Question 1

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 2

Adjusting journal entries are dated on the last day of the period.

Accepted Answer

A) True 
 B)False

Question 3

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

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Question 4

The matching concept supports matching expenses with the related revenues.

Accepted Answer

A) True 
 B)False

Question 5

Accumulated Depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 6

The type of account and normal balance of Unearned Rent is

Accepted Answer

A)  revenue, credit 
B)  expense, debit 
C)  liability, credit 
D)  liability, debit 
A)  revenue, credit 
B)  expense, debit 
C)  liability, credit 
D)  liability, debit

Question 7

Adjusting entries are

Accepted Answer

A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies 
A)  the same as correcting entries 
B)  needed to bring accounts up to date and match revenue and expense 
C)  optional under generally accepted accounting principles 
D)  rarely needed in large companies

Question 8

Generally accepted accounting principles requires that companies use the ____ of accounting.

Accepted Answer

A)  cash basis 
B)  deferral basis 
C)  accrual basis 
D)  account basis 
A)  cash basis 
B)  deferral basis 
C)  accrual basis 
D)  account basis

Question 9

For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?

Accepted Answer

A)  Revenues are overstated by $4,200. 
B)  Net income is overstated by $2,300. 
C)  Expenses are overstated by $6,500. 
D)  Expenses are understated by $3,500. 
A)  Revenues are overstated by $4,200. 
B)  Net income is overstated by $2,300. 
C)  Expenses are overstated by $6,500. 
D)  Expenses are understated by $3,500.

Question 10

A company depreciates its equipment $500 a year. The adjusting entry for December 31 is debit Depreciation Expense, $500 and credit Equipment, $500.

Accepted Answer

A) True 
 B)False

Question 11

At the end of April, the first month of the year, the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for April and (b) the balance sheet as of April 30. Also indicate whether the items in error will be overstated or understated.

Accepted Answer

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Question 12

For each of the following, journalize the necessary adjusting entry:

Accepted Answer

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Question 13

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 14

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 an owner's 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 an owner's equity account 
D)  increases the balance of an expense account

Question 15

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

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Question 16

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 17

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)  capital account 
D)  contra liability 
A)  asset 
B)  liability 
C)  capital account 
D)  contra liability

Question 18

At January 31, the end of the first month of the year, the usual adjusting entry transferring expired insurance to an expense account is omitted. Which items will be incorrectly stated, because of the error, on (a) the income statement for January and (b) the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

Accepted Answer

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Question 19

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

Accepted Answer

A)  deferral 
B)  accrual 
C)  revenue 
D)  liability 
A)  deferral 
B)  accrual 
C)  revenue 
D)  liability

Question 20

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Accepted Answer

A)  debit Supplies $1,500, credit Supplies Expense $1,500 
B)  debit Supplies Expense $4,750, credit Supplies $4,750 
C)  debit Supplies Expense $1,500, credit Supplies $1,500 
D)  debit Supplies $4,750, credit Supplies Expense $4,750 
A)  debit Supplies $1,500, credit Supplies Expense $1,500 
B)  debit Supplies Expense $4,750, credit Supplies $4,750 
C)  debit Supplies Expense $1,500, credit Supplies $1,500 
D)  debit Supplies $4,750, credit Supplies Expense $4,750

When is the adjusted trial balance prepared?

Adjusting journal entries are dated on the last day of the period.

The matching concept supports matching expenses with the related revenues.

Accumulated Depreciation is reported on the income statement.

The type of account and normal balance of Unearned Rent is

Adjusting entries are

Generally accepted accounting principles requires that companies use the ____ of accounting.

A company depreciates its equipment $500 a year. The adjusting entry for December 31 is debit Depreciation Expense, $500 and credit Equipment, $500.

For each of the following, journalize the necessary adjusting entry:

Which of the following is not true regarding depreciation?

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?

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.

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

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

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

When is the adjusted trial balance prepared?

Adjusting journal entries are dated on the last day of the period.

The matching concept supports matching expenses with the related revenues.

Accumulated Depreciation is reported on the income statement.

The type of account and normal balance of Unearned Rent is

Adjusting entries are

Generally accepted accounting principles requires that companies use the ____ of accounting.

A company depreciates its equipment $500 a year. The adjusting entry for December 31 is debit Depreciation Expense, $500 and credit Equipment, $500.

For each of the following, journalize the necessary adjusting entry:

Which of the following is not true regarding depreciation?

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?

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.

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

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

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