Question 1

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period 
A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period

Question 2

Accumulated Depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

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

Question 4

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Accepted Answer

A) True 
 B)False

Question 5

Austin, Inc. made a Prepaid Rent payment of $3,500 on January 1st. The company's monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:

Accepted Answer

A)  $2,800 
B)  $700 
C)  $3,500 
D)  $1,750 
A)  $2,800 
B)  $700 
C)  $3,500 
D)  $1,750

Question 6

Unearned rent, representing rent for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n)

Accepted Answer

A)  asset 
B)  liability 
C)  equity 
D)  revenue 
A)  asset 
B)  liability 
C)  equity 
D)  revenue

Question 7

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Accepted Answer

A) True 
 B)False

Question 8

Adjusting entries affect only expense and asset accounts.

Accepted Answer

A) True 
 B)False

Question 9

Prepaid expenses are eventually expected to

Accepted Answer

A)  become expenses when their future economic value expires. 
B)  become revenues when services are performed. 
C)  become expenses in the period when they are paid. 
D)  become revenues when the liability is no longer owed. 
A)  become expenses when their future economic value expires. 
B)  become revenues when services are performed. 
C)  become expenses in the period when they are paid. 
D)  become revenues when the liability is no longer owed.

Question 10

For the year ending December 31, 2010, Nathan Clinical Supplies Co. mistakenly omitted adjusting entries for (1) $8,900 of unearned revenue that was earned, (2) earned revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for 2010.

Accepted Answer

(a) Revenues were understated

Question 11

An example of deferred revenue is Unearned Rent.

Accepted Answer

A) True 
 B)False

Question 12

Which of the accounting steps in the accounting process below would be completed last?

Accepted Answer

A)  preparing the adjusted trial balance 
B)  posting 
C)  preparing the financial statements 
D)  journalizing 
A)  preparing the adjusted trial balance 
B)  posting 
C)  preparing the financial statements 
D)  journalizing

Question 13

Two income statements for PS Enterprises are shown below:
  
 (a) Prepare a vertical analysis of PS Enterprises' income statements.
(b) Does the vertical analysis indicate a favorable or unfavorable trend?

Accepted Answer

(a)
 @#IMG-DLM& (b) The vertical analysi

Question 14

The financial statements are prepared from the unadjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 15

For each of the following errors, considered individually, indicate whether the 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 answer of For each of the following errors, considered...

Question 16

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 entry for $975 of supplies used duri

Question 17

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

Accepted Answer

A) True 
 B)False

Question 18

The systematic allocation of land's cost to expense is called depreciation.

Accepted Answer

A) True 
 B)False

Question 19

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Accumulated Depreciation is reported on the income statement.

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

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Austin, Inc. made a Prepaid Rent payment of $3,500 on January 1st. The company's monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:

Unearned rent, representing rent for the next six months' occupancy, would be reported on the landlord's balance sheet as a(n)

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Adjusting entries affect only expense and asset accounts.

Prepaid expenses are eventually expected to

An example of deferred revenue is Unearned Rent.

Which of the accounting steps in the accounting process below would be completed last?

Two income statements for PS Enterprises are shown below: (a) Prepare a vertical analysis of PS Enterprises' income statements. (b) Does the vertical analysis indicate a favorable or unfavorable trend?

The financial statements are prepared from the unadjusted trial balance.

For each of the following errors, considered individually, indicate whether the 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.

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.

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

The systematic allocation of land's cost to expense is called depreciation.

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

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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