Question 1

Describe the two alternate methods used to account for prepaid expenses.

Accepted Answer

The answer of Describe the two alternate methods used to...

Question 2

A $900,000 note payable requires 10% annual interest with interest due monthly on the 15th of each month.An interest payment of $7,500 was made on April 15 and the next payment is due on May 15.As of April 30,$3,750 of interest expense has accrued.How would the company record the related adjusting entry?

Accepted Answer

A) Debit Interest Expense for $3,750 and credit Cash for $3,750. 
B) Debit Interest Expense for $3,750 and credit Interest Payable for $3,750. 
C) Debit Interest Payable for $3,750 and credit Cash for $3,750. 
D) Debit Interest Payable for $3,750 and credit Interest Expense for $3,750. 
E) Debit Interest Expense for $3,750,credit Interest Payable for $3,750 and credit cash for $7,500.

Question 3

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue.If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned,one effect will be an:

Accepted Answer

A) Overstatement of equity. 
B) Overstatement of liabilities. 
C) Understatement of assets. 
D) Understatement of liabilities. 
E) Overstatement of assets.

Question 4

A trial balance prepared after the closing entries have been journalized and posted is the:

Accepted Answer

A) Unadjusted trial balance 
B) Post-closing trial balance 
C) General ledger 
D) Adjusted trial balance 
E) Work sheet

Question 5

__________________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded.

Accepted Answer

The answer of __________________ expenses are those costs that are...

Question 6

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of those expenses is the:

Accepted Answer

A) Recognition principle 
B) Cost principle 
C) Cash basis of accounting 
D) Matching principle 
E) Time period principle

Question 7

July 31,2013,the end of the quarter,is on a Wednesday.Employees get paid each Friday for the five-day work week.Abel Co.has five employees who earn $100 per day each.Make the necessary adjusting journal entry for June 30.

Accepted Answer

The answer of July 31,2013,the end of the quarter,is on...

Question 8

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

Accepted Answer

A) Items that require contra accounts. 
B) Items that require adjusting entries. 
C) Asset and equity. 
D) Asset accounts. 
E) Income statement accounts.

Question 9

Which of the following is the usual final step in the accounting cycle?

Accepted Answer

A) Journalizing transactions. 
B) Preparing an adjusted trial balance. 
C) Preparing a post-closing trial balance. 
D) Preparing the financial statements. 
E) Preparing a work sheet.

Question 10

Deana DiAngelo opened a business called Deana's Decorators on January 6,2014.The company's unadjusted account balances (shown in T-account form) as of December 31,2104 follows.Deana's initially records prepaid expenses and unearned revenues in balance sheet accounts.The following information was gathered in anticipation of the recording of adjusting entries as of December 31,2014:

a.Prepare the required adjusting journal entry for each situation described below as of December 31,2014.Explanations are not required.
b.Post each adjusting entry to the related T-accounts and determine the adjusted account balances for the account affected by the adjusting entries.

Accepted Answer

The answer of Deana DiAngelo opened a business called Deana's...

Question 11

Given the table below, indicate the impact of the following errors made during the adjusting entry process. Use a "+" followed by the amount for overstatements, a "-" followed by the amount for understatements and a "0" for no effect. The first one is done as an example. 
Ex. Failed to recognize that $600 of unearned revenues, which were previously recorded as liabilities, had been earned by year-end.
1.  Failed to accrue salaries expense of $1,200. 
2.  Forgot to record $2,700 of depreciation on office equipment. 
3.  Failed to accrue $300 of interest on a note receivable.

Accepted Answer

The answer of Given the table below, indicate the impact...

Question 12

How is a classified balance sheet different from an unclassified balance sheet? List the order of the usual classifications on a classified balance sheet.

Accepted Answer

The answer of How is a classified balance sheet different...

Question 13

Each letter below contains three of the steps found in the accounting cycle.Which presents the given steps in the proper sequence,first to last?

Accepted Answer

A) Adjust,analyze transactions,close. 
B) Analyze transactions,adjust,close. 
C) Prepare post-closing trial balance,prepare statements,close. 
D) Prepare statements,post,close. 
E) Prepare adjusted trial balance,journalize,close.

Question 14

The following information is available for the Travis Travel Agency.After the closing entries have been journalized and posted,what will be the balance in the Retained Earnings account?

Accepted Answer

A) $65,000 
B) $80,000 
C) $130,000 
D) $145,000 
E) $280,000

Question 15

IFRS tends to be more principles-based compared with GAAP,which is viewed as more rules-based.Which of the following is a true statement about a principles-based system?

Accepted Answer

A) A principles-based system eliminates the need for internal controls. 
B) A principles-based system is significantly weaker than a rules-based system. 
C) A principles-based system will eliminate all fraud. 
D) A principles-based system is a way to calculate interest receivable or payable. 
E) A principles-based system depends heavily on control procedures to reduce the potential for fraud or misconduct.

Question 16

Interim financial statements refer to financial reports:

Accepted Answer

A) That cover less than one year,usually spanning one,three,or six-month periods. 
B) That are prepared before any adjustments have been recorded. 
C) That show the assets above the liabilities and the liabilities above the equity. 
D) Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid. 
E) That are prepared on the last day of the calendar year.

Question 17

When expenses exceed revenues,there is a net loss and the Income Summary account would have a credit balance.

Accepted Answer

A) True 
 B)False

Question 18

A(n) _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Accepted Answer

The answer of A(n) _______________________ is a listing of all...

Question 19

The following items appeared on a company's December 31 work sheet for the current period.Based on the following information,what is net income for the current period?

Accepted Answer

A) $1,400 
B) $1,855 
C) $1,905 
D) $2,060 
E) $4,670

Question 20

Prepare an income statement from the adjusted trial balance of Hanson Storage.

Accepted Answer

The answer of Prepare an income statement from the adjusted...

Exam 3: Adjusting Accounts for Financial Statements