Question 1

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

Accepted Answer

A) not been recognized as revenue and unearned revenues have been. 
B) been received in cash and unearned revenues have not. 
C) been recorded as a liability and unearned revenues have not. 
D) not been recorded and unearned revenues have. 
A) not been recognized as revenue and unearned revenues have been. 
B) been received in cash and unearned revenues have not. 
C) been recorded as a liability and unearned revenues have not. 
D) not been recorded and unearned revenues have.

Question 2

An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future.No entry was made at the time the service was provided.If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:

Accepted Answer

A) revenues to be overstated. 
B) net income to be overstated. 
C) liabilities to be understated. 
D) revenues to be understated. 
A) revenues to be overstated. 
B) net income to be overstated. 
C) liabilities to be understated. 
D) revenues to be understated.

Question 3

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

Accepted Answer

A) $9,500 
B) $14,000 
C) $7,700 
D) $9,950 
A) $9,500 
B) $14,000 
C) $7,700 
D) $9,950

Question 4

The following accounts show balances on the adjusted trial balance.Which of these account balances will not appear the same on the balance sheet?

Accepted Answer

A) Retained earnings 
B) Accounts receivable 
C) Common stock 
D) Notes payable 
A) Retained earnings 
B) Accounts receivable 
C) Common stock 
D) Notes payable

Question 5

An accounting time period that is one year in length is called:

Accepted Answer

A) a fiscal year. 
B) an interim period. 
C) the time period assumption. 
D) a reporting period. 
A) a fiscal year. 
B) an interim period. 
C) the time period assumption. 
D) a reporting period.

Question 6

The trial balance for Greenway Corporation appears as follows:   If the estimated depreciation for equipment were $600, the adjusting entry would contain a:

Accepted Answer

A) credit to Accumulated Depreciation, Equipment for $600. 
B) credit to Depreciation Expense, Equipment for $600. 
C) debit to Accumulated Depreciation, Equipment for $600. 
D) credit to Equipment for $600. 
A) credit to Accumulated Depreciation, Equipment for $600. 
B) credit to Depreciation Expense, Equipment for $600. 
C) debit to Accumulated Depreciation, Equipment for $600. 
D) credit to Equipment for $600.

Question 7

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Accepted Answer

A) True 
 B)False

Question 8

The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1.The adjusting entry required on December 31 is:

Accepted Answer

A) debit Prepaid Rent, $4,000; credit Rent Expense $4,000. 
B) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. 
C) debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. 
D) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000. 
A) debit Prepaid Rent, $4,000; credit Rent Expense $4,000. 
B) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. 
C) debit Rent Expense, $12,000; credit Prepaid Rent, $12,000. 
D) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.

Question 9

Management usually wants ________ financial statements while the IRS requires all businesses to file _________ tax returns.

Accepted Answer

A) annual, annual 
B) monthly, annual 
C) quarterly, monthly 
D) monthly, monthly 
A) annual, annual 
B) monthly, annual 
C) quarterly, monthly 
D) monthly, monthly

Question 10

Oakville Inc.purchased a 12-month insurance policy on March 1, 2022 for $2,400.At March 31, 2022, the adjusting journal entry to record expiration of this asset will include:

Accepted Answer

A) a debit to Prepaid Insurance and a credit to Cash for $2,400. 
B) a debit to Prepaid Insurance and a credit to Insurance Expense for $240. 
C) a debit to Insurance Expense and a credit to Prepaid Insurance for $200. 
D) a debit to Insurance Expense and a credit to Cash for $200. 
A) a debit to Prepaid Insurance and a credit to Cash for $2,400. 
B) a debit to Prepaid Insurance and a credit to Insurance Expense for $240. 
C) a debit to Insurance Expense and a credit to Prepaid Insurance for $200. 
D) a debit to Insurance Expense and a credit to Cash for $200.

Question 11

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

Accepted Answer

A) True 
 B)False

Question 12

The trial balance for Greenway Corporation appears as follows:   If service for $175 had been performed but not billed, the adjusting entry to record this would include a:

Accepted Answer

A) debit to Service Revenue for $175. 
B) credit to Unearned Service Revenue for $175. 
C) credit to Service Revenue for $175. 
D) debit to Unearned Revenue for $175. 
A) debit to Service Revenue for $175. 
B) credit to Unearned Service Revenue for $175. 
C) credit to Service Revenue for $175. 
D) debit to Unearned Revenue for $175.

