Deck 3: Adjusting and Closing Entries

Question 1

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

A)referrals.
B)deferrals.
C)accruals.
D)non-cash items.

Answer 1

B

Question 2

If Blue company records expenses in the time period when incurred,they are using the:

A)cash basis of accounting.
B)accrual basis of accounting.
C)adjustment basis of accounting.
D)expense basis of accounting.

Answer 2

B

Question 3

GAAP requires the use of accrual accounting.

Answer 3

True

Question 4

The matching principle in accounting requires the matching of:

A)revenue earned with the assets used to produce the revenue.
B)revenue earned with the assets used less the liabilities incurred.
C)revenue earned with the liabilities used to produce the revenue.
D)revenue earned with the expenses incurred to produce the revenue.

Question 5

Under accrual accounting,the most important GAAP concepts to remember are the recognition principle for expenses and the matching principle for revenues.

Question 6

If Bloom company records revenue when cash is received,they are using the:

A)cash basis of accounting.
B)accrual basis of accounting.
C)adjustment basis of accounting.
D)expense basis of accounting.

Question 7

A period of time,such as a month or quarter,could be considered a(n):

A)fiscal year.
B)accounting period.
C)revenue period.
D)income period.

Question 8

It is necessary to post:

A)asset and liability entries.
B)revenue and expense entries.
C)adjusting entries.
D)all journal entries.

Question 9

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

A)expense
B)revenue
C)adjusting
D)debit

Question 10

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

A)Income Statement
B)Balance sheet
C)Adjusting entries
D)Unadjusted trial balance

Question 11

If revenues are recognized and recorded when earned,the company is using the:

A)cash basis of accounting.
B)accrual basis of accounting.
C)adjustment basis of accounting.
D)the expense basis of accounting.

Question 12

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

Question 13

The type of accounting required by GAAP is:

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

Question 14

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

Question 15

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

Question 16

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

A)referrals.
B)deferrals.
C)accruals.
D)non-cash items.

Question 17

The majority of businesses normally end their fiscal year on:

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

Question 18

If a business records expenses when paid,the company is using the:

A)cash basis of accounting.
B)accrual basis of accounting.
C)adjustment basis of accounting.
D)the expense basis of accounting.

Question 19

Accounts Receivable and Accounts Payable are examples of accruals.

Question 20

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

Question 21

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

Question 22

Adjusting entries always include a debit or credit to Cash.

Question 23

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

Question 24

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

Question 25

The recording of depreciation is related to a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 26

An example of a contra-account would be Accumulated Depreciation.

Question 27

Wages that have been accrued need to be recorded so that the matching principle is reflected in Wages Expense.

Question 28

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

Question 29

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

Question 30

Recording Unearned Subscriptions Revenue would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 31

Recording Accounts Receivable would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 32

Recording the purchase of supplies in a prepaid account would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 33

Recording Income Taxes Payable would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 34

The Supplies account must be adjusted to reflect the supplies that were used during the period.

Question 35

Recording Wages Payable would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 36

Recording Social Security Taxes Payable would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 37

Recording Prepaid Rent would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 38

Recording Interest Receivable would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 39

Recording the collection of three months of advance rent from a client in an unearned account would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 40

Accumulated Depreciation is recorded in the Liabilities section of the Balance Sheet.

Question 41

Supplies on hand were $777 of the original $1,034.The adjusting amount for supplies for the year would be:

A)$1,034.
B)$777.
C)$257.
D)some other number.

Question 42

Which of the following accounts is NOT affected by an accrued expense?

A)Sales Tax Payable
B)Supplies
C)Interest Expense
D)Wages Payable

Question 43

Adjusting entries for Supplies and Prepaid Rent would be adjustments for:

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 44

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?

A)$36,000
B)$32,000
C)$3,600
D)$3,200

Question 45

Fixed assets that are depreciated are sometimes called:

A)Accounts Payable.
B)current assets.
C)long-term assets.
D)long-term liabilities.

