Question 1

On December 31,the balance in the Prepaid Insurance account was $4,500,which is the remaining balance of a 12-month policy purchased on October 31 in the current year.How much did this policy originally cost?

Accepted Answer

A) $5,400 
B) $3,750 
C) $4,909 
D) $4,500 
E) $6,000

Question 2

Reebok's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

Accepted Answer

The answer of Reebok's net income was $180,000; its total...

Question 3

What is an adjusted trial balance? Why is it prepared?

Accepted Answer

The answer of What is an adjusted trial balance? Why...

Question 4

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 5

The difference between the cost of an asset and the accumulated depreciation for that asset is called:

Accepted Answer

A) Depreciation Expense 
B) Unearned Depreciation 
C) Prepaid Depreciation 
D) Depreciation Value 
E) Book Value

Question 6

Unearned revenue is reported on the financial statements as:

Accepted Answer

A) A revenue on the balance sheet. 
B) A liability on the balance sheet. 
C) An unearned revenue on the income statement. 
D) An asset on the balance sheet. 
E) An operating activity on the statement of cash flows.

Question 7

Plant assets and intangible assets are usually long-term assets that are used to produce or sell products and services.

Accepted Answer

A) True 
 B)False

Question 8

The dividends account is normally closed by debiting it.

Accepted Answer

A) True 
 B)False

Question 9

A company's fiscal year must correspond with the calendar year.

Accepted Answer

A) True 
 B)False

Question 10

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

Accepted Answer

A) Western probably has little seasonal variation in their sales. 
B) Western has violated the time period principle. 
C) Western must prepare financial statements as of December 31 each year. 
D) Western has adopted a fiscal year. 
E) Western does not have an accountant.

Question 11

During the current year ended December 31,clients paid fees in advance for accounting services amounting to $25,000.These fees were recorded in an account called Unearned Accounting Fees.If $3,500 of these fees are still unearned on December 31 of this year,prepare the December 31 adjusting entry.

Accepted Answer

The answer of During the current year ended December 31,clients...

Question 12

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies was used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

Accepted Answer

A) $325 debit 
B) $325 credit 
C) $425 debit 
D) $750 debit 
E) $750 credit

Question 13

Before an adjusting entry is made to recognize expired insurance,Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 14

Calculate the current ratio in each of the following separate cases.

Accepted Answer

The answer of Calculate the current ratio in each of...

Question 15

Following are selected accounts and their balances for a company after the adjustments as of May 31,the end of its fiscal year.(All accounts have normal balances.)
  Prepare all the necessary closing entries for this company.

Accepted Answer

The answer of Following are selected accounts and their balances...

Question 16

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Accepted Answer

A) Pro forma statements 
B) Professional statements 
C) Simplified statements 
D) Temporary statements 
E) Interim statements

Question 17

Accrual accounting and the adjusting process rely on two principles: the ___________________ principle and the ________________________ principle.

Accepted Answer

The answer of Accrual accounting and the adjusting process rely...

Question 18

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows
  Present the four adjusting journal entries that were recorded by Black Company.

Accepted Answer

The answer of Black Company's unadjusted and adjusted trial balances...

Question 19

Adjusting entries result in a better matching of revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 20

Use the following information to prepare the adjusted trial balance for Bella's Beauty Salon.Bella's Beauty Salon's unadjusted trial balance for the current year follows:
  Additional information:
a.An insurance policy examination showed $1,240 of expired insurance.
b.An inventory count showed $210 of unused shop supplies still available.
c.Depreciation expense on shop equipment,$350.
d.Depreciation expense on the building,$2,220.
e.A beautician is behind on space rental payments and $200 of accrued revenue was unrecorded at the time the trial balance was prepared.
f.$800 of the Unearned Rent account balance was earned by year-end.
g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid.
h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded.
i.One month's interest on the note payable,$600,has accrued but is unrecorded.

Accepted Answer

The answer of Use the following information to prepare the...

Exam 3: Adjusting Accounts for Financial Statements

On December 31,the balance in the Prepaid Insurance account was $4,500,which is the remaining balance of a 12-month policy purchased on October 31 in the current year.How much did this policy originally cost?

Reebok's net income was $180,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

What is an adjusted trial balance? Why is it prepared?

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

The difference between the cost of an asset and the accumulated depreciation for that asset is called:

Unearned revenue is reported on the financial statements as:

Plant assets and intangible assets are usually long-term assets that are used to produce or sell products and services.

The dividends account is normally closed by debiting it.

A company's fiscal year must correspond with the calendar year.

Western Company has an annual reporting period that runs from July 1 through June 30.Based on this information,which of the following is a true statement?

During the current year ended December 31,clients paid fees in advance for accounting services amounting to $25,000.These fees were recorded in an account called Unearned Accounting Fees.If $3,500 of these fees are still unearned on December 31 of this year,prepare the December 31 adjusting entry.

The Unadjusted Trial Balance columns of a company's work sheet show the balance in the Office Supplies account as $750.The Adjustments columns show that $425 of these supplies was used during the period.The amount shown as Office Supplies in the Balance Sheet columns of the work sheet is:

Before an adjusting entry is made to recognize expired insurance,Prepaid Insurance and Insurance Expense are both overstated.

Calculate the current ratio in each of the following separate cases.

Following are selected accounts and their balances for a company after the adjustments as of May 31,the end of its fiscal year.(All accounts have normal balances.) Prepare all the necessary closing entries for this company.

Statements that show the effects of proposed transactions as if the transactions had already occurred are called:

Accrual accounting and the adjusting process rely on two principles: the _ principle and the ______ principle.

Black Company's unadjusted and adjusted trial balances on December 31 of the current year are as follows Present the four adjusting journal entries that were recorded by Black Company.

Adjusting entries result in a better matching of revenues and expenses.