Deck 3: Adjusting and Closing Entries

Question 1

Part of accrual accounting depends upon recording __________ entries at the end of the fiscal year.

Answer 1

adjusting

Question 2

An example of a contra-account would be accumulated depreciation.

Answer 2

True

Question 3

The majority of businesses normally end their fiscal year on:

A) June 30.
B) September 30.
C) December 31.
D) April 1.
E) some other date.

Answer 3

December 31.

Question 4

Recording office supplies as an asset after paying for them would be considered a deferral.

Question 5

The supplies account must be adjusted to reflect how many supplies were used during the period.

Question 6

Accounting for revenue on an accrual basis means that no entry of revenue is made until the cash is actually received.

Question 7

IFRS requires the use of accrual accounting.

Question 8

Adjusting entries are made only for accrued revenues and accrued expenses.

Question 9

It is necessary to post:

A) asset and liability entries.
B) revenue and expense entries.
C) adjusting entries.
D) all journal entries.
E) only retained earning entries

Question 10

Which of the following accounts would be adjusted?

A) Cash
B) Depreciation Expense
C) Land
D) Notes Payable
E) Petty Cash

Question 11

There are two types of accounting methods, cash and accrual. Review the two examples, and identify the accounting method.
1. If revenues are recognized and recorded when earned, the company is using the __________ basis of accounting.
2. If a business records expenses when paid, the company is using the __________ basis of accounting

Question 12

Land must be adjusted for depreciation at the end of the period.

Question 13

The type of accounting required by IFRS is:

A) modified cash.
B) hybrid cash.
C) cash.
D) accrual.
E) international cash

Question 14

Fixed assets that are depreciated are sometimes called:

A) accounts payable.
B) current assets.
C) long-term assets.
D) long-term liabilities.

Question 15

It does not matter when a fiscal year starts as long as it is twelve consecutive months long.

Question 16

Adjusting entries are used to update accounts at the end of an accounting period.

Question 17

Which of the following accounts would never be adjusted in a journal entry?

A) Prepaid rent
B) Supplies
C) Inventory
D) Cash
E) Depreciation

Question 18

At the end of the period, which is prepared first?

A) Income statement
B) Balance sheet
C) Adjusting entries
D) Unadjusted trial balance
E) Retained earnings statement

Question 19

Unearned ticket revenue must be adjusted to show how much of the deferred revenue has been earned during the period.

Question 20

Because inventories are high, Sears should end its fiscal year in either November or December.

Question 21

Season ticket monies received in advance would be an example of a(n) __________.

Question 22

A plot of land with a cost of $15,000, a salvage value of $3,000, and expected life of 20 years was purchased on September 1. What will be the depreciation expense recorded on December 31?

Question 23

Adjusting entries for supplies and prepaid rent would be adjustments for __________.

Question 24

Interest revenue would be an example of a(n) __________.

Question 25

The difference between the cost of office equipment and accumulated depreciation-office equipment is called __________.

Question 26

Collecting rent from a client three months in advance would be an example of a(n) __________.

Question 27

The value of an asset after all allowable depreciation has been taken is called __________.

Question 28

A 20-month insurance policy was purchased for $1,500 on May 1. How much insurance will be expensed on December 31?

Question 29

Prepaying supplies in advance would be an example of a(n) __________.

Question 30

Accounts receivable would be an example of a(n) __________.

Question 31

Items for which we have received payment, but have not yet delivered the service, are called __________.

Question 32

Taxes payable would be an example of a(n) __________.

Question 33

Prepaid rent would be an example of a(n) __________.

Question 34

The total dollars in an accumulated depreciation account are:

A) added to the corresponding asset account.
B) divided into the corresponding asset account.
C) subtracted from the corresponding asset account.
D) subtracted from the corresponding liability account.
E) divided into the corresponding liability account

Question 35

If a piece of equipment was purchased on September 1, it would have ________ months depreciation included in the adjusting entry for the year ended December 31.

Question 36

Wages payable would be an example of a(n) __________.

Question 37

Item costs that have been incurred, but not yet paid, are called __________.

Question 38

Depreciation would be an example of a(n) __________.

Question 39

Income taxes payable would be an example of a(n) __________.

Question 40

Unearned subscriptions revenue would be an example of a(n) __________.

Question 41

Record the following entries for March 31. Explanations are not required.
a. Interest incurred but not yet paid of $76.
b. Wages incurred but not yet paid of $498.
c. A count of supplies shows a balance of $589 on hand of the original $734.

Question 42

Supplies on hand were $777 of the original $1,034. Calculate the adjusting amount for supplies for the year 2.

Question 43

The adjusted trial balance is prepared before the adjusting entries are completed and posted.

Question 44

Using the adjusted trial balance, the first financial statement to prepare is the income statement.

Question 45

A piece of equipment cost $1,000 and has a salvage value of $200. If it has an 8-year life. Calculate the annual depreciation expense under straight-line depreciation.

Question 46

Rick Company bought a 2-year insurance policy on August 1 for $150 per month. Prepare the adjusting entry on December 31.

Question 47

Supplies on hand were $900 at the start of the year. At the end of the year, it was determined that $350 of supplies had been used. What is the adjusting entry for supplies?

Question 48

A machine with a salvage value of $4,000 and a cost of $36,000 was purchased on January 1, 2012. What is the depreciation expense for 2012 if the company uses straight-line depreciation for 10 years?

Question 49

Journalize the following entries for September 30. Explanations are not required.
a. Expired prepaid rent for the year was $3,400.
b. Supplies used during the year were $1,022.

