Question 1

In a service-type business, revenue is considered recognized

Accepted Answer

A)  at the end of the month. 
B)  at the end of the year. 
C)  when the service is performed. 
D)  when cash is received. 
A)  at the end of the month. 
B)  at the end of the year. 
C)  when the service is performed. 
D)  when cash is received.

Question 2

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

Accepted Answer

A) True 
 B)False

Question 3

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

Accepted Answer

A) True 
 B)False

Question 4

Accumulated Depreciation is

Accepted Answer

A)  an expense account. 
B)  a stockholders' equity account. 
C)  a liability account. 
D)  a contra asset account. 
A)  an expense account. 
B)  a stockholders' equity account. 
C)  a liability account. 
D)  a contra asset account.

Question 5

Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

Accepted Answer

A)  Debit Depreciation Expense, $1,800; Credit Accumulated Depreciation, $1,800. 
B)  Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150. 
C)  Debit Depreciation Expense, $5,400; Credit Accumulated Depreciation, $5,400. 
D)  Debit Equipment, $7,200; Credit Accumulated Depreciation, $7,200. 
A)  Debit Depreciation Expense, $1,800; Credit Accumulated Depreciation, $1,800. 
B)  Debit Depreciation Expense, $150; Credit Accumulated Depreciation, $150. 
C)  Debit Depreciation Expense, $5,400; Credit Accumulated Depreciation, $5,400. 
D)  Debit Equipment, $7,200; Credit Accumulated Depreciation, $7,200.

Question 6

On Friday of each week, Spoon Company pays its factory personnel weekly wages amounting to $45,000 for a five-day work week.
Instructions
(a) Prepare the necessary adjusting entry at year end, assuming December 31 falls on Wednesday.
(b) Prepare the journal entry for payment of the week's wages on the payday which is Friday, January 2 of the next year.

Accepted Answer

The answer of On Friday of each week, Spoon Company...

Question 7

On January 2, 2018, Superchunk purchased a general liability insurance policy for $2,700 for coverage for the calendar year. The entire $2,700 was charged to Insurance Expense on January 2, 2018. If the firm prepares monthly financial statements, the proper adjusting entry on January 31, 2018, will be:

Accepted Answer

The answer of On January 2, 2018, Superchunk purchased a...

Question 8

The revenue recognition principle dictates that revenue should be recognized in the accounting records

Accepted Answer

A)  when cash is received. 
B)  when the performance obligation is satisfied. 
C)  at the end of the month. 
D)  in the period that income taxes are paid. 
A)  when cash is received. 
B)  when the performance obligation is satisfied. 
C)  at the end of the month. 
D)  in the period that income taxes are paid.

Question 9

The economic entity assumption states that economic events

Accepted Answer

A)  of different entities can be combined if all the entities are corporations. 
B)  must be reported to the IASB. 
C)  of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D)  of every entity can be separately identified and accounted for. 
A)  of different entities can be combined if all the entities are corporations. 
B)  must be reported to the IASB. 
C)  of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D)  of every entity can be separately identified and accounted for.

Question 10

A company's calendar year and fiscal year are always the same.

Accepted Answer

A) True 
 B)False

Question 11

Double Nickels Company purchased equipment for $9,000 on January 1, 2018. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

Accepted Answer

A)  $0. 
B)  $250. 
C)  $3,000. 
D)  $9,000. 
A)  $0. 
B)  $250. 
C)  $3,000. 
D)  $9,000.

Question 12

For prepaid expense adjusting entries

Accepted Answer

A)  an expense-liability account relationship exists. 
B)  prior to adjustment, expenses are overstated and assets are understated. 
C)  the adjusting entry results in a debit to an expense account and a credit to an asset account. 
D)  none of these answer choices are correct. 
A)  an expense-liability account relationship exists. 
B)  prior to adjustment, expenses are overstated and assets are understated. 
C)  the adjusting entry results in a debit to an expense account and a credit to an asset account. 
D)  none of these answer choices are correct.

