Question 1

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 2

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 3

The post-closing trial balance will contain only permanent-balance sheet-accounts.

Accepted Answer

A) True 
 B)False

Question 4

At December 31, 2022, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $4,200.It was determined that $1,800 of the Prepaid Insurance had expired.The adjusted balance for Prepaid Insurance for the year would be:

Accepted Answer

A) $1,800. 
B) $2,400. 
C) $5,700. 
D) $4,200. 
A) $1,800. 
B) $2,400. 
C) $5,700. 
D) $4,200.

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

Beringer Company places an order for supplies with Picasso Company on December 17.Picasso delivers the supplies on December 20 and invoices Beringer on December 21.Beringer pays the invoice on December 29.On what date does Beringer satisfy its performance obligation?

Accepted Answer

A) December 17 
B) December 20 
C) December 21 
D) Beringer Company does not have a performance obligation. 
A) December 17 
B) December 20 
C) December 21 
D) Beringer Company does not have a performance obligation.

Question 7

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $35,000.If September 30 is a Wednesday, what is the appropriate journal entry on October 2, the next payday for Merando?

Accepted Answer

A) Dr Salaries and Wages Expense $14,000 Dr Salaries and Wages Payable $21,000
Cr Cash $35,000 
B) Dr Salaries and Wages Expense $21,000 Dr Salaries and Wages Payable $14,000
Cr Cash $35,000 
C) Dr Salaries and Wages Expense $21,000 Cr Cash $21,000 
D) Dr Salaries and Wages Payable $14,000 Cr Cash $14,000 
A) Dr Salaries and Wages Expense $14,000 Dr Salaries and Wages Payable $21,000
Cr Cash $35,000 
B) Dr Salaries and Wages Expense $21,000 Dr Salaries and Wages Payable $14,000
Cr Cash $35,000 
C) Dr Salaries and Wages Expense $21,000 Cr Cash $21,000 
D) Dr Salaries and Wages Payable $14,000 Cr Cash $14,000

Question 8

Regions Inc.pays its rent of $60,000 annually on January 1 and makes monthly adjusting entries.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are true?

Accepted Answer

A) Failure to make the adjustment does not affect the February financial statements. 
B) Expenses will be overstated by $5,000 and net income and stockholders' equity will be understated by $5,000. 
C) Assets will be overstated by $10,000 and net income and stockholders' equity will be understated by $10,000. 
D) Assets will be overstated by $5,000 and net income and stockholders' equity will be overstated by $5,000. 
A) Failure to make the adjustment does not affect the February financial statements. 
B) Expenses will be overstated by $5,000 and net income and stockholders' equity will be understated by $5,000. 
C) Assets will be overstated by $10,000 and net income and stockholders' equity will be understated by $10,000. 
D) Assets will be overstated by $5,000 and net income and stockholders' equity will be overstated by $5,000.

Question 9

Financial statements must be prepared before the closing entries are made.

Accepted Answer

A) True 
 B)False

Question 10

Green Realty Company received a check for $24,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client.Unearned Rent Revenue was credited for the full $24,000.Financial statements will be prepared on July 31.Green Realty should make the following adjusting entry on July 31:

Accepted Answer

A) debit Unearned Rent Revenue, $4,000; credit Rent Revenue, $4,000. 
B) debit Rent Revenue, $4,000; credit Unearned Rent Revenue, $4,000. 
C) debit Unearned Rent Revenue, $24,000; credit Rent Revenue, $24,000. 
D) debit Cash, $24,000; credit Rent Revenue, $24,000. 
A) debit Unearned Rent Revenue, $4,000; credit Rent Revenue, $4,000. 
B) debit Rent Revenue, $4,000; credit Unearned Rent Revenue, $4,000. 
C) debit Unearned Rent Revenue, $24,000; credit Rent Revenue, $24,000. 
D) debit Cash, $24,000; credit Rent Revenue, $24,000.

Question 11

Which statement is correct concerning the adjusted trial balance?

Accepted Answer

A) An adjusted trial balance eliminates the need for the preparation of financial statements. 
B) The purpose of an adjusted trial balance is to prove the equality of the total debit balances and the total credit balances in the ledger. 
C) An adjusted trial balance will contain only permanent-balance sheet-accounts. 
D) The adjusted trial balance is prepared after the adjusting entries have been journalized but before they have been posted. 
A) An adjusted trial balance eliminates the need for the preparation of financial statements. 
B) The purpose of an adjusted trial balance is to prove the equality of the total debit balances and the total credit balances in the ledger. 
C) An adjusted trial balance will contain only permanent-balance sheet-accounts. 
D) The adjusted trial balance is prepared after the adjusting entries have been journalized but before they have been posted.

