Question 1

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Accepted Answer

A) True 
 B)False

Question 2

Match between columns
                        Premises: Cash
Depreciation Expense
Accumulated Depreciation
Accounts Payable
Equipment
Prepaid Expenses

Accepted Answer

The Answer of False and True is...

Question 3

Unearned revenue is a liability.

Accepted Answer

A) True 
 B)False

Question 4

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)

Accepted Answer

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

Question 5

Accrued revenues would appear on the balance sheet as

Accepted Answer

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

Question 6

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

Accepted Answer

A)  debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000 
B)  debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000 
C)  debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000 
D)  debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000 
A)  debit Insurance Expense, $3,000; credit Prepaid Insurance, $3,000 
B)  debit Insurance Expense, $14,000; credit Prepaid Insurance, $14,000 
C)  debit Prepaid Insurance, $11,000; credit Insurance Expense, $11,000 
D)  debit Insurance Expense, $11,000; credit Prepaid Insurance, $11,000

Question 7

Which of the following is not true regarding depreciation?

Accepted Answer

A)  Depreciation allocates the cost of a fixed asset over its estimated life. 
B)  Depreciation expense reflects the decrease in market value each year. 
C)  Depreciation is an allocation not a valuation method. 
D)  Depreciation expense does not measure changes in market value. 
A)  Depreciation allocates the cost of a fixed asset over its estimated life. 
B)  Depreciation expense reflects the decrease in market value each year. 
C)  Depreciation is an allocation not a valuation method. 
D)  Depreciation expense does not measure changes in market value.

Question 8

The financial statements measure precisely the financial condition and results of operations of a business.

Accepted Answer

A) True 
 B)False

Question 9

The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

Accepted Answer

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

Question 10

On January 1st, Great Designs Company had a debit balance of $1,450 in the Office Supplies account. During the month, Great Designs purchased $115 and $160 of office supplies and journalized them to the Office Supplies asset account upon purchasing. On January 31st, an inspection of the office supplies cabinet shows that only $350 of Office Supplies remains in the locker. Prepare the January 31st adjusting entry for Office Supplies.

Accepted Answer

The answer of On January 1st, Great Designs Company had...

Question 11

At the end of the fiscal year, the following adjusting entries were omitted:
   Assuming that financial statements were prepared before the errors were discovered, indicate the effect of each error, considered individually, by inserting the dollar amount in the appropriate spaces. Insert "0" if the error does not affect the item.

Accepted Answer

The answer of At the end of the fiscal year,...

Question 12

What effect will the following adjusting journal entry have on the accounting records?

Accepted Answer

A)  increase net income 
B)  increase revenues 
C)  decrease expenses 
D)  decrease net book value 
A)  increase net income 
B)  increase revenues 
C)  decrease expenses 
D)  decrease net book value

Question 13

Which account would normally not require an adjusting entry?

Accepted Answer

A)  Wages Expense 
B)  Accounts Receivable 
C)  Accumulated Depreciation 
D)  Retained Earnings 
A)  Wages Expense 
B)  Accounts Receivable 
C)  Accumulated Depreciation 
D)  Retained Earnings

Question 14

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Accepted Answer

A)  debit Unearned Rent; credit Rent Revenue 
B)  debit Rent Revenue; credit Unearned Rent 
C)  debit Unearned Rent; credit Prepaid Rent 
D)  debit Rent Expense; credit Unearned Rent 
A)  debit Unearned Rent; credit Rent Revenue 
B)  debit Rent Revenue; credit Unearned Rent 
C)  debit Unearned Rent; credit Prepaid Rent 
D)  debit Rent Expense; credit Unearned Rent

Question 15

Adjusting entries always include

Accepted Answer

A)  only income statement accounts. 
B)  only balance sheet accounts. 
C)  the cash account. 
D)  at least one income statement account and one balance sheet account. 
A)  only income statement accounts. 
B)  only balance sheet accounts. 
C)  the cash account. 
D)  at least one income statement account and one balance sheet account.

Question 16

Match between columns
                        Premises: Fees received but not yet earned.
Accumulated depreciation.
Property tax accrual
Fees earned but not yet received.

Accepted Answer

The Answer of accrued expense and unearned revenue and accrued is...

Question 17

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?

Accepted Answer

A)  Salary expense for the year was understated. 
B)  The total of the liabilities at the end of the year was overstated. 
C)  Net income for the year was understated. 
D)  Stockholders' equity at the end of the year was understated. 
A)  Salary expense for the year was understated. 
B)  The total of the liabilities at the end of the year was overstated. 
C)  Net income for the year was understated. 
D)  Stockholders' equity at the end of the year was understated.

Question 18

The net book value of a fixed asset is determined by

Accepted Answer

A)  original cost less accumulated depreciation 
B)  original cost less depreciation expense 
C)  original cost less accumulated depreciation plus depreciation expense 
D)  original cost plus accumulated depreciation 
A)  original cost less accumulated depreciation 
B)  original cost less depreciation expense 
C)  original cost less accumulated depreciation plus depreciation expense 
D)  original cost plus accumulated depreciation

Question 19

Which of the following is an example of a prepaid expense?

Accepted Answer

A)  Supplies 
B)  Accounts Receivable 
C)  Unearned Subscriptions 
D)  Unearned Fees 
A)  Supplies 
B)  Accounts Receivable 
C)  Unearned Subscriptions 
D)  Unearned Fees

Question 20

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Unearned revenue is a liability.

Prepaid advertising, representing payment for the next quarter, would be reported on the balance sheet as a(n)

Accrued revenues would appear on the balance sheet as

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000, for the fiscal year ending on April 30?

Which of the following is not true regarding depreciation?

The financial statements measure precisely the financial condition and results of operations of a business.

The general term employed to indicate an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

What effect will the following adjusting journal entry have on the accounting records?

Which account would normally not require an adjusting entry?

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Adjusting entries always include

At the end of the fiscal year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true?

The net book value of a fixed asset is determined by

Which of the following is an example of a prepaid expense?

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

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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