Question 1

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

Accepted Answer

A)  Total assets at the end of the year will be understated. 
B)  Stockholders' equity at the end of the year will be understated. 
C)  Net income for the year will be overstated. 
D)  Insurance Expense will be overstated. 
A)  Total assets at the end of the year will be understated. 
B)  Stockholders' equity at the end of the year will be understated. 
C)  Net income for the year will be overstated. 
D)  Insurance Expense will be overstated.

Question 2

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be

Accepted Answer

$1,500/12

Question 3

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 4

A company pays $6,500 for two season tickets on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is debit Cash, $2,500 and credit Ticket Revenue, $2,500.

Accepted Answer

A) True 
 B)False

Question 5

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

Accepted Answer

A) True 
 B)False

Question 6

All of the following statements regarding vertical analysis are true except

Accepted Answer

A)  Vertical analysis may be prepared for several periods to analyze changes in relationships over time. 
B)  In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets. 
C)  In a vertical analysis of an income statement, each item is stated as a percent of total expenses. 
D)  Major differences between a company's vertical analysis and industry averages should be investigated. 
A)  Vertical analysis may be prepared for several periods to analyze changes in relationships over time. 
B)  In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets. 
C)  In a vertical analysis of an income statement, each item is stated as a percent of total expenses. 
D)  Major differences between a company's vertical analysis and industry averages should be investigated.

Question 7

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

Accepted Answer

The answer of Salaries of $6,400 are paid for a...

Question 8

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Accepted Answer

$22,800/24

Question 9

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

Accepted Answer

The adjustment for accrued fees of $1,17

Question 10

Prior to the adjusting process, accrued revenue has

Accepted Answer

A)  been earned and cash received 
B)  been earned and not recorded as revenue 
C)  not been earned but recorded as revenue 
D)  not been recorded as revenue but cash has been received 
A)  been earned and cash received 
B)  been earned and not recorded as revenue 
C)  not been earned but recorded as revenue 
D)  not been recorded as revenue but cash has been received

Question 11

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Accepted Answer

The answer of The estimated amount of depreciation on equipment...

Question 12

Data for an adjusting entry described as "accrued wages, $2,020" would result in

Accepted Answer

A)  a debit to Wages Expense and a credit to Wages Payable 
B)  a debit to Wages Payable and a credit to Wages Expense 
C)  a debit to Accounts Receivable and a credit Wages Expense 
D)  a debit to Dividends and a credit to Wages Payable 
A)  a debit to Wages Expense and a credit to Wages Payable 
B)  a debit to Wages Payable and a credit to Wages Expense 
C)  a debit to Accounts Receivable and a credit Wages Expense 
D)  a debit to Dividends and a credit to Wages Payable

Question 13

Prepare the December 31 adjusting entries for the following transactions. Omit explanations.
1. Fees accrued but unbilled total $6,300.
2. The supplies account balance on December 31 is $4,750. Supplies on hand are $960.
3. Wages accrued but not paid are $2,700.
4. Depreciation of office equipment is $1,650.
5. Rent expired during year, $10,800.

Accepted Answer

The answer of Prepare the December 31 adjusting entries for...

Question 14

The type of account and normal balance of Accumulated Depreciation is

Accepted Answer

A)  asset, credit 
B)  asset, debit 
C)  contra asset, credit 
D)  contra asset, debit 
A)  asset, credit 
B)  asset, debit 
C)  contra asset, credit 
D)  contra asset, debit

Question 15

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

Accepted Answer

A)  Adjust supplies inventory to actual. 
B)  Record purchase of supplies. 
C)  Reduce supplies expense. 
D)  Record sale of supplies. 
A)  Adjust supplies inventory to actual. 
B)  Record purchase of supplies. 
C)  Reduce supplies expense. 
D)  Record sale of supplies.

Question 16

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

Accepted Answer

A)  debit Rent Expense, $8,000; credit Prepaid Rent, $8,000 
B)  debit Prepaid Rent, $24,000; credit Rent Expense, $8,000 
C)  debit Rent Expense, $24,000; credit Prepaid Rent, $8,000 
D)  debit Prepaid Rent, $8,000; credit Rent Expense, $8,000 
A)  debit Rent Expense, $8,000; credit Prepaid Rent, $8,000 
B)  debit Prepaid Rent, $24,000; credit Rent Expense, $8,000 
C)  debit Rent Expense, $24,000; credit Prepaid Rent, $8,000 
D)  debit Prepaid Rent, $8,000; credit Rent Expense, $8,000

Question 17

When is the adjusted trial balance prepared?

Accepted Answer

A)  before adjusting journal entries are posted 
B)  after adjusting journal entries are posted 
C)  after the adjusting journal entries are journalized 
D)  before the adjusting journal entries are journalized 
A)  before adjusting journal entries are posted 
B)  after adjusting journal entries are posted 
C)  after the adjusting journal entries are journalized 
D)  before the adjusting journal entries are journalized

Question 18

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

Accepted Answer

A)  Total assets will be understated at the end of the current year. 
B)  The balance sheet and income statement will be misstated, but the retained earnings statement will be correct for the current year. 
C)  Net income will be overstated for the current year. 
D)  Total liabilities and total assets will be understated. 
A)  Total assets will be understated at the end of the current year. 
B)  The balance sheet and income statement will be misstated, but the retained earnings statement will be correct for the current year. 
C)  Net income will be overstated for the current year. 
D)  Total liabilities and total assets will be understated.

Question 19

Which of the following is not a characteristic of accrual basis of accounting?

Accepted Answer

A)  Revenues and expenses are reported in the period in which cash is received or paid 
B)  Revenues are reported in the income statement in the period in which they are earned 
C)  Supports the matching concept 
D)  All are correct. 
A)  Revenues and expenses are reported in the period in which cash is received or paid 
B)  Revenues are reported in the income statement in the period in which they are earned 
C)  Supports the matching concept 
D)  All are correct.

Question 20

On March 1, a business paid $3,600 for a twelve month liability insurance policy. On April 1 the same business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts:
(a) insurance expense for the month of March
(b) prepaid insurance as of March 31
(c) equipment rent expense for the month of April
(d) prepaid equipment rental as of April 30

Accepted Answer

The answer of On March 1, a business paid $3,600...

Exam 3: The Adjusting Process

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

A company pays $6,500 for two season tickets on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is debit Cash, $2,500 and credit Ticket Revenue, $2,500.

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

All of the following statements regarding vertical analysis are true except

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

Prior to the adjusting process, accrued revenue has

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Data for an adjusting entry described as "accrued wages, $2,020" would result in

The type of account and normal balance of Accumulated Depreciation is

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

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

When is the adjusted trial balance prepared?

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

Which of the following is not a characteristic of accrual basis of accounting?

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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