Question 46

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

A)$125.
B)$100.
C)$200.
D)$800.

Question 47

Allied,Inc.bought a 2-year insurance policy on August 1 for $3,600.The adjusting entry on December 31 would be:

A)debit Insurance Expense,$150;credit Prepaid Insurance,$150.
B)debit Prepaid Insurance,$150;credit Insurance Expense,$150.
C)debit Insurance Expense,$750;credit Prepaid Insurance,$750.
D)debit Prepaid Insurance,$750;credit Insurance Expense,$750.

Question 48

Recording season ticket monies received in advance as unearned revenue would be an example of a(n):

A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.

Question 49

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

A)12
B)8
C)4
D)6

Question 50

Which of the following accounts would NOT be debited or credited in an adjusting entry?

A)Supplies Expense
B)Office Equipment
C)Wages Expense
D)Wages Payable

Question 51

A machine with a cost of $15,000,a salvage value of $3,000 and expected life of 20 years was purchased on September 1.For a calendar year company,the journal entry to record depreciation expense for the first year would be to:

A)debit Depreciation Expense,$50;credit Accumulated Depreciation,$50.
B)debit Depreciation Expense,$250;credit Accumulated Depreciation,$250.
C)debit Depreciation Expense,$200;credit Accumulated Depreciation,$200.
D)debit Depreciation Expense,$150;credit Accumulated Depreciation,$150.

Question 52

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.The adjusting entry would be:

A)debit Supplies Expense,$275;credit Supplies,$275.
B)debit Supplies,$275;credit Supplies Expense,$275.
C)debit Supplies Expense,$225;credit Supplies,$225.
D)debit Supplies,$225;credit Supplies Expense,$225.

Question 53

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

A)market value.
B)salvage value.
C)book value.
D)original value.

Question 54

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

A)debit Wages Payable,$280;credit Wages Expense,$280.
B)debit Wages Expense,$280;credit Wages Payable,$280.
C)debit Wages Payable,420;credit Wages Expense,$420.
D)debit Wages Expense,$420;credit Wages Payable,$420.

Question 55

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

A)depreciable value.
B)market value.
C)salvage value.
D)trade-in value.

Question 56

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

A)$1,500
B)$75
C)$300
D)$600

Question 57

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.

Question 58

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

A)Prepaid Rent
B)Supplies
C)Inventory
D)Cash

Question 59

Which of the following accounts would NOT be adjusted?

A)Accumulated Depreciation
B)Cash
C)Depreciation Expense
D)Wages

Question 60

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?

A)debit Supplies,$350;credit Supplies Expense,$350
B)debit Supplies,$550;credit Supplies Expense,$550
C)debit Supplies Expense,$350;credit Supplies,$350
D)debit Supplies Expense,$550;credit Supplies,$550

Question 61

Safety First Supply Company purchased a 2-year insurance policy for $2,500.What would the adjusting entry be at the end of the first year?

A)Debit Insurance Expense $2,500,credit Prepaid Insurance $2,500
B)Debit Insurance Expense $2,500,credit Cash $2,500
C)Debit Insurance Expense $1,250,credit Prepaid Insurance $1,250
D)Debit Insurance Expense $1,250,credit Cash $1,250

Question 62

Annual depreciation on equipment at Charmed,Inc.is $1,200.The adjusting entry to record one month's worth of depreciation would be:

A)Debit Depreciation Expense $100,credit Cash $100
B)Debit Depreciation Expense $100,credit Accumulated Depreciation $100
C)Debit Depreciation Expense $1,200,credit Cash $1,200
D)Debit Depreciation Expense $1,200,credit Accumulated Depreciation $1,200

Question 63

Salary expense is $2,200 per day,Monday through Friday,and the business pays employees each Friday.If December 31 falls on a Tuesday,the adjusting entry to record accrued salaries would be to:

A)debit Salaries Payable,$2,200;credit Salaries Expense,$2,200.
B)debit Salaries Expense,$4,400;credit Salaries Payable,$4,400.
C)debit Salaries Expense,$2,200;credit Salaries Payable,$2,200.
D)debit Salaries Payable,$4,400;credit Salaries Expense,$4,400.