Question 13

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Accepted Answer

A) True 
 B)False

Question 14

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 15

A revenue-asset 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 16

Each of the following is a major type (or category) of adjusting entry except:

Accepted Answer

A) earned expenses. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues. 
A) earned expenses. 
B) prepaid expenses. 
C) accrued expenses. 
D) accrued revenues.

Question 17

The post closing trial balance will have fewer accounts than the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 18

If a company fails to adjust an Unearned Rent Revenue account for revenue that should be recognized, what effect will this have on that month's financial statements?

Accepted Answer

A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated. 
A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated.

Question 19

On January 1, 2021, Leardon Inc.purchased equipment for $25,000.The company is depreciating the equipment at the rate of $1,000 per month.At January 31, 2022, the balance in Accumulated Depreciation is:

Accepted Answer

A) $1,000 debit. 
B) $12,000 credit. 
C) $13,000 credit. 
D) $62,000 debit. 
A) $1,000 debit. 
B) $12,000 credit. 
C) $13,000 credit. 
D) $62,000 debit.

Question 20

If a company fails to adjust for accrued revenues:

Accepted Answer

A) liabilities will be understated and revenues will be understated. 
B) liabilities will be overstated and revenues will be understated. 
C) assets will be overstated and revenues will be understated. 
D) assets will be understated and revenues will be understated. 
A) liabilities will be understated and revenues will be understated. 
B) liabilities will be overstated and revenues will be understated. 
C) assets will be overstated and revenues will be understated. 
D) assets will be understated and revenues will be understated.

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future.No entry was made at the time the service was provided.If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

The following accounts show balances on the adjusted trial balance.Which of these account balances will not appear the same on the balance sheet?

An accounting time period that is one year in length is called:

The trial balance for Greenway Corporation appears as follows: If the estimated depreciation for equipment were $600, the adjusting entry would contain a:

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1.The adjusting entry required on December 31 is:

Management usually wants financial statements while the IRS requires all businesses to file _ tax returns.

Oakville Inc.purchased a 12-month insurance policy on March 1, 2022 for $2,400.At March 31, 2022, the adjusting journal entry to record expiration of this asset will include:

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

The trial balance for Greenway Corporation appears as follows: If service for $175 had been performed but not billed, the adjusting entry to record this would include a:

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Which statement is correct?

A revenue-asset relationship exists with:

Each of the following is a major type (or category) of adjusting entry except:

The post closing trial balance will have fewer accounts than the adjusted trial balance.

If a company fails to adjust an Unearned Rent Revenue account for revenue that should be recognized, what effect will this have on that month's financial statements?

On January 1, 2021, Leardon Inc.purchased equipment for $25,000.The company is depreciating the equipment at the rate of $1,000 per month.At January 31, 2022, the balance in Accumulated Depreciation is:

If a company fails to adjust for accrued revenues:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters

Exam 4: Accrual Accounting Concepts

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future.No entry was made at the time the service was provided.If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause:

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

The following accounts show balances on the adjusted trial balance.Which of these account balances will not appear the same on the balance sheet?

An accounting time period that is one year in length is called:

The trial balance for Greenway Corporation appears as follows: If the estimated depreciation for equipment were $600, the adjusting entry would contain a:

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents three months rent paid on December 1.The adjusting entry required on December 31 is:

Management usually wants ________ financial statements while the IRS requires all businesses to file _________ tax returns.

Oakville Inc.purchased a 12-month insurance policy on March 1, 2022 for $2,400.At March 31, 2022, the adjusting journal entry to record expiration of this asset will include:

Adjusting entries are not necessary if the trial balance debit and credit columns balances are equal.

The trial balance for Greenway Corporation appears as follows: If service for $175 had been performed but not billed, the adjusting entry to record this would include a:

The cost of a depreciable asset less accumulated depreciation reflects the book value of the asset.

Which statement is correct?

A revenue-asset relationship exists with:

Each of the following is a major type (or category) of adjusting entry except:

The post closing trial balance will have fewer accounts than the adjusted trial balance.

If a company fails to adjust an Unearned Rent Revenue account for revenue that should be recognized, what effect will this have on that month's financial statements?

On January 1, 2021, Leardon Inc.purchased equipment for $25,000.The company is depreciating the equipment at the rate of $1,000 per month.At January 31, 2022, the balance in Accumulated Depreciation is:

If a company fails to adjust for accrued revenues:

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters

Management usually wants financial statements while the IRS requires all businesses to file _ tax returns.