Question 1

Depreciation measures the decline in market value of an asset.

Accepted Answer

A) True 
 B)False

Question 2

The adjusted trial balance contains information pertaining to:

Accepted Answer

A)  Asset accounts only. 
B)  Balance sheet accounts only. 
C)  Income statement accounts only. 
D)  All general ledger accounts. 
E)  Revenue accounts only. 
A)  Asset accounts only. 
B)  Balance sheet accounts only. 
C)  Income statement accounts only. 
D)  All general ledger accounts. 
E)  Revenue accounts only.

Question 3

Alex Company rents space to a tenant for $2,200 per month. The tenant currently owes two months rent, November and December. The tenant has agreed to pay the November, December, and January rents in full on January 15 and has agreed not to fall behind again. The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Rent Receivable, $6,600; credit Rent Earned, $6,600. 
B)  Debit Unearned Rent, $4,400; credit Rent Earned, $4,400. 
C)  Debit Unearned Rent, $2,200; credit Rent Earned, $2,200. 
D)  Debit Rent Receivable, $4,400; credit Rent Earned, $4,400. 
E)  Debit Rent Receivable, $2,200; credit Rent Earned, $2,200. 
A)  Debit Rent Receivable, $6,600; credit Rent Earned, $6,600. 
B)  Debit Unearned Rent, $4,400; credit Rent Earned, $4,400. 
C)  Debit Unearned Rent, $2,200; credit Rent Earned, $2,200. 
D)  Debit Rent Receivable, $4,400; credit Rent Earned, $4,400. 
E)  Debit Rent Receivable, $2,200; credit Rent Earned, $2,200.

Question 4

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 5

Which of the following assets is not depreciated?

Accepted Answer

A)  Store fixtures. 
B)  Computers. 
C)  Land. 
D)  Buildings. 
E)  All of these are depreciated. 
A)  Store fixtures. 
B)  Computers. 
C)  Land. 
D)  Buildings. 
E)  All of these are depreciated.

Question 6

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

Accepted Answer

A)  A debit to Cash and a credit to Salaries Payable. 
B)  A debit to Cash and a credit to Prepaid Salaries. 
C)  A debit to Salaries Payable and a credit to Cash. 
D)  A debit to Salaries Payable and a credit to Salaries Expense. 
E)  No entry would be necessary on January 5. 
A)  A debit to Cash and a credit to Salaries Payable. 
B)  A debit to Cash and a credit to Prepaid Salaries. 
C)  A debit to Salaries Payable and a credit to Cash. 
D)  A debit to Salaries Payable and a credit to Salaries Expense. 
E)  No entry would be necessary on January 5.

Question 7

Explain how accounting adjustments affect financial statements.

Accepted Answer

Without accounting adjustments many acco

Question 8

Identify the differences between accrual accounting and cash basis accounting.

Accepted Answer

Accrual accounting records revenues in t

Question 9

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Accepted Answer

Unadjusted

Question 10

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows
Present the four adjusting journal entries that were recorded by Black Company.

Accepted Answer

The answer of Black Company's unadjusted and adjusted trial balances...

Question 11

Topflight Company had $1,500 of store supplies at the beginning of the current year. During this year, Topflight purchased $8,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the amount of Topflight Company's store supplies expense for the current year.

Accepted Answer

$1,500 + $

Question 12

A company's fiscal year must correspond with the calendar year.

Accepted Answer

A) True 
 B)False

Question 13

On December 31, Connelly Company had performed $5,000 of management services for clients that had not yet been billed. Prepare Connelly's adjusting entry to record these fees earned.
Answer will vary

Accepted Answer

The answer of On December 31, Connelly Company had performed...

Question 14

A trial balance prepared before any adjustments have been recorded is:

Accepted Answer

A)  An adjusted trial balance. 
B)  Used to prepare financial statements. 
C)  An unadjusted trial balance. 
D)  Correct with respect to proper balance sheet and income statement amounts. 
E)  Only prepared once a year. 
A)  An adjusted trial balance. 
B)  Used to prepare financial statements. 
C)  An unadjusted trial balance. 
D)  Correct with respect to proper balance sheet and income statement amounts. 
E)  Only prepared once a year.

Question 15

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Accepted Answer

A)  Recognition principle. 
B)  Cost principle. 
C)  Cash basis of accounting. 
D)  Matching principle. 
E)  Time period principle. 
A)  Recognition principle. 
B)  Cost principle. 
C)  Cash basis of accounting. 
D)  Matching principle. 
E)  Time period principle.

Question 16

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

Accepted Answer

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

Question 17

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Accepted Answer

A)  Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250. 
B)  Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500. 
C)  Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500. 
D)  Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750. 
E)  Debit Cash, $7,750; Credit Prepaid Insurance, $7,750. 
A)  Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250. 
B)  Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500. 
C)  Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500. 
D)  Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750. 
E)  Debit Cash, $7,750; Credit Prepaid Insurance, $7,750.

Question 18

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

Accepted Answer

A)  Accumulated depreciation. 
B)  A contra account. 
C)  The matching principle. 
D)  Depreciation expense. 
E)  An accrued account. 
A)  Accumulated depreciation. 
B)  A contra account. 
C)  The matching principle. 
D)  Depreciation expense. 
E)  An accrued account.

Question 19

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 20

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts and Preparing Financial Statements

Depreciation measures the decline in market value of an asset.

The adjusted trial balance contains information pertaining to:

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

Which of the following assets is not depreciated?

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

Explain how accounting adjustments affect financial statements.

Identify the differences between accrual accounting and cash basis accounting.

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows Present the four adjusting journal entries that were recorded by Black Company.

A company's fiscal year must correspond with the calendar year.

On December 31, Connelly Company had performed $5,000 of management services for clients that had not yet been billed. Prepare Connelly's adjusting entry to record these fees earned. Answer will vary

A trial balance prepared before any adjustments have been recorded is:

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

A salary owed to employees is an example of an accrued 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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

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

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