Question 64

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

Question 65

The balance in Unearned Revenues prior to adjustment was $2,750.If the amount still unearned as of the end of the period is $1,100,the adjusting entry needed would be to:

A)debit Cash,$2,750;credit Unearned Service Revenue,$785.
B)debit Unearned Service Revenue,$1,100;credit Service Revenue,$1,100.
C)debit Unearned Service Revenue,$1,650;credit Service Revenue,$1,650.
D)debit Service Revenue,$1,650;credit Unearned Service Revenue,$1,650.

Question 66

On January 1 Corporate Condos,Inc received $96,000 for one year's rent for building A.What would the adjusting entry be on March 31?

A)Debit Rent Expense $8,000,credit Prepaid Rent $8,000
B)Debit unearned rent revenue $8,000,credit rent revenue $8,000
C)Debit Rent Expense $24,000,credit Prepaid Rent $24,000
D)Debit unearned rent revenue $24,000,credit rent revenue $24,000

Question 67

Prepaid expenses are also called:

A)accrued expenses.
B)deferred expenses.
C)both A and B.
D)neither A or B.

Question 68

Salary expense is $975 per day,Monday through Friday,and the business pays employees each Friday.If December 31 falls on a Wednesday,the amount of the adjusting entry to record accrued salaries would be:

A)$2,925.
B)$975.
C)$1,950.
D)$4,875.

Question 69

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

A)$312.50.
B)$3,437.50.
C)$243.06.
D)$2,673.61.

Question 70

On the Income Statement,expenses are always listed in descending order from the largest to the smallest amount.

Question 71

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

Question 72

The journal entry to record $2,750 of depreciation expense for the year would be to:

A)debit Depreciation Expense,$2,750;credit Equipment,$2,750.
B)debit Accumulated Depreciation,$2,750;credit Depreciation Expense,$2,750.
C)debit Accumulated Depreciation,$2,750;credit Equipment,$2,750.
D)debit Depreciation Expense,$2,750;credit Accumulated Depreciation,$2,750.

Question 73

Another name for "book value" is:

A)Accumulated Depreciation.
B)carrying value.
C)market value.
D)Depreciation Expense.

Question 74

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

Question 75

The adjusting entry to record $785 of revenues that have been earned but not yet recorded would be to:

A)debit Cash,$785;credit Service Revenue,$785.
B)debit Unearned Revenue,$785;credit Service Revenue,$785.
C)debit Service Revenue,$785;credit Accounts Receivable,$785.
D)debit Accounts Receivable,$785;credit Service Revenue,$785.

Question 76

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

Question 77

A company started the year with no supplies.During this year they bought $200 worth of supplies on account and later paid $150 of this debt.If there were $40 supplies left at the end of this year,what was the supply expense for the period?

A)$160
B)$50
C)$40
D)$10

Question 78

On January 1,Daisy Company paid $5,400 for six months rent.What would the adjusting entry be on March 31?

A)Debit Rent Expense $900,credit Prepaid Rent $900
B)Debit Rent Expense $900,credit Cash $900
C)Debit Rent Expense $2,700,credit Prepaid Rent $2,700
D)Debit Rent Expense $2,700,credit Cash $2,700

Question 79

The balance of Retained Earnings on the adjusted trial balance does not represent the final Retained Earnings balance on the Balance Sheet.

Question 80

Which of the following is a TRUE statement regarding the Unearned Revenue account?

A)Unearned Revenue is accrued as the business provides goods or services.
B)Unearned Revenue is expensed as the business provides goods or services.
C)Unearned Revenue decreases as the business provides goods or services.
D)Unearned Revenue increases as the business provides goods or services.