Question 1

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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 4

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

Accepted Answer

The answer of Depreciation on Office Equipment is $3,300. The...

Question 5

The unexpired insurance at the end of the fiscal period represents

Accepted Answer

A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense 
A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense

Question 6

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

Accepted Answer

A)  $2,100 
B)  $12,900 
C)  $6,700 
D)  $8,300 
A)  $2,100 
B)  $12,900 
C)  $6,700 
D)  $8,300

Question 7

The matching concept supports matching expenses with the related revenues.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which account would normally not require an adjusting entry?

Accepted Answer

A)  Wages Expense 
B)  Accounts Receivable 
C)  Accumulated Depreciation 
D)  Smith, Capital 
A)  Wages Expense 
B)  Accounts Receivable 
C)  Accumulated Depreciation 
D)  Smith, Capital

Question 10

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 11

An adjusting entry to accrue an incurred expense will affect total liabilities.

Accepted Answer

A) True 
 B)False

Question 12

Which one of the accounts below would likely be included in an accrual adjusting entry?

Accepted Answer

A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent 
A)  Insurance Expense 
B)  Prepaid Rent 
C)  Interest Expense 
D)  Unearned Rent

Question 13

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

Accepted Answer

A)  $18,000 
B)  $90,000 
C)  $54,000 
D)  $36,000 
A)  $18,000 
B)  $90,000 
C)  $54,000 
D)  $36,000

Question 14

Adjusting entries affect only expense and asset accounts.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

The answer of Given the following account balances for Garry's...

Question 16

At the end of the fiscal year, the following adjusting entries were omitted:
   Assuming that financial statements are prepared before the errors are 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 17

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 18

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

Question 19

Which of the following is considered to be unearned revenue?

Accepted Answer

A)  Concert tickets sold last month for yesterday's performance. 
B)  Concert tickets sold yesterday on credit for yesterday's performance. 
C)  Concert tickets that were not sold for the current performance. 
D)  Concert tickets sold for next month's performance. 
A)  Concert tickets sold last month for yesterday's performance. 
B)  Concert tickets sold yesterday on credit for yesterday's performance. 
C)  Concert tickets that were not sold for the current performance. 
D)  Concert tickets sold for next month's performance.

Question 20

A company pays $360 for a yearly trade magazine on August 1. The adjusting entry on December 31 is debit Unearned Subscription Revenue, $150 and credit Subscription Revenue, $150.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

Which of the following is not true regarding depreciation?

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

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

The unexpired insurance at the end of the fiscal period represents

The balance in the office supplies account on June 1 was $7,500, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,300. The amount to be used for the appropriate adjusting entry is

The matching concept supports matching expenses with the related revenues.

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.

Which account would normally not require an adjusting 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

An adjusting entry to accrue an incurred expense will affect total liabilities.

Which one of the accounts below would likely be included in an accrual adjusting entry?

The unearned rent account has a balance of $72,000. If $18,000 of the $72,000 is unearned at the end of the accounting period, the amount of the adjusting entry is

Adjusting entries affect only expense and asset accounts.

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

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?

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.

Which of the following is considered to be unearned revenue?

A company pays $360 for a yearly trade magazine on August 1. The adjusting entry on December 31 is debit Unearned Subscription Revenue, $150 and credit Subscription Revenue, $150.

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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