Question 1

Which of the following correctly describes the following adjusting journal entry?

Accepted Answer

A) Total assets decrease and net income decreases. 
B) Stockholders' equity decreases and liabilities increase. 
C) The transaction is an example of a deferral. 
D) Net income decreases and stockholders' equity does not change. 
A) Total assets decrease and net income decreases. 
B) Stockholders' equity decreases and liabilities increase. 
C) The transaction is an example of a deferral. 
D) Net income decreases and stockholders' equity does not change. B

Question 2

Which of the following does not correctly describe an adjusting journal entry that debits depreciation expense and credits accumulated depreciation?

Accepted Answer

A) The entry increases expenses and increases assets. 
B) The entry decreases net income and decreases assets. 
C) The entry increases expenses and decreases retained earnings. 
D) The entry decreases assets and decreases net income. 
A) The entry increases expenses and increases assets. 
B) The entry decreases net income and decreases assets. 
C) The entry increases expenses and decreases retained earnings. 
D) The entry decreases assets and decreases net income. A

Question 3

Which of the following journal entries is created to adjust for a previously recorded deferral?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)    A

Question 4

Which of the following statements regarding earnings per share is not correct?

Accepted Answer

A) Earnings per share can be reported on the income statement. 
B) The numerator is net income. 
C) The denominator is the average number of shares of common stock outstanding. 
D) Earnings per share does not have to be disclosed on the income statement or the notes to the financial statements. 
A) Earnings per share can be reported on the income statement. 
B) The numerator is net income. 
C) The denominator is the average number of shares of common stock outstanding. 
D) Earnings per share does not have to be disclosed on the income statement or the notes to the financial statements.

Question 5

Which of the following account balances would not be closed at year-end by debiting the account?

Accepted Answer

A) Interest revenue. 
B) Gain on sale of building. 
C) Sales revenue. 
D) Unearned revenue. 
A) Interest revenue. 
B) Gain on sale of building. 
C) Sales revenue. 
D) Unearned revenue.

Question 6

Which of the following correctly describes the closing entry process?

Accepted Answer

A) The closing process reduces the balances in the permanent accounts to zero at the end of each period. 
B) The closing entries are usually prepared prior to the adjusted trial balance. 
C) The closing process creates a zero balance in all temporary accounts at the end of each period. 
D) The closing process creates a zero balance at the end of each period for all accounts on the year-end trial balance. 
A) The closing process reduces the balances in the permanent accounts to zero at the end of each period. 
B) The closing entries are usually prepared prior to the adjusted trial balance. 
C) The closing process creates a zero balance in all temporary accounts at the end of each period. 
D) The closing process creates a zero balance at the end of each period for all accounts on the year-end trial balance.

Question 7

Which is the correct sequence of the following steps in the accounting cycle?

Accepted Answer

A) Prepare journal entries,analyze transactions,prepare adjusted trial balance. 
B) Prepare adjusted trial balance,prepare closing entries,and prepare financial statements. 
C) Post adjusting journal entries,prepare adjusted trial balance,prepare financial statements. 
D) Post closing entries,prepare financial statements,prepare adjusted trial balance. 
A) Prepare journal entries,analyze transactions,prepare adjusted trial balance. 
B) Prepare adjusted trial balance,prepare closing entries,and prepare financial statements. 
C) Post adjusting journal entries,prepare adjusted trial balance,prepare financial statements. 
D) Post closing entries,prepare financial statements,prepare adjusted trial balance.

Question 8

On November 1,2019,Bruce Company leased some of its office space to Fairlane Company and immediately collected $600,000 for twelve months rent in advance.Bruce debited cash and credited unearned rent revenue for $600,000.
Prepare the December 31,2019 adjusting entry Bruce should make in respect to the rent,assuming no adjusting entries have been made during the year.

Accepted Answer

@#IMG-DLM& $600,000

Question 9

What is the effect on the financial statements when a company fails to record depreciation expense at year-end?

Accepted Answer

A) Net income is overstated and stockholders' equity is understated. 
B) Expenses are understated and stockholders' equity is understated. 
C) Expenses are understated and liabilities are overstated. 
D) Net income is overstated and assets are overstated. 
A) Net income is overstated and stockholders' equity is understated. 
B) Expenses are understated and stockholders' equity is understated. 
C) Expenses are understated and liabilities are overstated. 
D) Net income is overstated and assets are overstated.

Question 10

Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?

Accepted Answer

A) The entry increases expenses and decreases stockholders' equity. 
B) The entry decreases net income and decreases assets. 
C) The entry increases expenses and decreases current assets. 
D) The entry decreases net income and decreases liabilities. 
A) The entry increases expenses and decreases stockholders' equity. 
B) The entry decreases net income and decreases assets. 
C) The entry increases expenses and decreases current assets. 
D) The entry decreases net income and decreases liabilities.

Question 11

Which one of the following accounts would not be closed at the end of the accounting year?

Accepted Answer

A) Utilities expense. 
B) Sales revenue. 
C) Prepaid rent. 
D) Wages expense. 
A) Utilities expense. 
B) Sales revenue. 
C) Prepaid rent. 
D) Wages expense.

Question 12

Under accrual accounting,interest expense would be recognized on the income statement when the interest has accrued with the passage of time even though cash has not been paid.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is inaccurate with respect to the total asset turnover ratio?

