Question 1

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

Accepted Answer

A)  expenses understated and therefore net income overstated 
B)  revenues understated and therefore net income understated 
C)  expenses understated and therefore net income understated 
D)  expenses overstated and therefore net income understated 
A)  expenses understated and therefore net income overstated 
B)  revenues understated and therefore net income understated 
C)  expenses understated and therefore net income understated 
D)  expenses overstated and therefore net income understated

Question 2

Complete the missing items in the following chart:

Accepted Answer

The answer of Complete the missing items in the following...

Question 3

Requirement: Make the journal entries for both of the following:
(a) On December 1, $18,000 was received for a service contract to be performed from December 1 through until April 30.
(b) If the service work for this contract is performed evenly and on a regular basis throughout this period, prepare the adjusting journal entry as of year-end, December 31.

Accepted Answer

The answer of Requirement: Make the journal entries for both...

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Unearned revenue is a liability.

Accepted Answer

A) True 
 B)False

Question 6

Accrued expenses are ordinarily reported on the balance sheet as

Accepted Answer

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

Question 7

How will the following adjusting journal entry affect the accounting equation?

Accepted Answer

A)  Increase assets, increase revenues 
B)  Increase liabilities, increase revenues 
C)  Decrease liabilities, increase revenues 
D)  Decrease liabilities, decrease revenues 
A)  Increase assets, increase revenues 
B)  Increase liabilities, increase revenues 
C)  Decrease liabilities, increase revenues 
D)  Decrease liabilities, decrease revenues

Question 8

The revenue recognition concept

Accepted Answer

A)  is not in conflict with the cash method of accounting 
B)  determines when revenue is credited to a revenue account 
C)  states that revenue is not recorded until the cash is received 
D)  controls all revenue reporting for the cash basis of accounting 
A)  is not in conflict with the cash method of accounting 
B)  determines when revenue is credited to a revenue account 
C)  states that revenue is not recorded until the cash is received 
D)  controls all revenue reporting for the cash basis of accounting

Question 9

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 10

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Accepted Answer

A)  debit Unearned Rent; credit Rent Revenue 
B)  debit Rent Revenue; credit Unearned Rent 
C)  debit Unearned Rent; credit Prepaid Rent 
D)  debit Rent Expense; credit Unearned Rent 
A)  debit Unearned Rent; credit Rent Revenue 
B)  debit Rent Revenue; credit Unearned Rent 
C)  debit Unearned Rent; credit Prepaid Rent 
D)  debit Rent Expense; credit Unearned Rent

Question 11

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.

Accepted Answer

A) True 
 B)False

Question 13

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

The answer of At January 31, the end of the...

Question 14

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 15

A company purchases a one-year insurance policy on June 1 for $2,760. The adjusting entry on December 31 is

Accepted Answer

A)  debit Insurance Expense, $1,380 and credit Prepaid Insurance, $1,380. 
B)  debit Insurance Expense, $1,150 and credit Prepaid Insurance, $1,150. 
C)  debit Insurance Expense, $1,610, and credit Prepaid Insurance, $1,610. 
D)  debit Prepaid Insurance, $1,380, and credit Cash, $1,380. 
A)  debit Insurance Expense, $1,380 and credit Prepaid Insurance, $1,380. 
B)  debit Insurance Expense, $1,150 and credit Prepaid Insurance, $1,150. 
C)  debit Insurance Expense, $1,610, and credit Prepaid Insurance, $1,610. 
D)  debit Prepaid Insurance, $1,380, and credit Cash, $1,380.

Question 16

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The last pay day of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30, journalize the adjusting entry necessary at the end of the fiscal period (December 31).

Accepted Answer

$20,000/10

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A company pays $6,500 for two season tickets on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is debit Cash, $2,500 and credit Ticket Revenue, $2,500.

Accepted Answer

A) True 
 B)False

Question 19

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Accepted Answer

$22,800/24

Exam 3: The Adjusting Process

The adjusting entry to adjust supplies was omitted at the end of the year. This would effect the income statement by having

Complete the missing items in the following chart:

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

Unearned revenue is a liability.

Accrued expenses are ordinarily reported on the balance sheet as

How will the following adjusting journal entry affect the accounting equation?

The revenue recognition concept

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.

The adjusted trial balance verifies that total debits equals total credits before the adjusting entries are prepared.

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.

A company purchases a one-year insurance policy on June 1 for $2,760. The adjusting entry on December 31 is

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

A company pays $6,500 for two season tickets on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is debit Cash, $2,500 and credit Ticket Revenue, $2,500.

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

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

Filters