Question 1

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

Accepted Answer

A) True 
 B)False  False

Question 2

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Accepted Answer

A)   Record payment of fees earned
B)   Record fees earned at the end of the month
C)   Record fees that have not been earned at the end of the month
D)   Record payment of fees to be earned. B

Question 3

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Accepted Answer

A) True 
 B)False  True

Question 4

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

Accepted Answer

A) True 
 B)False

Question 5

The account type and normal balance of Prepaid Expense is

Accepted Answer

A)   revenue, credit
B)   expense, debit
C)   liability, credit
D)   asset, debit

Question 6

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be:

Accepted Answer

The answer of A one-year insurance policy was purchased on...

Question 7

Which of the following is an example of accrued revenue?

Accepted Answer

A)   Swimming pool cleaning that has been paid for three months in advance.
B)   Swimming pool cleaning that has been provided but has not been billed or paid.
C)   An agreement has been signed for swimming pool cleaning for the next three months.
D)   Swimming pool cleaning that has been provided and paid on the same day.

Question 8

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

Accepted Answer

A) True 
 B)False

Question 9

The Supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. At the end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.

Accepted Answer

The answer of The Supplies account had a beginning balance...

Question 10

What is the purpose of an adjusted trial balance? What type(s) of error does it detect? What type(s) of error does it not detect?

Accepted Answer

The answer of What is the purpose of an adjusted...

Question 11

The adjusting entry to record the depreciation of equipment for the fiscal period is

Accepted Answer

A)   debit Depreciation Expense; credit Equipment
B)   debit Depreciation Expense; credit Accumulated Depreciation
C)   debit Accumulated Depreciation; credit Depreciation Expense
D)   debit Equipment; credit Depreciation Expense

Question 12

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Accepted Answer

A) True 
 B)False

Question 13

Unearned revenue is a liability.

Accepted Answer

A) True 
 B)False

Question 14

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

Accepted Answer

A)   Record payment of wages
B)   Record wages paid last month
C)   Record wages paid in advance
D)   Record wages expense incurred and to be paid next month

Question 15

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

Accepted Answer

A) True 
 B)False

Question 16

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Accepted Answer

The answer of The balance in the unearned fees account,...

Question 17

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

Accepted Answer

The answer of Indicate whether the following error would cause...

Question 18

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

Accepted Answer

The answer of Journalize the six entries to adjust the...

Question 19

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

Accepted Answer

The answer of Depreciation on Office Equipment is $3,300. The...

Question 20

The adjusting entry for rent earned that was previously recorded in the unearned rent account is

Accepted Answer

A)   debit Unearned Rent; credit Rent Revenue
B)   debit Rent Revenue; credit Unearned Rent
C)   debit Unearned Rent; credit Prepaid Rent
D)   debit Rent Expense; credit Unearned Rent

Exam 3: The Adjusting Process

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.

The account type and normal balance of Prepaid Expense is

A one-year insurance policy was purchased on June 1, 2011 for $1,500. The adjusting entry on December 31, 2011 would be:

Which of the following is an example of accrued revenue?

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

The Supplies account had a beginning balance of $1,750. Supplies purchased during the period totaled $3,500. At the end of the period before adjustment, $350 of supplies were on hand. Prepare the adjusting entry for supplies.

What is the purpose of an adjusted trial balance? What type(s) of error does it detect? What type(s) of error does it not detect?

The adjusting entry to record the depreciation of equipment for the fiscal period is

If the debit portion of an adjusting entry is to an asset account, then the credit portion must be to a liability account.

Unearned revenue is a liability.

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

The balance in the unearned fees account, before adjustment at the end of the year, is $10,250. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $3,125.

Indicate whether the following error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much.

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

Depreciation on Office Equipment is $3,300. The adjusting entry on December 31, 2011 would be:

The adjusting entry for rent earned that was previously recorded in the unearned rent account is