Question 1

In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.

Accepted Answer

A) True 
 B)False

Question 2

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A) Accrual basis accounting. 
B) Operating cycle accounting. 
C) Cash basis accounting. 
D) Revenue recognition accounting. 
E) Current basis accounting. 
A) Accrual basis accounting. 
B) Operating cycle accounting. 
C) Cash basis accounting. 
D) Revenue recognition accounting. 
E) Current basis accounting.

Question 3

An annual reporting period consisting of any twelve consecutive months is known as:

Accepted Answer

A) Fiscal year. 
B) Calendar year. 
C) Interim financial period. 
D) Natural business year. 
E) Seasonal year. 
A) Fiscal year. 
B) Calendar year. 
C) Interim financial period. 
D) Natural business year. 
E) Seasonal year.

Question 4

On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will the balance be in the Prepaid Insurance account on the Balance Sheet for the current year ended December 31?

Accepted Answer

A) $1,200. 
B) $2,400. 
C) $1,000. 
D) $400. 
E) $1,400. 
A) $1,200. 
B) $2,400. 
C) $1,000. 
D) $400. 
E) $1,400.

Question 5

Using the information presented below, prepare a statement of retained earnings and balance sheet from the adjusted trial balance of Dodson Containers, Inc.

Accepted Answer

The answer of Using the information presented below, prepare a...

Question 6

Each adjusting entry will affect a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 7

On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Accepted Answer

A) $750. 
B) $5,270. 
C) $6,000. 
D) $6,750. 
E) $18,000. 
A) $750. 
B) $5,270. 
C) $6,000. 
D) $6,750. 
E) $18,000.

Question 8

Depreciation measures the decline in market value of an asset.

Accepted Answer

A) True 
 B)False

Question 9

Record the December 31 adjusting entries for the following transactions and events in general journal form. Assume that December 31 is the end of the annual accounting period.
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a two-year fire insurance policy that was purchased on October 1 of the current year and has not been adjusted to-date.
b. The Store Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on hand.
c. On November 1 of the current year, Rent Earned was credited for $1,500. This amount represented the rent earned for a three-month period beginning November 1.
d. Estimated depreciation on store equipment is $600.
e. Accrued salaries amount to $1,400.

Accepted Answer

The answer of Record the December 31 adjusting entries for...

Question 10

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Accepted Answer

A) Accounting period. 
B) Operating cycle. 
C) Accounting cycle. 
D) Closing cycle. 
E) Natural business year. 
A) Accounting period. 
B) Operating cycle. 
C) Accounting cycle. 
D) Closing cycle. 
E) Natural business year.

Question 11

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Accepted Answer

A) Prepare a work sheet. 
B) Prepare reversing entries. 
C) Close temporary accounts. 
D) Prepare a post-closing trial balance. 
E) Prepare an unadjusted trial balance. 
A) Prepare a work sheet. 
B) Prepare reversing entries. 
C) Close temporary accounts. 
D) Prepare a post-closing trial balance. 
E) Prepare an unadjusted trial balance.

Question 12

Permanent accounts carry their balances into the next accounting period.

Accepted Answer

A) True 
 B)False

Question 13

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

Accepted Answer

A) Balance Sheet-Credit and Income Statement-Credit. 
B) Balance Sheet Retained Earnings-Debit and Income Statement-Debit. 
C) Income Statement-Debit and Income Statement-Credit. 
D) Balance Sheet-Debit and Balance Sheet -Credit. 
E) Balance Sheet-Debit; and Income Statement-Credit. 
A) Balance Sheet-Credit and Income Statement-Credit. 
B) Balance Sheet Retained Earnings-Debit and Income Statement-Debit. 
C) Income Statement-Debit and Income Statement-Credit. 
D) Balance Sheet-Debit and Balance Sheet -Credit. 
E) Balance Sheet-Debit; and Income Statement-Credit.

Question 14

On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?

Accepted Answer

A) $1,200. 
B) $2,400. 
C) $1,000. 
D) $400. 
E) $1,400. 
A) $1,200. 
B) $2,400. 
C) $1,000. 
D) $400. 
E) $1,400.

Question 15

Revenue, expense, and dividend accounts, which are closed at the end of each accounting period, are:

Accepted Answer

A) Real accounts. 
B) Temporary accounts. 
C) Closing accounts. 
D) Permanent accounts. 
E) Balance sheet accounts. 
A) Real accounts. 
B) Temporary accounts. 
C) Closing accounts. 
D) Permanent accounts. 
E) Balance sheet accounts.

Question 16

When there is a net loss the Income Summary account would have a credit balance.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

Accepted Answer

A) Land. 
B) Dividends. 
C) Accounts Payable. 
D) Unearned Revenue. 
E) Prepaid Insurance. 
A) Land. 
B) Dividends. 
C) Accounts Payable. 
D) Unearned Revenue. 
E) Prepaid Insurance.

Question 18

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Accepted Answer

A) Accrued expense. 
B) Contra account. 
C) Accrued revenue. 
D) Intangible asset. 
E) Adjunct account. 
A) Accrued expense. 
B) Contra account. 
C) Accrued revenue. 
D) Intangible asset. 
E) Adjunct account.

Question 19

Adjusting entries:

Accepted Answer

A) Affect only income statement accounts. 
B) Affect only balance sheet accounts. 
C) Affect both income statement and balance sheet accounts. 
D) Affect cash accounts. 
E) Affect only equity accounts. 
A) Affect only income statement accounts. 
B) Affect only balance sheet accounts. 
C) Affect both income statement and balance sheet accounts. 
D) Affect cash accounts. 
E) Affect only equity accounts.

Question 20

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a. Estimated depreciation on equipment for the year, $4,500.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of insurance policies shows $600 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies shows $950 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday, December 29, 30, and 31.
e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $1,000 per month has not paid his rent for December.

Accepted Answer

The answer of Prepare general journal entries on December 31...

In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

An annual reporting period consisting of any twelve consecutive months is known as:

On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will the balance be in the Prepaid Insurance account on the Balance Sheet for the current year ended December 31?

Using the information presented below, prepare a statement of retained earnings and balance sheet from the adjusted trial balance of Dodson Containers, Inc.

Each adjusting entry will affect a balance sheet account.

On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Depreciation measures the decline in market value of an asset.

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Permanent accounts carry their balances into the next accounting period.

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?

Revenue, expense, and dividend accounts, which are closed at the end of each accounting period, are:

When there is a net loss the Income Summary account would have a credit balance.

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Adjusting entries:

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 3: Adjusting Accounts for Financial Statements

In preparing statements from the adjusted trial balance, the balance sheet must be prepared first.

The system of preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

An annual reporting period consisting of any twelve consecutive months is known as:

On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will the balance be in the Prepaid Insurance account on the Balance Sheet for the current year ended December 31?

Using the information presented below, prepare a statement of retained earnings and balance sheet from the adjusted trial balance of Dodson Containers, Inc.

Each adjusting entry will affect a balance sheet account.

On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Depreciation measures the decline in market value of an asset.

The recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance, is referred to as the:

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Permanent accounts carry their balances into the next accounting period.

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the current year ended December 31?

Revenue, expense, and dividend accounts, which are closed at the end of each accounting period, are:

When there is a net loss the Income Summary account would have a credit balance.

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

An account linked with another account that has an opposite normal balance and is subtracted from the balance of the related account is a(n):

Adjusting entries:

Introducing Financial Accounting

Accounting System and Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters