Question 1

Henry-K Company purchased a computer system for $5,400 on January 1, 2011.The company expects to use the computer system for 3 years.It has no residual value.Monthly depreciation expense on the asset is

Accepted Answer

A) $0. 
B) $150. 
C) $1,800. 
D) $5,400.

Question 2

Adjusting entries

Accepted Answer

A) Are often prepared after the statement of financial position date, but dated as of the statement of financial position date. 
B) Are necessary to enable the financial statements to conform to international Financial Reporting Standard (IFRS). 
C) Include both accruals and deferrals 
D) All of the choices are correct regarding adjusting entries.

Question 3

Which of the following are in accordance with IFRS?

Accepted Answer

A) Accrual basis accounting 
B) Cash basis accounting 
C) Both accrual basis and cash basis accounting 
D) Neither accrual basis nor cash basis accounting

Question 4

Monthly and quarterly time periods are called

Accepted Answer

A) calendar periods. 
B) fiscal periods. 
C) interim periods. 
D) quarterly periods.

Question 5

Myron is a barber who does his own accounting for his shop. When he buys supplies he routinely debits Supplies Expense. Myron purchased $ \$ 1,500 $ of supplies in January and his inventory at the end of January shows $ \$ 600 $ of supplies remaining. What adjusting entry should Myron make on January 31?

Accepted Answer

A)  
B)  
C)  
D)

Question 6

If the adjusting entry for depreciation is not made,

Accepted Answer

A) assets will be understated. 
B) equity will be understated. 
C) net income will be understated. 
D) expenses will be understated.

Question 7

Accrued revenues are amounts recorded and received but not yet earned.

Accepted Answer

A) True 
 B)False

Question 8

The preparation of adjusting entries is

Accepted Answer

A) straight forward because the accounts that need adjustment will be out of balance. 
B) often an involved process requiring the skills of a professional. 
C) only required for accounts that do not have a normal balance. 
D) optional when financial statements are prepared.

Question 9

Employees at Julian Corporation are paid $10,000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday, December 31.How much salary expense should be recorded two days later on January 2?

Accepted Answer

A) $10,000 
B) $6,000 
C) None, matching requires the weekly salary to be accrued on December 31. 
D) $4,000

Question 10

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

Accepted Answer

A) A company uses $400 worth of supplies during the year. 
B) A company records $400 worth of depreciation on equipment. 
C) A company has earned $400 of revenue collected at the beginning of the year. 
D) A company records $400 of wages earned by employees that will be paid next year.

Question 11

Betty Carson, an accountant, has billed her clients for services performed.She subsequently receives payments from her clients.What entry will Betty make upon receipt of the payments?

Accepted Answer

A) Debit Unearned Revenue and credit Service Revenue 
B) Debit Cash and credit Accounts Receivable 
C) Debit Accounts Receivable and credit Service Revenue 
D) Debit Cash and credit Service Revenue

Question 12

Cara, Inc.purchased supplies costing $2,500 on January 1, 2011 and recorded the transaction by debiting an expense.At the end of the year $1,300 of the supplies are still on hand.If Cara, Inc.does not make the appropriate adjusting entry, what is the impact on its statement of financial position at December 31, 2011?

Accepted Answer

A) Assets understated by $1,200. 
B) Equity understated by $1,200. 
C) Equity overstated by $1,300. 
D) Assets understated by $1,300.

Question 13

If an adjusting entry is not made for an accrued revenue,

Accepted Answer

A) assets will be overstated. 
B) expenses will be understated. 
C) equity will be understated. 
D) revenues will be overstated.

Question 14

On January 1, 2011, P.T.Scope Company purchased a computer system for $3,240.The company expects to use the system for 3 years.The asset has no salvage value.The book value of the system at December 31, 2012 is

Accepted Answer

A) $0. 
B) $1,080. 
C) $2,160. 
D) $3,240.

Question 15

A company must make adjusting entries every time it prepares an income statement and a statement of financial position.

Accepted Answer

A) True 
 B)False

Question 16

Adjusting entries impact at least one income statement and at least one statement of financial position account.

Accepted Answer

A) True 
 B)False

Question 17

A candy factory's employees work overtime to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime wages should be expensed in

Accepted Answer

A) February. 
B) March. 
C) the period when the workers receive their checks. 
D) either in February or March depending on when the pay period ends.

Question 18

For prepaid expense adjusting entries

Accepted Answer

A) an expense-liability account relationship exists. 
B) prior to adjustment, expenses are overstated and assets are understated. 
C) the adjusting entry results in a debit to an expense account and a credit to an asset account. 
D) none of these.

Question 19

Alternative adjusting entries do not apply to

Accepted Answer

A) accrued revenues and accrued expenses. 
B) prepaid expenses. 
C) unearned revenues. 
D) prepaid expenses and unearned revenues.

Question 20

An adjusting entry

Accepted Answer

A) affects two statement of financial position accounts. 
B) affects two income statement accounts. 
C) affects a statement of financial position account and an income statement account. 
D) is always a compound entry.

Exam 3: Adjusting the Accounts

Henry-K Company purchased a computer system for $5,400 on January 1, 2011.The company expects to use the computer system for 3 years.It has no residual value.Monthly depreciation expense on the asset is

Adjusting entries

Which of the following are in accordance with IFRS?

Monthly and quarterly time periods are called

If the adjusting entry for depreciation is not made,

Accrued revenues are amounts recorded and received but not yet earned.

The preparation of adjusting entries is

Employees at Julian Corporation are paid $10,000 cash every Friday for working Monday through Friday.The calendar year accounting period ends on Wednesday, December 31.How much salary expense should be recorded two days later on January 2?

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

Betty Carson, an accountant, has billed her clients for services performed.She subsequently receives payments from her clients.What entry will Betty make upon receipt of the payments?

If an adjusting entry is not made for an accrued revenue,

On January 1, 2011, P.T.Scope Company purchased a computer system for $3,240.The company expects to use the system for 3 years.The asset has no salvage value.The book value of the system at December 31, 2012 is

A company must make adjusting entries every time it prepares an income statement and a statement of financial position.

Adjusting entries impact at least one income statement and at least one statement of financial position account.

A candy factory's employees work overtime to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime wages should be expensed in

For prepaid expense adjusting entries

Alternative adjusting entries do not apply to

An adjusting entry