Question 1

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 2

Accrued revenues are revenues that have been received but not yet recognized.

Accepted Answer

A) True 
 B)False

Question 3

Expense recognition is tied to revenue recognition.

Accepted Answer

A) True 
 B)False

Question 4

Accrued revenues are revenues that have been recorded but cash has been received before financial statements have been prepared.

Accepted Answer

A) True 
 B)False

Question 5

A revenue account is closed with a credit to the revenue account and a debit to Income Summary.

Accepted Answer

A) True 
 B)False

Question 6

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

Accepted Answer

A) True 
 B)False

Question 7

The expense recognition principle requires that efforts be related to accomplishments.

Accepted Answer

A) True 
 B)False

Question 8

Cash is a temporary account.

Accepted Answer

A) True 
 B)False

Question 9

There are usually how many closing journal entries?

Accepted Answer

A) 5 
B) 4 
C) 3 
D) 2 
A) 5 
B) 4 
C) 3 
D) 2

Question 10

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

Accepted Answer

A) Failure to make an adjustment does not affect the financial statements. 
B) Expenses will be understated and net income and stockholders' equity will be overstated. 
C) Assets will be overstated and net income and stockholders' equity will be understated. 
D) Assets will be overstated and net income and stockholders' equity will be overstated. 
A) Failure to make an adjustment does not affect the financial statements. 
B) Expenses will be understated and net income and stockholders' equity will be overstated. 
C) Assets will be overstated and net income and stockholders' equity will be understated. 
D) Assets will be overstated and net income and stockholders' equity will be overstated.

Question 11

Foley Marketing received $60,000 from a customer on January 2, 2022 to be on retainer for the next two years.The appropriate journal entry to recognize revenue at Foley's fiscal year-end on December 31, 2022 would be:

Accepted Answer

A) Dr Unearned Service Revenue $30,000 Cr Service Revenue $30,000 
B) Dr Service Revenue $30,000 Cr Unearned Service Revenue $30,000 
C) Dr Service Revenue $30,000 Cr Cash $30,000 
D) Dr Unearned Service Revenue $30,000 Cr Cash $30,000 
A) Dr Unearned Service Revenue $30,000 Cr Service Revenue $30,000 
B) Dr Service Revenue $30,000 Cr Unearned Service Revenue $30,000 
C) Dr Service Revenue $30,000 Cr Cash $30,000 
D) Dr Unearned Service Revenue $30,000 Cr Cash $30,000

Question 12

Adjusting entries are:

Accepted Answer

A) not necessary if the accounting system is operating properly. 
B) usually required before financial statements are prepared. 
C) made whenever management desires to change an account balance. 
D) made to balance sheet accounts only. 
A) not necessary if the accounting system is operating properly. 
B) usually required before financial statements are prepared. 
C) made whenever management desires to change an account balance. 
D) made to balance sheet accounts only.

Question 13

Before adjusting entries, unearned revenues are:

Accepted Answer

A) received and recorded as liabilities before they are recognized as revenue. 
B) recognized as revenue and recorded as liabilities before they are received. 
C) recognized as revenue but not yet received or recorded. 
D) recognized as revenue and already received and recorded. 
A) received and recorded as liabilities before they are recognized as revenue. 
B) recognized as revenue and recorded as liabilities before they are received. 
C) recognized as revenue but not yet received or recorded. 
D) recognized as revenue and already received and recorded.

Question 14

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Accepted Answer

A) True 
 B)False

Question 15

Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount.At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand.The appropriate adjusting journal entry to be made at the end of the period would be:

Accepted Answer

A) debit Supplies Expense, $2,500; credit Supplies, $2,500. 
B) debit Supplies, $4,500; credit Supplies Expense, $4,500. 
C) debit Supplies Expense, $4,500; credit Supplies, $4,500. 
D) debit Supplies, $2,500; credit Supplies Expense, $2,500. 
A) debit Supplies Expense, $2,500; credit Supplies, $2,500. 
B) debit Supplies, $4,500; credit Supplies Expense, $4,500. 
C) debit Supplies Expense, $4,500; credit Supplies, $4,500. 
D) debit Supplies, $2,500; credit Supplies Expense, $2,500.

Question 16

Financial statements can be prepared from the information provided by an adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 17

The following is selected information from C Corporation for the fiscal year ending October 31, 2022.   Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2022?

Accepted Answer

A) $132,000 
B) $116,000 
C) $106,000 
D) $140,000 
A) $132,000 
B) $116,000 
C) $106,000 
D) $140,000

Question 18

De Meaning Corporation issued a one-year 6% $400,000 note on April 30, 2022.Interest expense for the year ended December 31, 2022 was:

Accepted Answer

A) $24,000. 
B) $18,000. 
C) $16,000. 
D) $14,000. 
A) $24,000. 
B) $18,000. 
C) $16,000. 
D) $14,000.

Question 19

An adjusting entry always involves two balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 20

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $36,000.If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end?

Accepted Answer

A) Dr Salaries and Wages Expense $21,600 Cr Salaries and Wages Payable $21,600 
B) Dr Salaries and Wages Expense $36,000 Cr Salaries and Wages Payable $36,000 
C) Dr Salaries and Wages Expense $7,200 Cr Salaries and Wages Payable $7,200 
D) Dr Salaries and Wages Expense $21,600 Cr Cash $21,600 
A) Dr Salaries and Wages Expense $21,600 Cr Salaries and Wages Payable $21,600 
B) Dr Salaries and Wages Expense $36,000 Cr Salaries and Wages Payable $36,000 
C) Dr Salaries and Wages Expense $7,200 Cr Salaries and Wages Payable $7,200 
D) Dr Salaries and Wages Expense $21,600 Cr Cash $21,600

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

Accrued revenues are revenues that have been received but not yet recognized.

Expense recognition is tied to revenue recognition.

Accrued revenues are revenues that have been recorded but cash has been received before financial statements have been prepared.

A revenue account is closed with a credit to the revenue account and a debit to Income Summary.

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

The expense recognition principle requires that efforts be related to accomplishments.

Cash is a temporary account.

There are usually how many closing journal entries?

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

Foley Marketing received $60,000 from a customer on January 2, 2022 to be on retainer for the next two years.The appropriate journal entry to recognize revenue at Foley's fiscal year-end on December 31, 2022 would be:

Adjusting entries are:

Before adjusting entries, unearned revenues are:

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount.At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand.The appropriate adjusting journal entry to be made at the end of the period would be:

Financial statements can be prepared from the information provided by an adjusted trial balance.

The following is selected information from C Corporation for the fiscal year ending October 31, 2022. Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2022?

De Meaning Corporation issued a one-year 6% $400,000 note on April 30, 2022.Interest expense for the year ended December 31, 2022 was:

An adjusting entry always involves two balance sheet accounts.

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $36,000.If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end?

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

Accrued revenues are revenues that have been received but not yet recognized.

Expense recognition is tied to revenue recognition.

Accrued revenues are revenues that have been recorded but cash has been received before financial statements have been prepared.

A revenue account is closed with a credit to the revenue account and a debit to Income Summary.

The book value of a depreciable asset is always equal to its market value because depreciation is a valuation technique.

The expense recognition principle requires that efforts be related to accomplishments.

Cash is a temporary account.

There are usually how many closing journal entries?

If a company fails to adjust for accrued expenses, what effect will this have on that month's financial statements?

Foley Marketing received $60,000 from a customer on January 2, 2022 to be on retainer for the next two years.The appropriate journal entry to recognize revenue at Foley's fiscal year-end on December 31, 2022 would be:

Adjusting entries are:

Before adjusting entries, unearned revenues are:

The balances of the Depreciation Expense and the Accumulated Depreciation accounts should always be the same.

Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount.At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand.The appropriate adjusting journal entry to be made at the end of the period would be:

Financial statements can be prepared from the information provided by an adjusted trial balance.

The following is selected information from C Corporation for the fiscal year ending October 31, 2022. Based on the accrual basis of accounting, what is C Corporation's net income for the year ending October 31, 2022?

De Meaning Corporation issued a one-year 6% $400,000 note on April 30, 2022.Interest expense for the year ended December 31, 2022 was:

An adjusting entry always involves two balance sheet accounts.

Merando Industries employs a five-day workweek and a September 30 year-end.Normal weekly wages amount to $36,000.If September 30 ends on a Wednesday, what is the appropriate journal entry at fiscal year-end?

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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