Accepted Answer

A) The ratio is calculated as sales revenues divided by total assets at year-end. 
B) The ratio is decreased when additional plant and equipment is purchased. 
C) A high ratio implies efficient management of assets. 
D) The ratio is decreased when additional inventory is purchased. 
A) The ratio is calculated as sales revenues divided by total assets at year-end. 
B) The ratio is decreased when additional plant and equipment is purchased. 
C) A high ratio implies efficient management of assets. 
D) The ratio is decreased when additional inventory is purchased.

Question 14

Cash collected from customers in advance of providing the goods or services creates a liability,which is later reduced when the goods or services are provided.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding the balance sheet is false?

Accepted Answer

A) Buildings and equipment are reported at book value. 
B) Assets are reported in the order of liquidity. 
C) Current liabilities are obligations to be paid with current assets. 
D) The balance sheet reflects balances for a period of time. 
A) Buildings and equipment are reported at book value. 
B) Assets are reported in the order of liquidity. 
C) Current liabilities are obligations to be paid with current assets. 
D) The balance sheet reflects balances for a period of time.

Question 16

Which of the following account balances would not be affected by closing entries?

Accepted Answer

A) Interest expense. 
B) Accumulated depreciation. 
C) Treasury stock. 
D) Retained earnings. 
A) Interest expense. 
B) Accumulated depreciation. 
C) Treasury stock. 
D) Retained earnings.

Question 17

Modern Mother Magazine (MMM)has received cash subscriptions on April 1,2019 in the amount of $3,600,000 for the next three years.The year-end for MMM is December 31,2019.Magazine delivery occurs monthly and started on April 1,2019.These were the only subscription sales for the year.
Answer the following questions for the year ended December 31,2019.
A.What amount of cash should be reported for the year on the statement of cash flows?
B.What amount of subscriptions revenue should be reported on the income statement?
C.What amount would be reported as unearned subscriptions revenue on the balance sheet as of December 31,2019?

Accepted Answer

A.$3,600,000.
B.$900

Question 18

Bridge Company keeps a small inventory of supplies used for cleaning and maintenance purposes.On January 1,2019,the inventory of supplies on hand was $2,000.During the year,supplies purchased were debited to the supplies account in the amount of $6,500.On December 31,2019,the amount of supplies in the storeroom was $1,750.The books are adjusted only at year-end.
Prepare the adjusting entry required at December 31,2019.

Accepted Answer

@#IMG-DLM& $2,000 +

Question 19

At the end of the accounting period,the balances in the nominal accounts are closed while the balances in the real accounts are carried forward to the next accounting period.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following accounts is used to record an accrual for expenses?

Accepted Answer

A) Prepaid rent. 
B) Unearned revenues. 
C) Accounts receivable. 
D) Interest payable. 
A) Prepaid rent. 
B) Unearned revenues. 
C) Accounts receivable. 
D) Interest payable.

Which of the following correctly describes the following adjusting journal entry?

Which of the following does not correctly describe an adjusting journal entry that debits depreciation expense and credits accumulated depreciation?

Which of the following journal entries is created to adjust for a previously recorded deferral?

Which of the following statements regarding earnings per share is not correct?

Which of the following account balances would not be closed at year-end by debiting the account?

Which of the following correctly describes the closing entry process?

Which is the correct sequence of the following steps in the accounting cycle?

What is the effect on the financial statements when a company fails to record depreciation expense at year-end?

Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?

Which one of the following accounts would not be closed at the end of the accounting year?

Under accrual accounting,interest expense would be recognized on the income statement when the interest has accrued with the passage of time even though cash has not been paid.

Which of the following statements is inaccurate with respect to the total asset turnover ratio?

Cash collected from customers in advance of providing the goods or services creates a liability,which is later reduced when the goods or services are provided.

Which of the following statements regarding the balance sheet is false?

Which of the following account balances would not be affected by closing entries?

At the end of the accounting period,the balances in the nominal accounts are closed while the balances in the real accounts are carried forward to the next accounting period.

Which of the following accounts is used to record an accrual for expenses?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 4: Adjustments,financial Statements,and the Quality of Earnings

Which of the following correctly describes the following adjusting journal entry?

Which of the following does not correctly describe an adjusting journal entry that debits depreciation expense and credits accumulated depreciation?

Which of the following journal entries is created to adjust for a previously recorded deferral?

Which of the following statements regarding earnings per share is not correct?

Which of the following account balances would not be closed at year-end by debiting the account?

Which of the following correctly describes the closing entry process?

Which is the correct sequence of the following steps in the accounting cycle?

What is the effect on the financial statements when a company fails to record depreciation expense at year-end?

Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?

Which one of the following accounts would not be closed at the end of the accounting year?

Under accrual accounting,interest expense would be recognized on the income statement when the interest has accrued with the passage of time even though cash has not been paid.

Which of the following statements is inaccurate with respect to the total asset turnover ratio?

Cash collected from customers in advance of providing the goods or services creates a liability,which is later reduced when the goods or services are provided.

Which of the following statements regarding the balance sheet is false?

Which of the following account balances would not be affected by closing entries?

At the end of the accounting period,the balances in the nominal accounts are closed while the balances in the real accounts are carried forward to the next accounting period.

Which of the following accounts is used to record an accrual for expenses?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters