Question 1

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 2

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Accepted Answer

A) True 
 B)False

Question 3

Given the following account balances for Garry's Tree Service, prepare a trial balance.

Accepted Answer

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Question 4

What effect will this adjustment have on the accounting records?

Accepted Answer

A)  Increase net income 
B)  Increase revenues reported for the period 
C)  Decrease liabilities 
D)  All of these are true. 
A)  Increase net income 
B)  Increase revenues reported for the period 
C)  Decrease liabilities 
D)  All of these are true.

Question 5

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 6

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 an owner's 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 an owner's 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 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

Accepted Answer

A) True 
 B)False

Question 12

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Accepted Answer

A)  records revenues when they are earned and expenses when they are paid 
B)  records revenues and expenses when they are incurred. 
C)  records revenues when cash is received and expenses when they are incurred. 
D)  records revenues and expenses when the company needs to apply for a loan. 
A)  records revenues when they are earned and expenses when they are paid 
B)  records revenues and expenses when they are incurred. 
C)  records revenues when cash is received and expenses when they are incurred. 
D)  records revenues and expenses when the company needs to apply for a loan.

Question 13

For the year ending June 30, Island Clinical Services mistakenly omitted adjusting entries for (1) $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. What is the combined effect of these errors on (a) revenues, (b) expenses, and (c) net income for the year ending June 30?

Accepted Answer

(a) Revenues were understated

Question 14

Using accrual accounting, expenses are recorded and reported only

Accepted Answer

A)  when they are incurred, whether or not cash is paid 
B)  when they are incurred and paid at the same time 
C)  if they are paid before they are incurred 
D)  if they are paid after they are incurred 
A)  when they are incurred, whether or not cash is paid 
B)  when they are incurred and paid at the same time 
C)  if they are paid before they are incurred 
D)  if they are paid after they are incurred

Question 15

A fixed asset's market value is reflected in the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 16

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Accrued revenues would appear on the balance sheet as

Accepted Answer

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

Question 19

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 20

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Accepted Answer

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

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Given the following account balances for Garry's Tree Service, prepare a trial balance.

What effect will this adjustment have on the accounting records?

Prior to the adjusting process, accrued revenue has

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?

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

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

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

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

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Using accrual accounting, expenses are recorded and reported only

A fixed asset's market value is reflected in the Balance Sheet.

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

All of the following statements regarding vertical analysis are true except:

Accrued revenues would appear on the balance sheet as

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

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 3: The Adjusting Process

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

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Given the following account balances for Garry's Tree Service, prepare a trial balance.

What effect will this adjustment have on the accounting records?

Prior to the adjusting process, accrued revenue has

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?

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

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

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

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

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Using accrual accounting, expenses are recorded and reported only

A fixed asset's market value is reflected in the Balance Sheet.

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

All of the following statements regarding vertical analysis are true except:

Accrued revenues would appear on the balance sheet as

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

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters