Question 1

If a company fails to adjust a Prepaid Rent account for rent that has expired, 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 overstated and net income and stockholders' equity will be under- stated. 
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 overstated and net income and stockholders' equity will be under- stated. 
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 2

At December 31, 2022, before any year-end adjustments, Dallis Company's Prepaid Insurance account had a balance of $5,800.It was determined that $2,600 of the Prepaid Insurance had expired.The adjusted balance for Insurance Expense for the year would be:

Accepted Answer

A) $2,600. 
B) $3,200. 
C) $5,800. 
D) $2,800. 
A) $2,600. 
B) $3,200. 
C) $5,800. 
D) $2,800.

Question 3

The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period.

Accepted Answer

A) True 
 B)False

Question 4

A furniture factory's employees work overtime to finish an order that is sold on January 31.The office sends a statement to the customer in early February and payment is received by mid-February.The overtime wages should be expensed in:

Accepted Answer

A) January. 
B) February. 
C) the period when the workers receive their checks. 
D) either January or February depending on when the pay period ends. 
A) January. 
B) February. 
C) the period when the workers receive their checks. 
D) either January or February depending on when the pay period ends.

Question 5

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are required steps in the accounting cycle except:

Accepted Answer

A) journalizing and posting closing entries. 
B) preparing an adjusted trial balance. 
C) preparing a post-closing trial balance. 
D) preparing a work sheet. 
A) journalizing and posting closing entries. 
B) preparing an adjusted trial balance. 
C) preparing a post-closing trial balance. 
D) preparing a work sheet.

Question 7

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

Accepted Answer

A) cash. 
B) prepaid rent. 
C) unearned rent revenue. 
D) accrued rent revenue. 
A) cash. 
B) prepaid rent. 
C) unearned rent revenue. 
D) accrued rent revenue.

Question 8

The worksheet contains columns for the:

Accepted Answer

A) statement of retained earnings. 
B) statement of cash flows. 
C) post-closing trial balance. 
D) balance sheet. 
A) statement of retained earnings. 
B) statement of cash flows. 
C) post-closing trial balance. 
D) balance sheet.

Question 9

A new accountant working for Metcalf Company records $800 Depreciation Expense on store equipment as follows:   The effect of this entry is to:

Accepted Answer

A) adjust the accounts to their proper amounts on December 31. 
B) over state total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31. 
A) adjust the accounts to their proper amounts on December 31. 
B) over state total assets on the balance sheet as of December 31. 
C) overstate the book value of the depreciable assets at December 31. 
D) understate the book value of the depreciable assets as of December 31.

Question 10

Supplies are recorded as assets when purchased.Therefore, the credit to supplies in the adjusting entry is for the amount of supplies:

Accepted Answer

A) remaining. 
B) purchased. 
C) used. 
D) either used or remaining. 
A) remaining. 
B) purchased. 
C) used. 
D) either used or remaining.

Question 11

Based on the account balances below, what is the total of the debit and credit columns of the adjusted trial balance?

Accepted Answer

A) $11,150 
B) $12,840 
C) $11,560 
D) $12,430 
A) $11,150 
B) $12,840 
C) $11,560 
D) $12,430

Question 12

The policy at Adler Corporation is to expense all office supplies at the time of purchase.On the last day of the accounting period, there are $1,100 of unused office supplies on hand and the balance of supplies expense is $3,500.What should the accountant do?

Accepted Answer

A) Debit Supplies and credit Supplies Expense for $1,100. 
B) Nothing, company policy says to expense supplies when purchased. 
C) Convince management to change its policy to avoid problems in the future. 
D) Debit Supplies Expense for $2,400 and credit Supplies for $2,400. 
A) Debit Supplies and credit Supplies Expense for $1,100. 
B) Nothing, company policy says to expense supplies when purchased. 
C) Convince management to change its policy to avoid problems in the future. 
D) Debit Supplies Expense for $2,400 and credit Supplies for $2,400.

Question 13

A small company may be able to justify using a cash basis of accounting if they have:

Accepted Answer

A) sales under $1,000,000. 
B) no accountants on staff. 
C) few receivables and payables. 
D) all sales and purchases on account. 
A) sales under $1,000,000. 
B) no accountants on staff. 
C) few receivables and payables. 
D) all sales and purchases on account.

Question 14

An adjusting entry can include a:

Accepted Answer

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

Question 15

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 16

The following information is from the Income Statement of the Campus Laundry Service:   The entry to close the Service Revenue account includes a:

Accepted Answer

A) debit to Service Revenue for $6,500. 
B) credit to Service Revenue for $6,500. 
C) debit to Income Summary for $6,500. 
D) debit to Retained Earnings for $6,500. 
A) debit to Service Revenue for $6,500. 
B) credit to Service Revenue for $6,500. 
C) debit to Income Summary for $6,500. 
D) debit to Retained Earnings for $6,500.

