Question 1

The adjusting entry to record an accrued expense is:

Accepted Answer

A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability. 
A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability.

Question 2

______________________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ________________________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

The answer of ______________________ basis accounting means that revenues are...

Question 3

The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:

Accepted Answer

A)  Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400. 
B)  Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400. 
C)  Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200. 
D)  Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200. 
E)  Debit Cash, $4,800; Credit Prepaid Insurance, $4,800. 
A)  Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400. 
B)  Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400. 
C)  Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200. 
D)  Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200. 
E)  Debit Cash, $4,800; Credit Prepaid Insurance, $4,800.

Question 4

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

Accepted Answer

A)  Account form balance sheet. 
B)  Report form balance sheet. 
C)  Interim balance sheet. 
D)  Classified balance sheet. 
E)  Unclassified balance sheet. 
A)  Account form balance sheet. 
B)  Report form balance sheet. 
C)  Interim balance sheet. 
D)  Classified balance sheet. 
E)  Unclassified balance sheet.

Question 5

All of the following statements regarding profit margin are true except:

Accepted Answer

A)  Profit margin reflects the percent of profit in each dollar of revenue. 
B)  Profit margin is also called return on sales. 
C)  Profit margin can be used to compare a firm's performance to its competitors. 
D)  Profit margin is calculated by dividing net income by net sales. 
E)  Profit margin is not a useful measure of a company's operating results. 
A)  Profit margin reflects the percent of profit in each dollar of revenue. 
B)  Profit margin is also called return on sales. 
C)  Profit margin can be used to compare a firm's performance to its competitors. 
D)  Profit margin is calculated by dividing net income by net sales. 
E)  Profit margin is not a useful measure of a company's operating results.

Question 6

What are the types of adjusting entries used for accrued expenses and accrued revenues?

Accepted Answer

Accrued expenses are expenses that have

Question 7

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

Accepted Answer

The answer of ______________________ are required at the end of...

Question 8

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Accepted Answer

A)  Depreciation Expense. 
B)  Unearned Depreciation. 
C)  Prepaid Depreciation. 
D)  Depreciation Value. 
E)  Book Value. 
A)  Depreciation Expense. 
B)  Unearned Depreciation. 
C)  Prepaid Depreciation. 
D)  Depreciation Value. 
E)  Book Value.

Question 9

Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek. The employees are paid each Friday. This year the accounting period ends on Tuesday. Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue wages.

Accepted Answer

The answer of Barnes Company has 20 employees who are...

Question 10

On October 15, a company received $15,000 cash as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October.
Revenue = $15,000 x 10% = $1,500

Accepted Answer

A) True 
 B)False

Question 11

Adjusting entries result in a better matching of revenues and expenses for the period.

Accepted Answer

A) True 
 B)False

Question 12

During the current year ended December 31, clients paid fees in advance for accounting services amounting to $25,000. These fees were recorded in an account called Unearned Accounting Fees. If $3,500 of these fees remain unearned on December 31 of this year present the December 31 adjusting entry to bring the accounts up to date.

Accepted Answer

The answer of During the current year ended December 31,...

Question 13

Adjusting entries are made after the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 14

Under the accrual basis of accounting, adjustments are often made for prepaid expenses and unearned revenues.

Accepted Answer

A) True 
 B)False

Question 15

The unadjusted trial balance and the adjustment data for Harris Training Institute are given below along with adjusting entry information. What is the impact of the adjusting entries on the balance sheet? Show calculation for total assets, total liabilities, and owner's equity without the adjustments; show calculation for total assets, total liabilities, and owner's equity with the adjustments. Which one gives the most accurate presentation of the balance sheet?   Additional information items:
a. The Prepaid Insurance account consists of a payment for a 1 year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.
b. A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent.
c. Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

Accepted Answer

The answer of The unadjusted trial balance and the adjustment...

Question 16

______________________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ______________________ revenues are liabilities requiring delivery of...

Question 17

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

Accepted Answer

The answer of Companies experiencing seasonal variations in sales often...

Question 18

A company pays each of its two office employees each Friday at the rate of $100 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is:

Accepted Answer

A)  Debit Unpaid Salaries $600 and credit Salaries Payable $600. 
B)  Debit Salaries Expense $400 and credit Salaries Payable $400. 
C)  Debit Salaries Expense $600 and credit Salaries Payable $600. 
D)  Debit Salaries Payable $400 and credit Salaries Expense $400. 
E)  Debit Salaries Expense $400 and credit Cash $400. 
A)  Debit Unpaid Salaries $600 and credit Salaries Payable $600. 
B)  Debit Salaries Expense $400 and credit Salaries Payable $400. 
C)  Debit Salaries Expense $600 and credit Salaries Payable $600. 
D)  Debit Salaries Payable $400 and credit Salaries Expense $400. 
E)  Debit Salaries Expense $400 and credit Cash $400.

Question 19

All of the following are True regarding prepaid expenses except:

Accepted Answer

A)  They are paid for in advance of receiving their benefits. 
B)  They are assets. 
C)  When they are used, their costs become expenses. 
D)  The adjusting entry for prepaid expenses increases expenses and increases liabilities. 
E)  The adjusting entry for prepaid expenses increases expenses and decreases assets. 
A)  They are paid for in advance of receiving their benefits. 
B)  They are assets. 
C)  When they are used, their costs become expenses. 
D)  The adjusting entry for prepaid expenses increases expenses and increases liabilities. 
E)  The adjusting entry for prepaid expenses increases expenses and decreases assets.

Question 20

Failure to record depreciation expense will overstate the asset and understate the expense.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

The adjusting entry to record an accrued expense is:

______________________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ________________________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

All of the following statements regarding profit margin are true except:

What are the types of adjusting entries used for accrued expenses and accrued revenues?

______________________ are required at the end of the accounting period because certain internal transactions and events remain unrecorded.

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Barnes Company has 20 employees who are each paid $80 per day for a 5-day workweek. The employees are paid each Friday. This year the accounting period ends on Tuesday. Prepare the December 31 year-end adjusting journal entry Barnes Company should make to accrue wages.

Adjusting entries result in a better matching of revenues and expenses for the period.

Adjusting entries are made after the preparation of financial statements.

Under the accrual basis of accounting, adjustments are often made for prepaid expenses and unearned revenues.

______________________ revenues are liabilities requiring delivery of products and for services.

Companies experiencing seasonal variations in sales often choose a fiscal year corresponding to their ________________________ year.

All of the following are True regarding prepaid expenses except:

Failure to record depreciation expense will overstate the asset and understate the expense.

Accounting in Business

Analyzing and Recording Transactions

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

Filters

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. __ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.