recorded and reported only

Accepted Answer

A)  when cash is received without regard to when the services are rendered 
B)  when the services are rendered without regard to when cash is received 
C)  when cash is received at the time services are rendered 
D)  if cash is received after the services are rendered 
A)  when cash is received without regard to when the services are rendered 
B)  when the services are rendered without regard to when cash is received 
C)  when cash is received at the time services are rendered 
D)  if cash is received after the services are rendered

Question 13

By matching revenues and expenses in the same period in which they incur

Accepted Answer

A)  net income or loss will always be underestimated. 
B)  net income or loss will always be overestimated. 
C)  net income or loss will be properly reported on the income statement 
D)  net income or loss will not be determined. 
A)  net income or loss will always be underestimated. 
B)  net income or loss will always be overestimated. 
C)  net income or loss will be properly reported on the income statement 
D)  net income or loss will not be determined.

Question 14

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

Accepted Answer

A) True 
 B)False

Question 15

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Accepted Answer

The answer of Ski Master Company pays weekly salaries of...

Question 16

Which one of the following accounts below would likely be included in a deferral adjusting entry?

Accepted Answer

A)  Interest Revenue 
B)  Unearned Revenue 
C)  Salaries Payable 
D)  Accounts Receivable 
A)  Interest Revenue 
B)  Unearned Revenue 
C)  Salaries Payable 
D)  Accounts Receivable

Question 17

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

Accepted Answer

A) True 
 B)False

Question 18

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Accepted Answer

A) True 
 B)False

Question 19

Accrued expenses are ordinarily reported on the balance sheet as

Accepted Answer

A)  assets 
B)  liabilities 
C)  fixed assets 
D)  prepaid expenses 
A)  assets 
B)  liabilities 
C)  fixed assets 
D)  prepaid expenses

Question 20

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

Accepted Answer

A)  debit Salaries Payable, $10,000; credit Cash, $10,000 
B)  debit Salary Expense, $10,000; credit Dividends, $10,000 
C)  debit Salary Expense, $10,000; credit Salaries Payable, $10,000 
D)  debit Dividends, $10,000; credit Cash, $10,000 
A)  debit Salaries Payable, $10,000; credit Cash, $10,000 
B)  debit Salary Expense, $10,000; credit Dividends, $10,000 
C)  debit Salary Expense, $10,000; credit Salaries Payable, $10,000 
D)  debit Dividends, $10,000; credit Cash, $10,000

Exam 3: The Adjusting Process

A contra asset account for Land will normally appear in the balance sheet.

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 of premiums paid during the year. Journalize the adjusting entry required at the end of the year assuming the amount of unexpired insurance related to future periods is $4,100.

Under the accrual basis, some accounts in the ledger require updating. Discuss the three main reasons for this updating and give an example of each.

Which of the following pairs of accounts could not appear in the same adjusting entry?

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

The company determines that the interest expense on a note payable for period ending December 31st is $775. This amount is payable on January 1st. Prepare the journal entries required on December 31st and January 1st.

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

A company pays $36,000 for twelve month's rent on October 1. The adjusting entry on December 31 is debit Rent Expense, $9,000 and credit Prepaid Rent, $9,000.

The matching concept

Using accrual accounting, revenue is recorded and reported only

By matching revenues and expenses in the same period in which they incur

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Which one of the following accounts below would likely be included in a deferral adjusting entry?

Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Accrued expenses are ordinarily reported on the balance sheet as

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

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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