Question 1

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

Accepted Answer

A)  accrual of expense. 
B)  accrual of revenue. 
C)  accrual of unearned revenue. 
D)  prepayment for services. 
A)  accrual of expense. 
B)  accrual of revenue. 
C)  accrual of unearned revenue. 
D)  prepayment for services.

Question 2

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Accepted Answer

A)  Comparability 
B)  Relevance 
C)  Faithful representation 
D)  Consistency 
A)  Comparability 
B)  Relevance 
C)  Faithful representation 
D)  Consistency

Question 3

Which one of the following is not a justification for adjusting entries?

Accepted Answer

A)  Adjusting entries are necessary to ensure that the revenue recognition principle is followed. 
B)  Adjusting entries are necessary to ensure that the expense recognition principle is followed. 
C)  Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. 
D)  Adjusting entries are necessary to bring the general ledger accounts in line with the budget. 
A)  Adjusting entries are necessary to ensure that the revenue recognition principle is followed. 
B)  Adjusting entries are necessary to ensure that the expense recognition principle is followed. 
C)  Adjusting entries are necessary to enable financial statements to be in conformity with GAAP. 
D)  Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Question 4

Which statement is correct?

Accepted Answer

A)  As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use. 
B)  The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles. 
C)  The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received. 
D)  As long as management is ethical, there are no problems with using the cash basis of accounting. 
A)  As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use. 
B)  The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles. 
C)  The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received. 
D)  As long as management is ethical, there are no problems with using the cash basis of accounting.

Question 5

Pixies Inc. pays its rent of $54,000 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

Accepted Answer

A)  Failure to make the adjustment does not affect the February financial statements. 
B)  Expenses will be overstated by $4,500 and net income and stockholders' equity will be understated by $4,500. 
C)  Assets will be overstated by $9,000 and net income and stockholders' equity will be understated by $9,000. 
D)  Assets will be overstated by $4,500 and net income and stockholders' equity will be overstated by $4,500. 
A)  Failure to make the adjustment does not affect the February financial statements. 
B)  Expenses will be overstated by $4,500 and net income and stockholders' equity will be understated by $4,500. 
C)  Assets will be overstated by $9,000 and net income and stockholders' equity will be understated by $9,000. 
D)  Assets will be overstated by $4,500 and net income and stockholders' equity will be overstated by $4,500.

Question 6

Rhodes National purchased software on October 1, 2018 for $14,400. The company expects to use the software for 3 years. It has no salvage value.
1. What adjusting journal entry should the company make at the end of each month if monthly financials are prepared? (annual depreciation is $4,800)
2. What balance will be reported on the December 31, 2018 balance sheet for Accumulated Depreciation?

Accepted Answer

1. Depreciation Expense 400
Ac

Question 7

What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $18,500, and unexpired amounts per analysis of policies of $6,000?

Accepted Answer

A)  Debit Insurance Expense, $6,000; Credit Prepaid Insurance, $6,000. 
B)  Debit Insurance Expense, $18,500; Credit Prepaid Insurance, $18,500. 
C)  Debit Prepaid Insurance, $12,500; Credit Insurance Expense, $12,500. 
D)  Debit Insurance Expense, $12,500; Credit Prepaid Insurance, $12,500. 
A)  Debit Insurance Expense, $6,000; Credit Prepaid Insurance, $6,000. 
B)  Debit Insurance Expense, $18,500; Credit Prepaid Insurance, $18,500. 
C)  Debit Prepaid Insurance, $12,500; Credit Insurance Expense, $12,500. 
D)  Debit Insurance Expense, $12,500; Credit Prepaid Insurance, $12,500.

Question 8

Many business transactions affect more than one time period.

Accepted Answer

A) True 
 B)False

Question 9

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

Accepted Answer

A) True 
 B)False

Question 10

Accrual-basis accounting is allowed under

Accepted Answer

A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.
IFRS, 
A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.
IFRS,

Question 11

Which of the following is not an accounting assumption?

Accepted Answer

A)  Integrity. 
B)  Going concern. 
C)  Periodicity. 
D)  Economic entity. 
A)  Integrity. 
B)  Going concern. 
C)  Periodicity. 
D)  Economic entity.

