Question 1

HCF, a finance company, lends Able Business $12,000 at 5% on December 1, 2015.HCF's adjusting entry on December 31, 2015, should include:

Accepted Answer

A) A credit to Interest Earned for $50. 
B) A debit to Interest Expense for $600. 
C) A debit to Cash for $600. 
D) A debit to Interest Earned for $50. 
E) A credit to Interest Receivable for $50.

Question 2

Accrued revenues at the end of one period result in cash payments in a subsequent period.

Accepted Answer

A) True 
 B)False

Question 3

Under the alternative method for accounting for unearned revenues, which of thefollowing pairs of journal entry formats is correct?

Accepted Answer

A)  
B)  
C)  
D)  
E)

Question 4

Discuss the importance of periodic reporting and the timeliness principle

Accepted Answer

The answer of Discuss the importance of periodic reporting and...

Question 5

The entry to record a cash receipt from a customer when the service to be provided to earn the cash has not yet been performed involves a debit to an unearned revenueaccount.

Accepted Answer

A) True 
 B)False

Question 6

The length of time covered by periodic financial statements and other reports is the

Accepted Answer

A) Operating cycle. 
B) Fiscal year. 
C) Accounting period. 
D) Natural business year. 
E) Business cycle.

Question 7

Zang Company had no office supplies on hand at the beginning of the year. During the year, the company purchased $250 worth of office supplies. At the end of the year, $50 worth of office supplies were on hand. How much should Zang Company report asoffice supplies expense for the year?

Accepted Answer

A) $200. 
B) $175. 
C) $125. 
D) $75. 
E) $325.

Question 8

The account format of the balance sheet matches the accounting equation. Assets are onthe left side of the statement. Liabilities and equity are on the right side of the statement.

Accepted Answer

A) True 
 B)False

Question 9

On October 15, Gallery Corp. received $12,500 as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31,10% of the contract was completed. Gallery Corp. needs to prepare an adjusting entry for $1,250.

Accepted Answer

A) True 
 B)False

Question 10

Gallery Corp. performs 20 days' work on a 30-day contract. The total contract is valued at $6,000. The adjusting entry of $4,000 includes a credit to unearned revenue.

Accepted Answer

A) True 
 B)False

Question 11

In January, Denton Mabrey College received $120,000 in Unearned Tuition Revenuefrom its students for the spring semester, which lasts four months. On January 31, the college should recognize which amount for tuition revenue?

Accepted Answer

A) $30,000. 
B) $60,000. 
C) $80,000. 
D) $120,000. 
E) $90,000.

Question 12

The following journal entry (incorrectly)recorded the purchase of office supplies for$1,200 on credit: 
If only one entry is to be made to correct this entry it would be:

Accepted Answer

A)  None required. The original entry above is correct. 
B)  
C)  
D)  
E)

Question 13

Before recording adjusting entries, the Office Supplies account had a $359 debitbalance while a physical count of the supplies showed $105 of unused supplies on hand. Thus, the required adjusting entry is:

Accepted Answer

A) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
B) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
C) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
D) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
E) Some other entry.

Question 14

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

Accepted Answer

A) True 
 B)False

Question 15

The unadjusted trial balance for a company has total debit and credit column totals of$148,000. The Adjustments columns contain entries for the following:Office supplies used during the period, $2,650. Expiration of prepaid rent, $1,700.Accrued salaries expense, $3,500. Depreciation expense, $1,625.Accrued service revenues, $2,500.The Adjusted Trial Balance columns total to:

Accepted Answer

A) $159,975. 
B) $148,000. 
C) $155,625. 
D) $151,275. 
E) $136,025.

Question 16

The approach to preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Accepted Answer

A) Cash basis accounting. 
B) The matching principle. 
C) The operating cycle of a business. 
D) The revenue recognition principle. 
E) Accrual basis accounting.

Question 17

Prepare an income statement for the year ended December 31, 2015

Accepted Answer

The answer of Prepare an income statement for the year...

Question 18

Under the alternative method for recording prepaid expenses, the purchase of insurancefor cash would be recorded as a debit to Cash and a credit to Prepaid Insurance.

Accepted Answer

A) True 
 B)False

Question 19

An adjusting entry could be made for all of the following except

Accepted Answer

A) Unearned revenues. 
B) Depreciation expense. 
C) Owner withdrawals. 
D) Accrued revenues. 
E) Prepaid expenses.

Question 20

The accounting basis that attempts to measure performance in the period in which itoccurred is the:

Accepted Answer

A) IFRS basis. 
B) Accrual Basis. 
C) Matching Basis. 
D) Cash basis. 
E) Revenue Recognition Basis.

Exam 3: Adjusting Accounts for Financial Statements

HCF, a finance company, lends Able Business $12,000 at 5% on December 1, 2015.HCF's adjusting entry on December 31, 2015, should include:

Accrued revenues at the end of one period result in cash payments in a subsequent period.

Under the alternative method for accounting for unearned revenues, which of thefollowing pairs of journal entry formats is correct?

Discuss the importance of periodic reporting and the timeliness principle

The entry to record a cash receipt from a customer when the service to be provided to earn the cash has not yet been performed involves a debit to an unearned revenueaccount.

The length of time covered by periodic financial statements and other reports is the

Zang Company had no office supplies on hand at the beginning of the year. During the year, the company purchased $250 worth of office supplies. At the end of the year, $50 worth of office supplies were on hand. How much should Zang Company report asoffice supplies expense for the year?

The account format of the balance sheet matches the accounting equation. Assets are onthe left side of the statement. Liabilities and equity are on the right side of the statement.

On October 15, Gallery Corp. received $12,500 as a down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31,10% of the contract was completed. Gallery Corp. needs to prepare an adjusting entry for $1,250.

Gallery Corp. performs 20 days' work on a 30-day contract. The total contract is valued at $6,000. The adjusting entry of $4,000 includes a credit to unearned revenue.

In January, Denton Mabrey College received $120,000 in Unearned Tuition Revenuefrom its students for the spring semester, which lasts four months. On January 31, the college should recognize which amount for tuition revenue?

The following journal entry (incorrectly) recorded the purchase of office supplies for$1,200 on credit: If only one entry is to be made to correct this entry it would be:

Before recording adjusting entries, the Office Supplies account had a $359 debitbalance while a physical count of the supplies showed $105 of unused supplies on hand. Thus, the required adjusting entry is:

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

The approach to preparing financial statements based on recognizing revenues when the cash is received and reporting expenses when the cash is paid is called:

Prepare an income statement for the year ended December 31, 2015

Under the alternative method for recording prepaid expenses, the purchase of insurancefor cash would be recorded as a debit to Cash and a credit to Prepaid Insurance.

An adjusting entry could be made for all of the following except

The accounting basis that attempts to measure performance in the period in which itoccurred is the: