Question 1

Adjusting entries are required

Accepted Answer

A)  because some costs expire with the passage of time and have not yet been journalized. 
B)  when the company's profits are below the budget. 
C)  when expenses are recorded in the period in which they are incurred. 
D)  when revenues are recorded in the period in which services are performed. 
A)  because some costs expire with the passage of time and have not yet been journalized. 
B)  when the company's profits are below the budget. 
C)  when expenses are recorded in the period in which they are incurred. 
D)  when revenues are recorded in the period in which services are performed.

Question 2

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

Accepted Answer

A) True 
 B)False

Question 3

Blue Guitar Music School borrowed $30,000 from the bank signing an 8%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar)?

Accepted Answer

Interest Expense ($3

Question 4

All of the following are characteristics of accounting information except

Accepted Answer

A)  faithful representation. 
B)  comparability. 
C)  relevance. 
D)  flexibility. 
A)  faithful representation. 
B)  comparability. 
C)  relevance. 
D)  flexibility.

Question 5

An adjusting entry

Accepted Answer

A)  affects two balance sheet accounts. 
B)  affects two income statement accounts. 
C)  affects a balance sheet account and an income statement account. 
D)  is always a compound entry. 
A)  affects two balance sheet accounts. 
B)  affects two income statement accounts. 
C)  affects a balance sheet account and an income statement account. 
D)  is always a compound entry.

Question 6

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, the failure to make an adjusting entry will cause

Accepted Answer

A)  assets to be understated. 
B)  assets to be overstated. 
C)  expenses to be understated. 
D)  contra-expenses to be overstated. 
A)  assets to be understated. 
B)  assets to be overstated. 
C)  expenses to be understated. 
D)  contra-expenses to be overstated.

Question 7

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

Accepted Answer

A)  net income to be overstated. 
B)  an understatement of assets and an understatement of revenues. 
C)  an understatement of revenues and an understatement of liabilities. 
D)  an understatement of revenues and an overstatement of liabilities. 
A)  net income to be overstated. 
B)  an understatement of assets and an understatement of revenues. 
C)  an understatement of revenues and an understatement of liabilities. 
D)  an understatement of revenues and an overstatement of liabilities.

Question 8

On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is

Accepted Answer

A)  Debit Rent Expense, $14,000; Credit Prepaid Rent, $3,500. 
B)  Debit Prepaid Rent, $3,500; Credit Rent Expense, $3,500. 
C)  Debit Rent Expense, $3,500; Credit Prepaid Rent, $3,500. 
D)  Debit Rent Expense, $14,000; Credit Prepaid Rent, $14,000. 
A)  Debit Rent Expense, $14,000; Credit Prepaid Rent, $3,500. 
B)  Debit Prepaid Rent, $3,500; Credit Rent Expense, $3,500. 
C)  Debit Rent Expense, $3,500; Credit Prepaid Rent, $3,500. 
D)  Debit Rent Expense, $14,000; Credit Prepaid Rent, $14,000.

Question 9

A liability-revenue relationship exists with

Accepted Answer

A)  prepaid expense adjusting entries. 
B)  accrued expense adjusting entries. 
C)  unearned revenue adjusting entries. 
D)  accrued revenue adjusting entries. 
A)  prepaid expense adjusting entries. 
B)  accrued expense adjusting entries. 
C)  unearned revenue adjusting entries. 
D)  accrued revenue adjusting entries.

Question 10

Soundgarden Company collected $18,200 in May of 2018 for 5 months of service which would take place from October of 2018 through February of 2019. The revenue reported from this transaction during 2018 would be

Accepted Answer

A)  $0. 
B)  $7,280. 
C)  $10,920. 
D)  $18,200. 
A)  $0. 
B)  $7,280. 
C)  $10,920. 
D)  $18,200.

Question 11

On January 1, Chan & Chan, CPAs received a $15,000 cash retainer for accounting services to be rendered ratably over the next 3 months. The full amount was credited to the liability account Unearned Service Revenue. Assuming that the revenue is recognized equally over the 3-month period, what adjusting journal entry should be made at January 31?

Accepted Answer

The answer of On January 1, Chan & Chan, CPAs...

Question 12

Consistency in accounting means that a company uses the same accounting principles from one accounting period to the next accounting period.

