Question 1

The worksheet starts with two columns for the:

Accepted Answer

A)   adjustments.
B)   financial statements.
C)   trial balance.
D)   adjusted trial balance. C

Question 2

The final step in the accounting cycle is to prepare:

Accepted Answer

A)   closing entries.
B)   financial statements.
C)   a post-closing trial balance.
D)   adjusting entries. C

Question 3

Better Publications, sold annual subscriptions to their magazine for $42,000 in December, 2013. The magazine is published monthly. The new subscribers received their first magazine in January, 2014.
1. What adjusting entry should be made in January if the subscriptions were originally recorded as a liability?
2. What amount will be reported on the January 2014 balance sheet for Unearned Subscription Revenue?

Accepted Answer

1. Unearned Sales Revenue$\quad$$\quad$3,500
Sales Revenue$\quad$$\quad$3,500
2. Unearned Sales Revenue at January 31: $ \$ 42,000-\$ 3,500=\$ 38,500 $

Question 4

Adjustments would not be necessary if financial statements were prepared to reflect net income from:

Accepted Answer

A)   monthly operations.
B)   fiscal year operations.
C)   interim operations.
D)   lifetime operations.

Question 5

On February 1, the Acts Tax Service received a $3,600 cash retainer for tax preparation services to be provided rateably over the next 4 months. The full amount was credited to the liability account Unearned Service Revenue. Assuming that the revenue is recognized rateably over the 4 month period, what balance would be reported on the February 28 balance sheet for Unearned Service Revenue?

Accepted Answer

The answer of On February 1, the Acts Tax Service...

Question 6

Prepare adjusting entries for the following transactions. Omit explanations.
1. Depreciation on equipment is $800 for the accounting period.
2. There was no beginning balance of supplies and purchased $600 of office supplies during the period. At the end of the period $120 of supplies were on hand.
3. Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $300 was unexpired.

Accepted Answer

The answer of Prepare adjusting entries for the following transactions....

Question 7

Match between columns
                        Premises: Office supplies on hand that will be used in the next period
Subscription revenue collected; not yet recognized.
Interest expense incurred; not yet paid.
A revenue not yet recognized; collected in advance.
Rent not yet collected; already recognized.
An expense not yet incurred; paid in advance.
A revenue recognized; not yet collected or recorded.
An expense incurred; not yet paid or recorded.

Accepted Answer

The Answer of Accrued Expenses and Unearned Revenues and Prepaid is...

Question 8

Closing entries deal primarily with the balances of permanent accounts.

Accepted Answer

A) True 
 B)False

Question 9

One of the accounting concepts upon which adjustments for prepayments and accruals are based is:

Accepted Answer

A)   expense recognition.
B)   cost.
C)   monetary unit.
D)   economic entity.

Question 10

Accrued revenues are revenues that have been received but not yet recognized.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises: A revenue not yet recognized; collected in advance.
A revenue recognized; not yet collected or recorded.
An expense not yet incurred; paid in advance.
An expense incurred; not yet paid or recorded.

Accepted Answer

The Answer of Unearned Revenues and Accrued Revenues and Preaid is...

Question 12

Accrued revenues are revenues that have been recognized but cash has not been received before financial statements have been prepared.

Accepted Answer

A) True 
 B)False

Question 13

A contra asset account is subtracted from a related account in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

The adjusted trial balance of Masters Company includes the following balance sheet accounts that frequently require adjustment. For each account, indicate (a) the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, or accrued expenses) and (b) the related account in the adjusting entry.

Accepted Answer

The answer of The adjusted trial balance of Masters Company...

Question 15

A revenue account is closed with a credit to the revenue account and a debit to Income Summary.

Accepted Answer

A) True 
 B)False

Question 16

Closing entries result in the transfer of net income or net loss into the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 17

An adjusting entry made to record accrued interest on a note receivable due next year consists of a:

Accepted Answer

A)   debit to Interest Expense and a credit to Interest Payable.
B)   debit to Interest Receivable and a credit to Interest Revenue.
C)   debit to Interest Expense and a credit to Notes Payable.
D)   debit to Interest Expense and a credit to Cash.

Question 18

Wang Company had the following transactions during 2013: 
-Sales of $10,800 on account
-Collected $4,800 for services to be performed in 2014
-Paid $3,100 cash in salaries
-Purchased airline tickets for $600 in December for a trip to take place in 2014
What is Wang's 2013 net income using cash basis accounting?

Accepted Answer

A)   $1,100
B)   $2,300
C)   $12,500
D)   $1,700

Question 19

Presented below is the Trial Balance and Adjusted Trial Balance for Stabler Company on December 31.  Instructions:
Prepare in journal form, with explanations, the adjusting entries that explain the changes in the
balances from the trial balance to the adjusted trial balance.

Accepted Answer

The answer of Presented below is the Trial Balance and...

Question 20

A review of the ledger of Weakly Service Co. at December 31, 2014, produces the following data pertaining to the preparation of annual adjusting entries:
(a) Notes Payable $80,000: This is a 9-month note, dated September 1, 2014, with a 9% interest rate.
(b) Prepaid Rent $648,000. The company rents offices throughout the Midwest. During 2014 it signed 10 leases as shown below:  (c) Unearned Service Revenue $171,000. During 2014 the company entered into 13 monthly service contracts with clients. The clients prepaid for the services to be provided over the contract period in an even manner.  Instructions:
Prepare the adjusting entries at December 31, 2014. Show all computations.

Accepted Answer

The answer of A review of the ledger of Weakly...

Exam 4: Accrual Accounting Concepts

The worksheet starts with two columns for the:

The final step in the accounting cycle is to prepare:

Adjustments would not be necessary if financial statements were prepared to reflect net income from:

Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided.

Closing entries deal primarily with the balances of permanent accounts.

One of the accounting concepts upon which adjustments for prepayments and accruals are based is:

Accrued revenues are revenues that have been received but not yet recognized.

Match the statements below with the appropriate terms by entering the appropriate letter code in the spaces provided. TERMS:

Accrued revenues are revenues that have been recognized but cash has not been received before financial statements have been prepared.

A contra asset account is subtracted from a related account in the balance sheet.

A revenue account is closed with a credit to the revenue account and a debit to Income Summary.

Closing entries result in the transfer of net income or net loss into the Retained Earnings account.

An adjusting entry made to record accrued interest on a note receivable due next year consists of a:

Presented below is the Trial Balance and Adjusted Trial Balance for Stabler Company on December 31. Instructions: Prepare in journal form, with explanations, the adjusting entries that explain the changes in the balances from the trial balance to the adjusted trial balance.