Question 1

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 2

An adjusting entry could be made for each of the following except:

Accepted Answer

A) Prepaid expenses. 
B) Depreciation. 
C) Stockholder investments. 
D) Unearned revenues. 
E) Accrued expenses. 
A) Prepaid expenses. 
B) Depreciation. 
C) Stockholder investments. 
D) Unearned revenues. 
E) Accrued expenses.

Question 3

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

Accepted Answer

A) True 
 B)False

Question 4

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

Accepted Answer

A) Debit Unpaid Salaries and credit Salaries Payable. 
B) Debit Salaries Payable and credit Salaries Expense. 
C) Debit Salaries Expense and credit Cash. 
D) Debit Salaries Expense and credit Salaries Payable. 
E) Debit Cash and credit Salaries Expense. 
A) Debit Unpaid Salaries and credit Salaries Payable. 
B) Debit Salaries Payable and credit Salaries Expense. 
C) Debit Salaries Expense and credit Cash. 
D) Debit Salaries Expense and credit Salaries Payable. 
E) Debit Cash and credit Salaries Expense.

Question 5

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Accepted Answer

A) $16,780 debit. 
B) $7,180 credit. 
C) $16,780 credit. 
D) $18,280 credit. 
E) $23,780 credit. 
A) $16,780 debit. 
B) $7,180 credit. 
C) $16,780 credit. 
D) $18,280 credit. 
E) $23,780 credit.

Question 6

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Accepted Answer

A) True 
 B)False

Question 7

Explain the difference between temporary and permanent accounts.

Accepted Answer

Temporary,or nominal,accounts accumulate

Question 8

Each adjusting entry affects one or more income statement account,one or more balance sheet account,and never cash.

Accepted Answer

A) True 
 B)False

Question 9

A company purchased new furniture at a cost of $14,000 on September 30.The furniture is estimated to have a useful life of 8 years and a salvage value of $2,000.The company uses the straight-line method of depreciation.How much depreciation expense will be recorded for the furniture for the first year ended December 31?

Accepted Answer

A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750 
A) $437.50 
B) $375.00 
C) $1,500.00 
D) $500 
E) $1,750

Question 10

The closing process takes place before financial statements have been prepared.

Accepted Answer

A) True 
 B)False

Question 11

The unadjusted trial balance and the adjustment data for Porter Business Institute are given below along with adjusting entry information.What is the impact on net income if these adjustments are not recorded? Show the calculation for net income without the adjustments and net income with the adjustments.Which one gives the most accurate net income? Which accounting principles are being violated if the adjustments are not made?
   Additional information items:
a.The Prepaid Insurance account consists of a payment for a 1 year policy.An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.
b.A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent.
c.Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

Accepted Answer

@#IMG-DLM& The accrual basis gives the most accura

Question 12

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

Accepted Answer

A) Fiscal year. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Calendar year. 
A) Fiscal year. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Calendar year.

Question 13

The ________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Accepted Answer

The answer of The ________ depreciation method allocates equal amounts...

Question 14

Journal entries recorded at the end of each accounting period to prepare the revenue,expense,and dividends accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

Accepted Answer

A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries. 
A) Adjusting entries. 
B) Closing entries. 
C) Final entries. 
D) Work sheet entries. 
E) Updating entries.

Question 15

The accrual basis of accounting recognizes expenses when cash is paid.

Accepted Answer

A) True 
 B)False

Question 16

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

Accepted Answer

A) True 
 B)False

Question 17

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:

Accepted Answer

A) Income Summary account. 
B) Closing account. 
C) Balance column account. 
D) Contra account. 
E) Nominal account. 
A) Income Summary account. 
B) Closing account. 
C) Balance column account. 
D) Contra account. 
E) Nominal account.

Question 18

The Dividends account is normally closed by debiting it.

Accepted Answer

A) True 
 B)False

Question 19

Adjusting entries always affect the cash account.

Accepted Answer

A) True 
 B)False

Question 20

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Accepted Answer

A) True 
 B)False

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

An adjusting entry could be made for each of the following except:

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Explain the difference between temporary and permanent accounts.

Each adjusting entry affects one or more income statement account,one or more balance sheet account,and never cash.

The closing process takes place before financial statements have been prepared.

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

The ________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Journal entries recorded at the end of each accounting period to prepare the revenue,expense,and dividends accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

The accrual basis of accounting recognizes expenses when cash is paid.

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:

The Dividends account is normally closed by debiting it.

Adjusting entries always affect the cash account.

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Introducing Financial Statements

Financial Statements and the Accounting System

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 3: Adjusting Accounts for Financial Statements

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

An adjusting entry could be made for each of the following except:

A company's month-end adjusting entry for Insurance Expense is $1,000.If this entry is not made then expenses are understated by $1,000 and net income is overstated by $1,000.

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Reversing entries overcome the disadvantage of more complex entries to pay accrued liabilities from the previous accounting period.

Explain the difference between temporary and permanent accounts.

Each adjusting entry affects one or more income statement account,one or more balance sheet account,and never cash.

The closing process takes place before financial statements have been prepared.

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

The ________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Journal entries recorded at the end of each accounting period to prepare the revenue,expense,and dividends accounts for the upcoming period and to update the retained earnings account for the events of the period just finished are referred to as:

The accrual basis of accounting recognizes expenses when cash is paid.

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from)the retained earnings account is the:

The Dividends account is normally closed by debiting it.

Adjusting entries always affect the cash account.

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Introducing Financial Statements

Financial Statements and the Accounting System

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters