Deck 9: QBO Adjustments

Question 1

One way QBO enters adjusting entries is through using the Onscreen Journal. This method involves using the following process?

A)Select the Create (+)icon,then select Journal Entry to access the Onscreen Journal. Enter the Journal date,and Journal no (usually,label as AJE). On Line 1 select Account to debit from the drop-down list,enter the Debit Amount,and Description.Do the same process on Line 2 for the credit.
B)Select the Gear icon,then select Adjustment to access the Onscreen Journal. Enter the Journal date,and Journal no. On Line 1 select Account to debit from the drop-down list,enter the Debit Amount,and Description.Do the same process on Line 2 for the credit.
C)Select the Create (+)icon,then select Adjustment to access the Onscreen Journal. Enter the Journal date,and Journal no. On Line 1 select Account to debit from the drop-down list,enter the Debit Amount,and Description.Do the same process on Line 2 for the credit.
D)The Onscreen Journal is generally not used to enter in adjustments. It does not identify adjustments clearly enough.

Answer 1

A

Question 2

What is the accounting cycle?

A)It is a series of accounting activities a business performs each accounting period.
B)It consists of a period of steps beginning with preparing the financial statements.
C)It is closing out revenue and expense accounts to begin a new accounting year.
D)It is preparing adjustments to ensure revenue and expenses are correctly recorded.

Answer 2

A

Question 3

In QBO,users can save adjusting entries as recurring transactions.Which of the following is FALSE regarding recurring transactions used for adjustments?

A)Saving adjusting entries as recurring transactions saves time.
B)When saving adjusting entries as recurring transactions users still must update the amount of the adjustment as needed.
C)There are two ways to save adjusting entries as recurring transactions: 1.Using the Onscreen journal and 2.Using the recurring transactions screen.
D)It is challenging to use recurring transactions for adjustments since most adjustment amounts need to change every month.

Answer 3

D

Question 4

What is the definition of depreciation?

A)Depreciation is a special type of prepaid item involving fixed assets and it is the allocation of an asset's cost over its useful life.
B)Depreciation is a special type of accrued liability item involving fixed assets and it is the allocation of an asset's cost over its useful life.
C)Depreciation is a special type of prepaid item involving revenues and it is the allocation of an asset's cost compared to revenue generated over its useful life.
D)Depreciation is a special type of prepaid item involving a current prepaid asset and it is the allocation of the prepaid's cost over the asset's life.

Question 5

What is the difference between the accrual basis and the cash basis of accounting?

A)Accrual basis records revenue when cash is received and cash basis matches expenses with the revenues it generates.
B)Accrual basis records revenue when cash is received and the cash basis records revenue when it is earned.
C)Accrual basis matches expenses with the revenues it generates and cash basis records revenue when cash is received.
D)Accrual basis records expenses when cash is paid and cash basis records expenses in the accounting period,it is incurred.

Question 6

What is the easiest way to correct an error?

A)First,make the correct entry that should have been made initially.Second,eliminate the effect of the incorrect entry by making the opposite journal entry.
B)Update accounts via a journal entry that are required to bring the accounts up to date as of a certain date.
C)First,eliminate the effect of the incorrect entry by making the opposite journal entry. Second,make the correct entry that should have been made initially.
D)Make the correct entry that should have been done initially.

Question 7

What is the difference between a correcting entry and an adjusting entry?

A)Correcting entries are updates required to bring accounts to the correct balances as of a certain date.Adjusting entries fix mistakes in the accounting system.
B)Correcting entries require one journal entry to fix and adjusting entries require two entries to fix.
C)Correcting entries fix mistakes in the accounting system.Adjusting entries are not mistakes but updates required to bring accounts to the correct balances as of a certain date.
D)Correcting entries and adjusting entries are the same type of entry just labelled differently.

Question 8

Correcting errors on saved documents requires all of the following except:

A)One approach is to display the document,correct the error and then save the document again.
B)The document can be voided and then create a new document.
C)Delete the document and create a new document.
D)Destroy the document to ensure there is no source for identity theft since that is more important than needing an audit trail.

Question 9

An example of an adjusting entry for an accrued expense item using the QBO journal is:

A) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Interest payable } &\$ 1,000\\\text { Interest expense } & &\$ 1,000 & \\\end{array}$$
B) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Interest expense } &\$ 1,000\\\text { Interest payable } & &\$ 1,000 & \\\end{array}$$
C) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Interest receivable } &\$ 1,000\\\text { Interest revenue } & &\$ 1,000 & \\\end{array}$$
D) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Interest revenue } &\$ 1,000\\\text { Interest receivable } & &\$ 1,000 & \\\end{array}$$

Question 10

In QBO,the process for saving adjusting entries as a Recurring Transaction is:

A)Enter the adjusting entry in the Onscreen Journal,and select Save,then Make recurring.Enter a Template name and select Reminder and enter the number of days and interval for the reminder.
B)Use the Create (+)icon to enter the adjusting entry in the Onscreen Journal,and select Save,then Make recurring.Enter a Template name and select Reminder and enter the number of days and interval for the reminder.
C)Use the Gear icon to enter the adjusting entry in the Onscreen Journal,and select Save,then Make recurring.Enter a Template name and select Reminder and enter the number of days and interval for the reminder.
D)Use the Gear icon to enter the adjusting entry in the Onscreen Journal,and select Save,then Make recurring.Schedule the transaction by entering the date and interval and QBO will automatically prepare the adjustment.

Question 11

In QBO,Recurring transactions can be classified as: 1.Scheduled 2.Unscheduled 3.Reminder.Which of the following statements is NOT true regarding these three classifications?

A)Scheduled transactions are a great option to use for Recurring adjusting entry transactions since adjustments generally are for a constant amount each time.
B)Scheduled transactions mean QBO automatically enters the transaction on the date the user specifies.
C)Unscheduled transactions appear in the Recurring Transactions list but QBO will not automatically enter the transaction.
D)Reminder transactions mean QBO will alert us with a reminder when we should use a recurring transaction to enter in an adjustment.

Question 12

Accrued expenses are:

A)expenses that have been paid but not yet incurred.
B)expenses incurred but not yet paid or recorded.
C)expenses that require adjusting entries to increase a prepaid expense and decrease a liability.
D)expenses that require adjusting entries to debit a liability and credit an expense.

Question 13

In QBO,which of the following is TRUE?

A)When making journal entries,accountants may have situations where a journal entry has 2 Debits and no Credits or 2 Credits and no Debits.
B)There are situations in QBO when Debits will not equal Credits.
C)When making journal entries,accountants generally list Credits before Debits,however,QBO may not always list Credits before Debits in journal entries.
D)When making journal entries,accountants generally list Debits before Credits,however,QBO may not always list Debits before Credits in journal entries.

Question 14

What is FALSE regarding adjusting entries and QBO?

A)Adjusting entries are dated the last day of the accounting period which can be one month,one quarter or one year.
B)Adjustments are made through the Chart of Accounts during the year and then using the Onscreen Journal at the end of the year.
C)Adjusting Entries are entered in the Onscreen QBO Journal using debits and credits.
D)Some companies use QBO to maintain its accounting system throughout the year and use an accountant to prepare and enter adjusting entries at year end.

Question 15

Which selection below is FALSE regarding Adjustments?

A)Adjustments bring accounts up to date and show the correct account balances on financial reports.
B)Adjusting entries are dated the first day of the accounting period.
C)Adjustments are typically made at the end of the accounting period to up date accounts before year-end reports are prepared.
D)Adjustments are also called Adjusting Entries since we enter Adjustments by making entries into a Journal.

Question 16

An example of an adjusting entry for a prepaid item using the QBO journal is:

A) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Expense } &\$ 1,000\\\text { Prepaid Insurance } & &\$ 1,000 & \\\end{array}$$
B) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Prepaid Insurance} &\$ 1,000\\\text { Insurance Expense } & &\$ 1,000 & \\\end{array}$$
C) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Expense} &\$ 1,000\\\text { Insurance Payable} & &\$ 1,000 & \\\end{array}$$
D) $$\begin{array} { l c c } &\text { Debit } & \text { Credit } \\\text { Insurance Payable} &\$ 1,000\\\text { Insurance Expense } & &\$ 1,000 & \\\end{array}$$

Question 17

Accrued revenues:

A)are revenues not yet earned but have been collected or recorded.
B)are revenues earned but not yet collected or recorded.
C)require an adjusting entry to decreases (credits)an asset and increases (debit)a revenue.
D)require an adjusting entry to decrease (credits)a revenue and increase (debit)a liability.

Question 18

What are the four type of adjusting entries?

A)Prepaid,Unearned,Accrued Expenses,and Accrued Revenues
B)Depreciation,Prepaid,Unearned,and Accrual
C)Scheduled,Unscheduled,Accruals,and Depreciation
D)Reminder,Accrual,Depreciation,and Prepaid

Question 19

What is FALSE regarding prepaid items?

A)Prepaid adjustments typically decrease an expense and increase an asset.
B)Prepaids are items relating to expenses that have been paid in advance.
C)Adjusting entries for prepaids affect an Expense account and an Asset account.
D)The adjusting entry records the amount that needs to be transferred between two accounts,an expense and an asset,to show the amount of the asset that has been reduced or used.

Question 20

What is true regarding Unearned items?

A)Unearned items consist of revenue a company has not earned and an adjustment is necessary to increase the revenue once it is earned and decrease the liability once the obligation is satisfied.
B)Unearned items consist of expenses that have not yet been incurred. A company must reduce an asset,prepaid,and increase expense for what has been incurred.
C)The adjusting journal entry related to Unearned items would increase a liability and reduce revenue to recognize what has been earned.
D)The adjusting entry related to Unearned items records the amount that needs to be transferred between two accounts,an Expense and a Liability,to show the appropriate balance in each account.