Question 1

The main purpose of adjusting entries is to:

Accepted Answer

A) Record external transactions and events. 
B) Record internal transactions and events. 
C) Recognize assets purchased during the period. 
D) Recognize debts paid during the period. 
E) Correct errors in the accounting records. 
A) Record external transactions and events. 
B) Record internal transactions and events. 
C) Recognize assets purchased during the period. 
D) Recognize debts paid during the period. 
E) Correct errors in the accounting records.

Question 2

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 3

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

Accepted Answer

A) True 
 B)False

Question 4

What is the purpose of closing entries? Describe the closing process.

Accepted Answer

The purpose of closing entries is to tra

Question 5

Andrew's net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

Accepted Answer

Profit Margin Ratio

Question 6

An adjusting entry often includes an entry to Cash.

Accepted Answer

A) True 
 B)False

Question 7

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

Accepted Answer

A) $3,305. 
B) $4,180. 
C) $2,350. 
D) $2,540. 
E) $3,225. 
A) $3,305. 
B) $4,180. 
C) $2,350. 
D) $2,540. 
E) $3,225.

Question 8

A company owes its employees $5,000 for the year ended December 31.It will pay employees on January 6 for the previous two weeks' salaries.The year-end adjusting entry on December 31 will include a debit to Salaries Expense and a credit to Cash.

Accepted Answer

A) True 
 B)False

Question 9

Explain how accounting adjustments affect financial statements and provide an example of an adjustment that would impact the statements if not recorded.

Accepted Answer

Adjusting entries bring assets,liabiliti

Question 10

Since the revenue recognition principle requires that revenues be recorded when earned,there are no unearned revenues in accrual accounting.

Accepted Answer

A) True 
 B)False

Question 11

On January 1,Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Imlay uses the straight-line depreciation method to allocate costs,and only prepares adjustments at year-end.The adjusting entry needed on December 31 of the first year is:

Accepted Answer

A) Debit Depreciation Expense,$9,000; credit Accumulated Depreciation,$9,000. 
B) Debit Depreciation Expense,$18,000; credit Accumulated Depreciation,$18,000. 
C) Debit Depreciation Expense,$90,000; credit Accumulated Depreciation,$90,000. 
D) Debit Depreciation Expense,$18,000; credit Equipment,$18,000. 
E) Debit Depreciation Expense,$9,000; credit Equipment,$9,000. 
A) Debit Depreciation Expense,$9,000; credit Accumulated Depreciation,$9,000. 
B) Debit Depreciation Expense,$18,000; credit Accumulated Depreciation,$18,000. 
C) Debit Depreciation Expense,$90,000; credit Accumulated Depreciation,$90,000. 
D) Debit Depreciation Expense,$18,000; credit Equipment,$18,000. 
E) Debit Depreciation Expense,$9,000; credit Equipment,$9,000.

Question 12

The work sheet is a required report made available to external decision makers.

Accepted Answer

A) True 
 B)False

Question 13

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

Accepted Answer

receipts (

Question 14

Complete the following by filling in the blanks:
(1)The Prepaid Insurance account had a $545 debit balance at the beginning of the current year; $650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420 of prepaid insurance; consequently,the income statement for the year must have shown $________ of insurance expense.
(2)The Office Supplies account began the current year with a $235 debit balance; the income statement for the year showed $475 of office supplies expense; and the year-end balance sheet showed the current asset,office supplies,at $275; consequently,if all supplies were accounted for,$________ of office supplies must have been purchased during the year.

Accepted Answer

(1)$775 = $545 + $65

Question 15

After posting the entries to close all revenue and expense accounts,Marker Company's Income Summary account has a credit balance of $6,000,and its Dividends account has a debit balance of $2,500.These balances indicate that net income for the current accounting period amounted to $3,500.

Accepted Answer

A) True 
 B)False

Question 16

Adjusting entries made at the end of an accounting period accomplish all of the following except:

Accepted Answer

A) Updating liability and asset accounts to their proper balances. 
B) Assigning revenues to the periods in which they are earned. 
C) Assigning expenses to the periods in which they are incurred. 
D) Assuring that financial statements reflect the revenues earned and the expenses incurred. 
E) Assuring that external transaction amounts remain unchanged. 
A) Updating liability and asset accounts to their proper balances. 
B) Assigning revenues to the periods in which they are earned. 
C) Assigning expenses to the periods in which they are incurred. 
D) Assuring that financial statements reflect the revenues earned and the expenses incurred. 
E) Assuring that external transaction amounts remain unchanged.

Question 17

An unclassified balance sheet provides more information to users than a classified balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

The adjusting entry to record an accrued revenue is:

Accepted Answer

A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability. 
A) Increase an expense; increase a liability. 
B) Increase an asset; increase revenue. 
C) Decrease a liability; increase revenue. 
D) Increase an expense; decrease an asset. 
E) Increase an expense; decrease a liability.

Question 19

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Accepted Answer

A) True 
 B)False

Question 20

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

Accepted Answer

Adjusting entries are necessary for tran

The main purpose of adjusting entries is to:

A salary owed to employees is an example of an accrued expense.

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

What is the purpose of closing entries? Describe the closing process.

Andrew's net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

An adjusting entry often includes an entry to Cash.

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

A company owes its employees $5,000 for the year ended December 31.It will pay employees on January 6 for the previous two weeks' salaries.The year-end adjusting entry on December 31 will include a debit to Salaries Expense and a credit to Cash.

Explain how accounting adjustments affect financial statements and provide an example of an adjustment that would impact the statements if not recorded.

Since the revenue recognition principle requires that revenues be recorded when earned,there are no unearned revenues in accrual accounting.

The work sheet is a required report made available to external decision makers.

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

After posting the entries to close all revenue and expense accounts,Marker Company's Income Summary account has a credit balance of $6,000,and its Dividends account has a debit balance of $2,500.These balances indicate that net income for the current accounting period amounted to $3,500.

Adjusting entries made at the end of an accounting period accomplish all of the following except:

An unclassified balance sheet provides more information to users than a classified balance sheet.

The adjusting entry to record an accrued revenue is:

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

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

The main purpose of adjusting entries is to:

A salary owed to employees is an example of an accrued expense.

On a work sheet,if the Debit total exceeds the Credit total of the Income Statement columns,a net loss is indicated.

What is the purpose of closing entries? Describe the closing process.

Andrew's net income was $280,000; its total assets were $1,050,000; and its net sales were $3,500,000.Calculate the company's profit margin ratio.

An adjusting entry often includes an entry to Cash.

A company's December 31 work sheet for the current period appears below.Based on the information provided,what is net income for the current period?

A company owes its employees $5,000 for the year ended December 31.It will pay employees on January 6 for the previous two weeks' salaries.The year-end adjusting entry on December 31 will include a debit to Salaries Expense and a credit to Cash.

Explain how accounting adjustments affect financial statements and provide an example of an adjustment that would impact the statements if not recorded.

Since the revenue recognition principle requires that revenues be recorded when earned,there are no unearned revenues in accrual accounting.

The work sheet is a required report made available to external decision makers.

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

After posting the entries to close all revenue and expense accounts,Marker Company's Income Summary account has a credit balance of $6,000,and its Dividends account has a debit balance of $2,500.These balances indicate that net income for the current accounting period amounted to $3,500.

Adjusting entries made at the end of an accounting period accomplish all of the following except:

An unclassified balance sheet provides more information to users than a classified balance sheet.

The adjusting entry to record an accrued revenue is:

Before an adjusting entry is made to accrue employee salaries,Salaries Expense and Salaries Payable are both understated.

Explain the purpose of adjusting entries at the end of a period and provide an example of an adjusting entry.

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