Question 13

A new sales representative, Jiggs Lucero, has just received his copy of the month-end financial reports. He is puzzled by the term "unearned revenue." He left the following e-mail message for you on the company's bulletin board system:
What is this??? Creative Accounting, or what??? Line item 12 on year-to-date financials shows over $25Gs in Unearned Revenue!!! Come on, guys! Either we earned it, or we didn't ... Right??! Is this how you guys lower our commissions? Reply to j.lucero@sbd
Required:
Write a response to send to Jiggs.

Accepted Answer

Since the answer is being prepared for a

Question 14

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Accepted Answer

A)  liabilities to be overstated. 
B)  revenues to be understated. 
C)  revenues to be overstated. 
D)  accounts receivable to be overstated. 
A)  liabilities to be overstated. 
B)  revenues to be understated. 
C)  revenues to be overstated. 
D)  accounts receivable to be overstated.

Question 15

Financial statements can be prepared from the information provided by an adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 16

Expense recognition is tied to revenue recognition.

Accepted Answer

A) True 
 B)False

Question 17

Accumulated Depreciation is a liability account and has a normal credit account balance.

Accepted Answer

A) True 
 B)False

Question 18

Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month, 8% note payable for $90,000 on November 1. On December 31, the accrued expense adjusting entry is

Accepted Answer

The answer of Pavement Company purchased a truck from Bee...

Question 19

Accrued expenses are

Accepted Answer

A)  paid and recorded in an asset account before they are used or consumed. 
B)  paid and recorded in an asset account after they are used or consumed. 
C)  incurred but not yet paid or recorded. 
D)  incurred and already paid or recorded. 
A)  paid and recorded in an asset account before they are used or consumed. 
B)  paid and recorded in an asset account after they are used or consumed. 
C)  incurred but not yet paid or recorded. 
D)  incurred and already paid or recorded.

Question 20

The expense recognition principle requires that expenses be matched with revenues.

Accepted Answer

A) True 
 B)False

In a service-type business, revenue is considered recognized

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

Accumulated Depreciation is

Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

The revenue recognition principle dictates that revenue should be recognized in the accounting records

The economic entity assumption states that economic events

A company's calendar year and fiscal year are always the same.

Double Nickels Company purchased equipment for $9,000 on January 1, 2018. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

For prepaid expense adjusting entries

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Financial statements can be prepared from the information provided by an adjusted trial balance.

Expense recognition is tied to revenue recognition.

Accumulated Depreciation is a liability account and has a normal credit account balance.

Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month, 8% note payable for $90,000 on November 1. On December 31, the accrued expense adjusting entry is

Accrued expenses are

The expense recognition principle requires that expenses be matched with revenues.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 3: Adjusting the Accounts

In a service-type business, revenue is considered recognized

A common application of materiality is weighing the factual nature of cost figures versus the relevance of fair value.

The revenue recognition principle dictates that revenue be recognized in the accounting period in which cash is received.

Accumulated Depreciation is

Meat Puppets Company purchased equipment for $7,200 on December 1. It is estimated that annual depreciation on the equipment will be $1,800. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

The revenue recognition principle dictates that revenue should be recognized in the accounting records

The economic entity assumption states that economic events

A company's calendar year and fiscal year are always the same.

Double Nickels Company purchased equipment for $9,000 on January 1, 2018. The company expects to use the equipment for 3 years. It has no salvage value. Monthly depreciation expense on the asset is

For prepaid expense adjusting entries

If unearned revenues are initially recorded in revenue accounts and not all the related services been performed at the end of the accounting period, the failure to make an adjusting entry will cause

Financial statements can be prepared from the information provided by an adjusted trial balance.

Expense recognition is tied to revenue recognition.

Accumulated Depreciation is a liability account and has a normal credit account balance.

Pavement Company purchased a truck from Bee Thousand Corp. by issuing a 6-month, 8% note payable for $90,000 on November 1. On December 31, the accrued expense adjusting entry is

Accrued expenses are

The expense recognition principle requires that expenses be matched with revenues.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters