Question 1

Depreciation is a ______________ allocation process rather than a process of ______________.

Accepted Answer

The answer of Depreciation is a ______________ allocation process rather...

Question 2

If the adjusting entry for depreciation is not made,

Accepted Answer

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

Question 3

On January 1, Bit & Bridle, CPAs received a $9,000 cash retainer for legal services to be rendered ratably over the next 3 months. The full amount was credited to the liability account Unearned Revenue. Assuming that the revenue is earned equally over the 3-month period, what adjusting journal entry should be made at January 31?

Accepted Answer

The answer of On January 1, Bit & Bridle, CPAs...

Question 4

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

Accepted Answer

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

Question 5

Which of the following would not result in unearned revenue?

Accepted Answer

A)  Rent collected in advance from tenants 
B)  Services performed on account 
C)  Sale of season tickets to football games 
D)  Sale of two-year magazine subscriptions 
A)  Rent collected in advance from tenants 
B)  Services performed on account 
C)  Sale of season tickets to football games 
D)  Sale of two-year magazine subscriptions

Question 6

An asset-expense relationship exists with

Accepted Answer

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

Question 7

Prepaid 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 8

Accounts often need to be adjusted because

Accepted Answer

A)  there are never enough accounts to record all the transactions. 
B)  many transactions affect more than one time period. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report. 
A)  there are never enough accounts to record all the transactions. 
B)  many transactions affect more than one time period. 
C)  there are always errors made in recording transactions. 
D)  management can't decide what they want to report.

Question 9

Angus Insurance Agency prepares monthly financial statements. Presented below is an income statement for the month of June that is correct on the basis of information considered.   
Additional Data: When the income statement was prepared, the company accountant neglected to take into consideration the following information:
1. A utility bill for $2,000 was received on the last day of the month for electric and gas service for the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $35,000. The agency billed the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were $3,000. The agency purchased additional supplies during the month for $3,500 in cash and $2,200 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for $19,200 cash. The car will depreciate $4,800 per year.
5. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on July 5.
Instructions
Prepare a correct income statement.

Accepted Answer

The answer of Angus Insurance Agency prepares monthly financial statements....

Question 10

Every adjusting entry affects one balance sheet account and one income statement account.

Accepted Answer

A) True 
 B)False

Question 11

Depreciation expense for a period is computed by taking the

Accepted Answer

A)  original cost of an asset - accumulated depreciation. 
B)  depreciable cost ÷ depreciation rate. 
C)  cost of the asset ÷ useful life. 
D)  market value of the asset ÷ useful life. 
A)  original cost of an asset - accumulated depreciation. 
B)  depreciable cost ÷ depreciation rate. 
C)  cost of the asset ÷ useful life. 
D)  market value of the asset ÷ useful life.

Question 12

BJ, an employee of Walker Corp., will not receive her paycheck until April 2. Based on services performed from March 15 to March 30, her salary was $900. The adjusting entry for Walker Corp. on March 31 is

Accepted Answer

The answer of BJ, an employee of Walker Corp., will...

Question 13

Turner Company collected $6,500 in May of 2010 for 5 months of service which would take place from October of 2010 through February of 2011. The revenue reported from this transaction during 2010 would be

Accepted Answer

A)  $0. 
B)  $3,900. 
C)  $6,500. 
D)  $2,600. 
A)  $0. 
B)  $3,900. 
C)  $6,500. 
D)  $2,600.

Question 14

The time period assumption is often referred to as the matching principle.

Accepted Answer

A) True 
 B)False

Question 15

Accrued revenues are amounts recorded and received but not yet earned.

Accepted Answer

A) True 
 B)False

Question 16

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

Accepted Answer

A) True 
 B)False

Question 17

Identify the impact on the balance sheet if the following information is not used to adjust the accounts.
1. Supplies consumed totaled $3,000.
2. Interest accrues on notes payable at the rate of $200 per month.
3. Insurance of $450 expired during the month.
4. Plant and equipment are depreciated at the rate of $1,200 per month.

Accepted Answer

1. Assets overstated and Owner's Equity

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Expenses paid and recorded as assets before they are used are called

Accepted Answer

A)  accrued expenses. 
B)  interim expenses. 
C)  prepaid expenses. 
D)  unearned expenses. 
A)  accrued expenses. 
B)  interim expenses. 
C)  prepaid expenses. 
D)  unearned expenses.

Question 20

An adjusted trial balance

Accepted Answer

A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  cannot be used to prepare financial statements. 
A)  is prepared after the financial statements are completed. 
B)  proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made. 
C)  is a required financial statement under generally accepted accounting principles. 
D)  cannot be used to prepare financial statements.

Exam 3: Adjusting the Accounts

Depreciation is a ______________ allocation process rather than a process of ______________.

If the adjusting entry for depreciation is not made,

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

Which of the following would not result in unearned revenue?

An asset-expense relationship exists with

Prepaid expenses are

Accounts often need to be adjusted because

Every adjusting entry affects one balance sheet account and one income statement account.

Depreciation expense for a period is computed by taking the

BJ, an employee of Walker Corp., will not receive her paycheck until April 2. Based on services performed from March 15 to March 30, her salary was $900. The adjusting entry for Walker Corp. on March 31 is

Turner Company collected $6,500 in May of 2010 for 5 months of service which would take place from October of 2010 through February of 2011. The revenue reported from this transaction during 2010 would be

The time period assumption is often referred to as the matching principle.

Accrued revenues are amounts recorded and received but not yet earned.

Unearned revenue is a prepayment that requires an adjusting entry when services are performed.

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

Expenses paid and recorded as assets before they are used are called

An adjusted trial balance

Accounting in Action

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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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

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Incremental Analysis

Budgetary Planning

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Standard Costs and Balanced Scorecard

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Depreciation is a allocation process rather than a process of .