Question 12

The fiscal year opened for Noland Manufacturing with a $2,700 balance in its prepaid insurance account.They purchased $9,600 in insurance policies during the year.If $1,725 of insurance has expired during the year, what is the year-end balance in the prepaid insurance account?

Accepted Answer

A) $10,575 
B) $12,300 
C) $7,875 
D) $5,175 
A) $10,575 
B) $12,300 
C) $7,875 
D) $5,175

Question 13

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

Accepted Answer

A) True 
 B)False

Question 14

The adjusting entry for accrued salaries requires a debit to Salaries and Wages Payable.

Accepted Answer

A) True 
 B)False

Question 15

Asset prepayments become expenses when they expire.

Accepted Answer

A) True 
 B)False

Question 16

The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded.

Accepted Answer

A) True 
 B)False

Question 17

An expense account is closed with a credit to the expense account and a debit to the Income Summary account.

Accepted Answer

A) True 
 B)False

Question 18

Revenue received before it is recognized and expenses paid before being used or consumed are both initially recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The periodicity assumption states that:

Accepted Answer

A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods. 
A) a transaction can only affect one period of time. 
B) estimates should not be made if a transaction affects more than one time period. 
C) adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations. 
D) the economic life of a business can be divided into artificial time periods.

Which of the following would not result in unearned revenue?

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

The post-closing trial balance will contain only permanent-balance sheet-accounts.

At December 31, 2022, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $4,200.It was determined that $1,800 of the Prepaid Insurance had expired.The adjusted balance for Prepaid Insurance for the year would be:

An adjusting entry:

Beringer Company places an order for supplies with Picasso Company on December 17.Picasso delivers the supplies on December 20 and invoices Beringer on December 21.Beringer pays the invoice on December 29.On what date does Beringer satisfy its performance obligation?

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $35,000.If September 30 is a Wednesday, what is the appropriate journal entry on October 2, the next payday for Merando?

Regions Inc.pays its rent of $60,000 annually on January 1 and makes monthly adjusting entries.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are true?

Financial statements must be prepared before the closing entries are made.

Which statement is correct concerning the adjusted trial balance?

The fiscal year opened for Noland Manufacturing with a $2,700 balance in its prepaid insurance account.They purchased $9,600 in insurance policies during the year.If $1,725 of insurance has expired during the year, what is the year-end balance in the prepaid insurance account?

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

The adjusting entry for accrued salaries requires a debit to Salaries and Wages Payable.

Asset prepayments become expenses when they expire.

The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded.

An expense account is closed with a credit to the expense account and a debit to the Income Summary account.

Revenue received before it is recognized and expenses paid before being used or consumed are both initially recorded as liabilities.

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

The periodicity assumption states that:

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

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Exam 4: Accrual Accounting Concepts

Which of the following would not result in unearned revenue?

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

The post-closing trial balance will contain only permanent-balance sheet-accounts.

At December 31, 2022, before any year-end adjustments, Janus Company's Prepaid Insurance account had a balance of $4,200.It was determined that $1,800 of the Prepaid Insurance had expired.The adjusted balance for Prepaid Insurance for the year would be:

An adjusting entry:

Beringer Company places an order for supplies with Picasso Company on December 17.Picasso delivers the supplies on December 20 and invoices Beringer on December 21.Beringer pays the invoice on December 29.On what date does Beringer satisfy its performance obligation?

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $35,000.If September 30 is a Wednesday, what is the appropriate journal entry on October 2, the next payday for Merando?

Regions Inc.pays its rent of $60,000 annually on January 1 and makes monthly adjusting entries.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following are true?

Financial statements must be prepared before the closing entries are made.

Which statement is correct concerning the adjusted trial balance?

The fiscal year opened for Noland Manufacturing with a $2,700 balance in its prepaid insurance account.They purchased $9,600 in insurance policies during the year.If $1,725 of insurance has expired during the year, what is the year-end balance in the prepaid insurance account?

A liability-revenue account relationship exists with an unearned rent revenue adjusting entry.

The adjusting entry for accrued salaries requires a debit to Salaries and Wages Payable.

Asset prepayments become expenses when they expire.

The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded.

An expense account is closed with a credit to the expense account and a debit to the Income Summary account.

Revenue received before it is recognized and expenses paid before being used or consumed are both initially recorded as liabilities.

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

The periodicity assumption states that:

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

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