Question 1

Accumulated Depreciation accounts are liability accounts.

Accepted Answer

A) True 
 B)False

Question 2

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 3

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

Accepted Answer

A)  Total assets will be understated at the end of the current year. 
B)  The balance sheet and income statement will be misstated but the statement of owner's equity will be correct for the current year. 
C)  Net income will be overstated for the current year. 
D)  Total liabilities and total assets will be understated. 
A)  Total assets will be understated at the end of the current year. 
B)  The balance sheet and income statement will be misstated but the statement of owner's equity will be correct for the current year. 
C)  Net income will be overstated for the current year. 
D)  Total liabilities and total assets will be understated.

Question 4

On January 1st, Power House Co. prepays the year's rent, $10,140 to its landlord. Prepare the journal entry by recording the prepayment to an asset account.

Accepted Answer

The answer of On January 1st, Power House Co. prepays...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

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

The answer of At the end of April, the first...

Question 8

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 total 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 9

Two income statements for PS Enterprises are shown below:   Prepare a vertical analysis of PS Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?

Accepted Answer

A)  Yes, increased by 5%. 
B)  Yes, increased by 111%. 
C)  No, decreased by 5%. 
D)  None are correct. 
A)  Yes, increased by 5%. 
B)  Yes, increased by 111%. 
C)  No, decreased by 5%. 
D)  None are correct.

Question 10

Revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

Accepted Answer

A) True 
 B)False

Question 11

Classify the following items as: (1) prepaid expense, (2) unearned revenue, (3) accrued expense, or (4) accrued revenue.
a) Fees received but not yet earned.
b) Fees earned but not yet received.
c) Paid premium on a one-year insurance policy.
d) Property tax accrual

Accepted Answer

a) (2) unearned reve

Question 12

Which one of the following accounts below would likely be included in a deferral adjusting entry?

Accepted Answer

A)  Interest Revenue 
B)  Unearned Revenue 
C)  Salaries Payable 
D)  Accounts Receivable 
A)  Interest Revenue 
B)  Unearned Revenue 
C)  Salaries Payable 
D)  Accounts Receivable

Question 13

The financial statements are prepared from the unadjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 14

The entry to adjust the accounts for wages accrued at the end of the accounting period is

Accepted Answer

A)  debit Wages Payable; credit Wages Income 
B)  debit Wages Income; credit Wages Payable 
C)  debit Wages Payable; credit Wages Expense 
D)  debit Wages Expense; credit Wages Payable 
A)  debit Wages Payable; credit Wages Income 
B)  debit Wages Income; credit Wages Payable 
C)  debit Wages Payable; credit Wages Expense 
D)  debit Wages Expense; credit Wages Payable

Question 15

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Accepted Answer

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

Question 16

What is the purpose of the adjusted trial balance?

Accepted Answer

A)  to verify that all of the adjusting entries have been posted 
B)  to verify that the net income (loss) is correctly reported 
C)  to verify that no adjusting journal entry has been omitted. 
D)  to verify that the debits and credits balance 
A)  to verify that all of the adjusting entries have been posted 
B)  to verify that the net income (loss) is correctly reported 
C)  to verify that no adjusting journal entry has been omitted. 
D)  to verify that the debits and credits balance

Question 17

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

Accepted Answer

A)  Total assets at the end of the year will be understated. 
B)  Owner's equity at the end of the year will be understated. 
C)  Net income for the year will be overstated. 
D)  Insurance Expense will be overstated. 
A)  Total assets at the end of the year will be understated. 
B)  Owner's equity at the end of the year will be understated. 
C)  Net income for the year will be overstated. 
D)  Insurance Expense will be overstated.

Question 18

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 19

Generally accepted accounting principles require accrual-basis accounting.

Accepted Answer

A) True 
 B)False

Question 20

Listed below are accounts to use for transactions (a) through (j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.

Accepted Answer

The answer of Listed below are accounts to use for...

Exam 3: The Adjusting Process

Accumulated Depreciation accounts are liability accounts.

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

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?

On January 1st, Power House Co. prepays the year's rent, $10,140 to its landlord. Prepare the journal entry by recording the prepayment to an asset account.

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

The net book value of a fixed asset is determined by

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 total to be unequal, indicate whether the debit or credit total is higher and by how much.

Two income statements for PS Enterprises are shown below: Prepare a vertical analysis of PS Enterprises' income statements. Has operating income increased or decreased as a percentage of revenue?

Revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

Classify the following items as: (1) prepaid expense, (2) unearned revenue, (3) accrued expense, or (4) accrued revenue. a) Fees received but not yet earned. b) Fees earned but not yet received. c) Paid premium on a one-year insurance policy. d) Property tax accrual

Which one of the following accounts below would likely be included in a deferral adjusting entry?

The financial statements are prepared from the unadjusted trial balance.

The entry to adjust the accounts for wages accrued at the end of the accounting period is

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

What is the purpose of the adjusted trial balance?

At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

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

Generally accepted accounting principles require accrual-basis accounting.

Listed below are accounts to use for transactions (a) through (j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.

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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