Question 1

The time period assumption is also referred to as the

Accepted Answer

A)  calendar assumption. 
B)  cyclicity assumption. 
C)  periodicity assumption. 
D)  fiscal assumption. 
A)  calendar assumption. 
B)  cyclicity assumption. 
C)  periodicity assumption. 
D)  fiscal assumption. C

Question 2

Adjusting entries are required

Accepted Answer

A)  yearly. 
B)  quarterly. 
C)  monthly. 
D)  every time financial statements are prepared. 
A)  yearly. 
B)  quarterly. 
C)  monthly. 
D)  every time financial statements are prepared. D

Question 3

If prepaid expenses are initially recorded in expense accounts and have not all been used at the end of the accounting period then 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. A

Question 4

If an adjusting entry is not made for an accrued expense

Accepted Answer

A)  expenses will be overstated. 
B)  liabilities will be understated. 
C)  net income will be understated. 
D)  owner's equity will be understated. 
A)  expenses will be overstated. 
B)  liabilities will be understated. 
C)  net income will be understated. 
D)  owner's equity will be understated.

Question 5

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 6

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

Question 7

Roadwag Company purchased a truck from Tom's Semi Corp. by issuing a 6-month 6% note payable for $60000 on November 1. On December 31 the accrued expense adjusting entry is a.$\begin{array}{l}
\text { No entry is required. }\\end{array}$

b.$\begin{array}{l} 
\text { Interest Expense. } & 3,600 & \
\text { Interest Payable. }&&3,600 \
\end{array}$

c.$\begin{array}{l}\text { Interest Expense }& 1,800&  \
 \text { Interest Payable. } & &1, 800 \\end{array}$

d.$\begin{array}{l}
\text { Interest Expense } & 600 \
\text { Interest Payable }&& 600 \
\end{array}$

Accepted Answer

The answer of Roadwag Company purchased a truck from Tom's...

Question 8

Determine the impact on the balance sheet accounts if the following information is not used to adjust the accounts of Mood Food Company for the month of January 2016. Round answers to the nearest dollar.
1. The company rents extra office space to Beulah CPAs. Beulah pays the $6000 rent annually on January 1.
2. The company has an outstanding loan to its President in the amount of $150000. The loan accrues interest at the annual rate of 6%. Principal and interest are due January 1 2018.
3. The company completed work on a project during January that was not yet billed to the client. The client will be charged $3100.

Accepted Answer

1. Liabilities overstated and

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The ______________ assumption divides the economic life of a business into artificial time periods.

Accepted Answer

The answer of The ______________ assumption divides the economic life...

Question 11

Rhodes National purchased software on October 1 2016 for $14400. 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 $4800)
2. What balance will be reported on the December 31 2016 balance sheet for Accumulated Depreciation?

Accepted Answer

None

Question 12

A company using the same accounting principles from year to year is an application of

Accepted Answer

A)  timeliness. 
B)  consistency. 
C)  full disclosure. 
D)  meteriality. 
A)  timeliness. 
B)  consistency. 
C)  full disclosure. 
D)  meteriality.

Question 13

Accrued revenues are

Accepted Answer

A)  cash received and a liability recorded before services are performed. 
B)  revenue for services performed and recorded as liabilities before they are received. 
C)  revenue for services performed but not yet received in cash or recorded. 
D)  revenue for services performed and already received in cash and recorded. 
A)  cash received and a liability recorded before services are performed. 
B)  revenue for services performed and recorded as liabilities before they are received. 
C)  revenue for services performed but not yet received in cash or recorded. 
D)  revenue for services performed and already received in cash and recorded.

Question 14

The adjusted trial balance of Malt Company at December 31 2016 includes the following accounts: Owner's Capital $16200; Owner's Drawings $7300; Service Revenue $37000; Salaries and Wages Expense $12000; Insurance Expense $2100; Rent Expense $3600; Supplies Expense $2500; and Depreciation Expense $3000. Prepare an owner's equity statement for the year.

Accepted Answer

None

Question 15

The adjusted trial balance of Wallowa Ranch Inc. on December 31 2016 includes the following accounts: Accumulated Depreciation $8000; Depreciation Expense $2000; Notes Payable $7800; Interest Expense $250; Utilities Expense $370; Rent Expense $800; Service Revenue $24600; Salaries and Wages Expense $6800; Supplies $250; Supplies Expense $1500; Salaries and Wages Payable $800. Prepare an income statement for the month of December.

Accepted Answer

None

Question 16

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that

Accepted Answer

A)  assets should be matched with liabilities. 
B)  efforts should be matched with accomplishments. 
C)  owner withdrawals should be matched with owner contributions. 
D)  cash payments should be matched with cash receipts. 
A)  assets should be matched with liabilities. 
B)  efforts should be matched with accomplishments. 
C)  owner withdrawals should be matched with owner contributions. 
D)  cash payments should be matched with cash receipts.

Question 17

As prepaid expenses expire with the passage of time the correct adjusting entry will be a

Accepted Answer

A)  debit to an asset account and a credit to an expense account. 
B)  debit to an expense account and a credit to an asset account. 
C)  debit to an asset account and a credit to an asset account. 
D)  debit to an expense account and a credit to an expense account. 
A)  debit to an asset account and a credit to an expense account. 
B)  debit to an expense account and a credit to an asset account. 
C)  debit to an asset account and a credit to an asset account. 
D)  debit to an expense account and a credit to an expense account.

Question 18

Asset prepayments become expenses when they expire.

Accepted Answer

A) True 
 B)False

Question 19

When a prepaid expense is initially debited to an expense account expenses and assets are both overstated prior to adjustment.

Accepted Answer

A) True 
 B)False

Question 20

Toole Company had the following transactions during 2016:
$\bullet$ Sales of $4200 on account
$\bullet$ Collected $2500 for services to be performed in 2017
$\bullet$Paid $1580 cash in salaries
$\bullet$ Purchased airline tickets for $350 in December for a trip to take place in 2017
What is Toole's 2016 net income using accrual accounting?

Accepted Answer

A)  $2370. 
B)  $2620. 
C)  $4770. 
D)  $5120. 
A)  $2370. 
B)  $2620. 
C)  $4770. 
D)  $5120.

Exam 3: Adjusting the Accounts

The time period assumption is also referred to as the

Adjusting entries are required

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

If an adjusting entry is not made for an accrued expense

A liability-revenue relationship exists with

Accrual-basis accounting is allowed under

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

The ______________ assumption divides the economic life of a business into artificial time periods.

A company using the same accounting principles from year to year is an application of

Accrued revenues are

The expense recognition principle states that expenses should be matched with revenues. Another way of stating the principle is to say that

As prepaid expenses expire with the passage of time the correct adjusting entry will be a

Asset prepayments become expenses when they expire.

When a prepaid expense is initially debited to an expense account expenses and assets are both overstated prior to adjustment.

Accounting in Action

The Recording Process

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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