Question 12

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

Accepted Answer

A)  an expense should be recorded when the bill is received. 
B)  an expense should be recorded when the cash is paid out. 
C)  an adjusting entry should be made recognizing the expense. 
D)  it is optional whether to record the expense before the bill is received. 
A)  an expense should be recorded when the bill is received. 
B)  an expense should be recorded when the cash is paid out. 
C)  an adjusting entry should be made recognizing the expense. 
D)  it is optional whether to record the expense before the bill is received.

Question 13

Cash-basis accounting is in accordance with

Accepted Answer

A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.
IFRS, 
A)  GAAP but not IFRS. 
B)  IFRS but not GAAP. 
C)  both IFRS and GAAP. 
D)  neither IFRS nor GAAP.
IFRS,

Question 14

Which of the following statements related to the adjusted trial balance is incorrect?

Accepted Answer

A)  It shows the balances of all accounts at the end of the accounting period. 
B)  It is prepared before adjusting entries have been made. 
C)  It proves the equality of the total debit balances and the total credit balances in the ledger. 
D)  Financial statements can be prepared directly from the adjusted trial balance. 
A)  It shows the balances of all accounts at the end of the accounting period. 
B)  It is prepared before adjusting entries have been made. 
C)  It proves the equality of the total debit balances and the total credit balances in the ledger. 
D)  Financial statements can be prepared directly from the adjusted trial balance.

Question 15

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

Accepted Answer

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

Question 16

Uncle Tupelo's Gifts signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $75,000 with annual interest of 12%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest?

Accepted Answer

The answer of Uncle Tupelo's Gifts signs a three-month note...

Question 17

A flower shop makes a large sale for $1,200 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,200 considered to be recognized?

Accepted Answer

A)  December 5. 
B)  December 10. 
C)  November 30. 
D)  December 1. 
A)  December 5. 
B)  December 10. 
C)  November 30. 
D)  December 1.

Question 18

182. Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2018 for $60,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2018 is

Accepted Answer

Question 19

At December 31, 2018, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $2,800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

Accepted Answer

A)  $2,450. 
B)  $3,450. 
C)  $2,800. 
D)  $5,250. 
A)  $2,450. 
B)  $3,450. 
C)  $2,800. 
D)  $5,250.

Question 20

Accounting time periods that are one year in length are referred to as interim periods.

Accepted Answer

A) True 
 B)False

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Which one of the following is not a justification for adjusting entries?

Which statement is correct?

Pixies Inc. pays its rent of $54,000 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $18,500, and unexpired amounts per analysis of policies of $6,000?

Many business transactions affect more than one time period.

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

Accrual-basis accounting is allowed under

Which of the following is not an accounting assumption?

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

Cash-basis accounting is in accordance with

Which of the following statements related to the adjusted trial balance is incorrect?

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

A flower shop makes a large sale for $1,200 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,200 considered to be recognized?

182. Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2018 for $60,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2018 is

Accounting time periods that are one year in length are referred to as interim periods.

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

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Exam 3: Adjusting the Accounts

From an accounting standpoint, the acquisition of productive facilities can be thought of as a long-term

Jackson Cement Corporation reported $35 million for sales when it only had $20 million of actual sales. Which of the following qualities of useful information has Jackson most likely violated?

Which one of the following is not a justification for adjusting entries?

Which statement is correct?

Pixies Inc. pays its rent of $54,000 annually on January 1. If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $18,500, and unexpired amounts per analysis of policies of $6,000?

Many business transactions affect more than one time period.

Rent received in advance and credited to a rent revenue account which is still unearned at the end of the period, will require an adjusting entry crediting a liability account for the amount still unearned.

Accrual-basis accounting is allowed under

Which of the following is not an accounting assumption?

If a resource has been consumed but a bill has not been received at the end of the accounting period, then

Cash-basis accounting is in accordance with

Which of the following statements related to the adjusted trial balance is incorrect?

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

A flower shop makes a large sale for $1,200 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,200 considered to be recognized?

182. Buffalo Tom Cruises purchased a five-year insurance policy for its ships on April 1, 2018 for $60,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2018 is

Accounting time periods that are one year in length are referred to as interim periods.

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