Question 50

Record the following entries for March 31. Explanations are not required.
a. The balance of the prepaid rent account is $1,200 of the original $3,000.
b. The balance of the unearned revenue account is $5,000 of the original $7,500.
c. Depreciation on machinery is 15% of the depreciable cost of $10,000.

Question 51

Journalize the following entries for December 31. Explanations are not required.
a. Income tax incurred but not yet paid for $1,346.
b. Supplies used for $568.
c. Earned subscription revenue of $800 out of $1,000 of unearned revenue.

Question 52

During a recent week, incurred wages were $700. However, $280 of the wages had not been paid. Prepare the adjusting entry for wages.

Question 53

After preparing the adjusted trial balance, those figures are used to complete the balance sheet only.

Question 54

Journalize the following entries for March 31. Explanations are not required.
a. A machine costing $7,000 with no salvage value was purchased on March 1 and straight-line depreciation is being used. The life is 5 years.
b. Unearned revenue was earned at the rate of $300 per month, starting November 1.
c. Wages incurred but not paid are $2,300.

Question 55

A machine costing $45,000 has a life of 12 years. The salvage value is $10,000. It was purchased on February 1. Calculate the depreciation expense for the year.

Question 56

Journalize the following entries for December 31. Explanations are not required.
a. Depreciation expense on office equipment was $639.
b. Used supplies for the year was $1,057.
c. Earned subscription revenue for the year was $875.

Question 57

Journalize the following entries for December 31. Explanations are not required.
a. Wages incurred but not yet paid for $256.
b. Interest earned but not yet received for $190.
c. Depreciation expense on machinery for $388.

Question 58

Journalize the following entries for December 31. Explanations are not required.
a. Beginning supplies were $2,096. Ending supplies were $923.
b. Beginning interest expense was $0. Accrued interest expense is $777.
c. Wages incurred but not yet paid are $1,135.

Question 59

At the beginning of the period, the supplies account has a balance of $500. At the end of the period, the balance in the account was $275. Prepare the adjusting entry.

Question 60

Classify the following items as prepaid expenses (PE), unearned revenue (UR), accrued expenses (AE), or accrued revenue (AR).

Question 61

The adjusted trial balance total:

A) is equal to the unadjusted trial balance total.
B) is greater than the unadjusted trial balance total.
C) is less than the unadjusted trial balance total.
D) has no direct relationship to the unadjusted trial balance total.
E) is equal to the unadjusted trial balance.

Question 62

The adjusted trial balance for the land account:

A) must be equal to the unadjusted trial balance total.
B) must be greater than the unadjusted trial balance total.
C) must be less than the unadjusted trial balance total.
D) has no relationship to the unadjusted trial balance total.
E) must never be equal to the unadjusted trial balance total.

Question 63

The statement of retained earnings that is prepared from the adjusted trial balance begins with the __________.

Question 64

The income statement that is prepared from the adjusted trial balance begins with the __________.

Question 65

The adjusted trial balance for the supplies account:

A) is equal to the unadjusted trial balance total.
B) is greater than the unadjusted trial balance total.
C) is less than the unadjusted trial balance total.
D) has no relationship to the unadjusted trial balance total.
E) has no relationship to the trial balance total.

Question 66

Adjusting entries are completed before the unadjusted trial balance is prepared.

Question 67

The unadjusted trial balance for prepaid insurance shows a $1,350 balance. $500 of the balance was unexpired at year end. The adjusted trial balance for prepaid insurance is a __________.

Question 68

The adjusted trial balance shows:

A) accounts that may still be out of balance.
B) revenues and expense amounts only.
C) assets, liabilities, and revenue amounts only.
D) numbers ready to be transferred to the financial statements.
E) assets, liabilities, and shareholder's equity amounts only.

Question 69

Net income or net loss can be determined by the adjusted trial balance figures.

Question 70

The adjusted trial balance is the basis for the preparation of the __________.

Question 71

The unadjusted trial balance lists supplies with a $678 balance. After taking an inventory of supplies, it was found that $390 were on hand. The adjustment for supplies expense is a __________.

Question 72

The adjusted trial balance proves that:

A) all adjusting entries have been recorded correctly.
B) debit totals equal credit totals.
C) no adjusting entry has been entered twice.
D) the balance of the adjusted trial balance is correct.
E) there are no errors.

Question 73

The unadjusted trial balance for depreciation expense shows a $780 balance. The expense was adjusted by $235. The adjusted trial balance figure for depreciation expense is now a __________.

Question 74

The unadjusted trial balance for prepaid rent shows a $12,000 balance. At the end of the year, $7,000 of the rent had been used. The adjusted trial balance for prepaid rent is a __________.

Question 75

The dollar figures in the adjusted columns are added to or subtracted from the unadjusted trial balance amounts to determine the adjusted trial balance figures.

Question 76

The unadjusted trial balance for supplies shows a $434 balance and a $132 adjustment. The adjusted trial balance for supplies would be a __________.

Question 77

The adjusted trial balance for the accumulated depreciation account:

A) is equal to the unadjusted trial balance total.
B) is greater than the unadjusted trial balance total.
C) is less than the unadjusted trial balance total.
D) has no relationship to the unadjusted trial balance total.
E) has no relationship to the trial balance total.

Question 78

The balance in the depreciation expense account on the adjusted trial balance:

A) is equal to the unadjusted trial balance total.
B) has no relationship to the trial balance.
C) is greater than the unadjusted trial balance total.
D) is less than the unadjusted trial balance total.
E) has no relationship to the unadjusted trial balance total.

Question 79

The adjusted trial balance will directly show:

A) the total in the cash account.
B) the final total in the retained earnings account.
C) the total of the adjustments.
D) the accounts that were adjusted.
E) the income.

Question 80

All financial statements titles must include three title lines. Name the three lines in the order they should appear.