Accepted Answer

A) True 
 B)False

Question 13

Match between columns
                        Premises: A revenue recognized; not yet collected or recorded.
A revenue not yet recognized; collected in advance.
Interest expense incurred; not yet paid.
Rent not yet collected; already recognized.
An expense incurred; not yet paid or recorded.
An expense not yet incurred; paid in advance.
Office supplies on hand that will be used in the next period.
Interest revenue collected; not yet recognized.

Accepted Answer

The Answer of Accrued Expenses and Accrued Revenues and Unearned is...

Question 14

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Accepted Answer

A)  Debit Supplies Expense, $1,000; Credit Supplies, $1,000. 
B)  Debit Supplies, $1,000; Credit Supplies Expense, $1,000. 
C)  Debit Supplies, $6,000; Credit Supplies Expense, $6,000. 
D)  Debit Supplies Expense, $6,000; Credit Supplies, $6,000. 
A)  Debit Supplies Expense, $1,000; Credit Supplies, $1,000. 
B)  Debit Supplies, $1,000; Credit Supplies Expense, $1,000. 
C)  Debit Supplies, $6,000; Credit Supplies Expense, $6,000. 
D)  Debit Supplies Expense, $6,000; Credit Supplies, $6,000.

Question 15

Under accrual-basis accounting

Accepted Answer

A)  cash must be received before revenue is recognized. 
B)  net income is calculated by matching cash outflows against cash inflows. 
C)  events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. 
D)  the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. 
A)  cash must be received before revenue is recognized. 
B)  net income is calculated by matching cash outflows against cash inflows. 
C)  events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. 
D)  the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Question 16

The expense recognition principle requires that efforts be matched with accomplishments.

Accepted Answer

A) True 
 B)False

Question 17

Monthly and quarterly time periods are called

Accepted Answer

A)  calendar periods. 
B)  fiscal periods. 
C)  interim periods. 
D)  quarterly periods. 
A)  calendar periods. 
B)  fiscal periods. 
C)  interim periods. 
D)  quarterly periods.

Question 18

On January 1, 2018, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2018 is

Accepted Answer

A)  $0. 
B)  $9,600. 
C)  $30,400. 
D)  $40,000. 
A)  $0. 
B)  $9,600. 
C)  $30,400. 
D)  $40,000.

Question 19

Financial statements are prepared directly from the

Accepted Answer

A)  general journal. 
B)  ledger. 
C)  trial balance. 
D)  adjusted trial balance. 
A)  general journal. 
B)  ledger. 
C)  trial balance. 
D)  adjusted trial balance.

Question 20

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

Accepted Answer

A) True 
 B)False

Adjusting entries are required

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

All of the following are characteristics of accounting information except

An adjusting entry

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, the failure to make an adjusting entry will cause

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is

A liability-revenue relationship exists with

Soundgarden Company collected $18,200 in May of 2018 for 5 months of service which would take place from October of 2018 through February of 2019. The revenue reported from this transaction during 2018 would be

Consistency in accounting means that a company uses the same accounting principles from one accounting period to the next accounting period.

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Under accrual-basis accounting

The expense recognition principle requires that efforts be matched with accomplishments.

Monthly and quarterly time periods are called

On January 1, 2018, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2018 is

Financial statements are prepared directly from the

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

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

Adjusting entries are required

To be faithfully representative, accounting information should predict future events, confirm prior expectations, and be reported on a timely basis.

All of the following are characteristics of accounting information except

An adjusting entry

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period, the failure to make an adjusting entry will cause

Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause

On July 1, Runner's Sports Store paid $14,000 to Corona Realty for 4 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Runner's Sports Store is

A liability-revenue relationship exists with

Soundgarden Company collected $18,200 in May of 2018 for 5 months of service which would take place from October of 2018 through February of 2019. The revenue reported from this transaction during 2018 would be

Consistency in accounting means that a company uses the same accounting principles from one accounting period to the next accounting period.

Dreamtime Laundry purchased $7,000 worth of supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the supplies indicated only $1,000 on hand. The adjusting entry that should be made by the company on June 30 is

Under accrual-basis accounting

The expense recognition principle requires that efforts be matched with accomplishments.

Monthly and quarterly time periods are called

On January 1, 2018, Superfuzz Company purchased equipment for $40,000. The company is depreciating the equipment at the rate of $800 per month. The book value of the equipment at December 31, 2018 is

Financial statements are prepared directly from the

If prepaid costs are initially recorded as an asset, no adjusting entries will be required in the future.

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