Question 17

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

Accepted Answer

A) Common stock 
B) Prepaid rent 
C) Unearned service revenue 
D) Retained earnings 
A) Common stock 
B) Prepaid rent 
C) Unearned service revenue 
D) Retained earnings

Question 18

At March 1, 2022, Candy Inc.had supplies on hand of $2,000.During the month, Candy purchased supplies of $2,900 and used supplies of $2,800.The March 31 balance sheet should report what balance in the supplies account?

Accepted Answer

A) $2,000 
B) $2,100 
C) $2,800 
D) $2,900 
A) $2,000 
B) $2,100 
C) $2,800 
D) $2,900

Question 19

Masterfalls Corporation purchased a one-year insurance policy in January 2021 for $36,000.The insurance policy is in effect from March 2021 through February 2022.If the company neglects to make the proper year-end adjustment for the expired insurance:

Accepted Answer

A) net income and assets will be understated by $30,000. 
B) net income and assets will be overstated by $30,000. 
C) net income and assets will be understated by $6,000. 
D) net income and assets will be overstated by $6,000. 
A) net income and assets will be understated by $30,000. 
B) net income and assets will be overstated by $30,000. 
C) net income and assets will be understated by $6,000. 
D) net income and assets will be overstated by $6,000.

Question 20

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.

If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements?

At December 31, 2022, before any year-end adjustments, Dallis Company's Prepaid Insurance account had a balance of $5,800.It was determined that $2,600 of the Prepaid Insurance had expired.The adjusted balance for Insurance Expense for the year would be:

The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period.

A furniture factory's employees work overtime to finish an order that is sold on January 31.The office sends a statement to the customer in early February and payment is received by mid-February.The overtime wages should be expensed in:

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

All of the following are required steps in the accounting cycle except:

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

The worksheet contains columns for the:

A new accountant working for Metcalf Company records $800 Depreciation Expense on store equipment as follows: The effect of this entry is to:

Supplies are recorded as assets when purchased.Therefore, the credit to supplies in the adjusting entry is for the amount of supplies:

Based on the account balances below, what is the total of the debit and credit columns of the adjusted trial balance?

The policy at Adler Corporation is to expense all office supplies at the time of purchase.On the last day of the accounting period, there are $1,100 of unused office supplies on hand and the balance of supplies expense is $3,500.What should the accountant do?

A small company may be able to justify using a cash basis of accounting if they have:

An adjusting entry can include a:

An asset-expense relationship exists with:

The following information is from the Income Statement of the Campus Laundry Service: The entry to close the Service Revenue account includes a:

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

At March 1, 2022, Candy Inc.had supplies on hand of $2,000.During the month, Candy purchased supplies of $2,900 and used supplies of $2,800.The March 31 balance sheet should report what balance in the supplies account?

Masterfalls Corporation purchased a one-year insurance policy in January 2021 for $36,000.The insurance policy is in effect from March 2021 through February 2022.If the company neglects to make the proper year-end adjustment for the expired insurance:

Accounts often need to be adjusted because:

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

If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect will this have on that month's financial statements?

At December 31, 2022, before any year-end adjustments, Dallis Company's Prepaid Insurance account had a balance of $5,800.It was determined that $2,600 of the Prepaid Insurance had expired.The adjusted balance for Insurance Expense for the year would be:

The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period.

A furniture factory's employees work overtime to finish an order that is sold on January 31.The office sends a statement to the customer in early February and payment is received by mid-February.The overtime wages should be expensed in:

Without an adjusting entry for accrued interest expense, liabilities and interest expense are understated, and net income and stockholders' equity are overstated.

All of the following are required steps in the accounting cycle except:

If a business pays rent in advance and debits a Prepaid Rent account, the company receiving the rent payment will credit:

The worksheet contains columns for the:

A new accountant working for Metcalf Company records $800 Depreciation Expense on store equipment as follows: The effect of this entry is to:

Supplies are recorded as assets when purchased.Therefore, the credit to supplies in the adjusting entry is for the amount of supplies:

Based on the account balances below, what is the total of the debit and credit columns of the adjusted trial balance?

The policy at Adler Corporation is to expense all office supplies at the time of purchase.On the last day of the accounting period, there are $1,100 of unused office supplies on hand and the balance of supplies expense is $3,500.What should the accountant do?

A small company may be able to justify using a cash basis of accounting if they have:

An adjusting entry can include a:

An asset-expense relationship exists with:

The following information is from the Income Statement of the Campus Laundry Service: The entry to close the Service Revenue account includes a:

Which of the following account's balance will change between the adjusted trial balance and the post-closing trial balance?

At March 1, 2022, Candy Inc.had supplies on hand of $2,000.During the month, Candy purchased supplies of $2,900 and used supplies of $2,800.The March 31 balance sheet should report what balance in the supplies account?

Masterfalls Corporation purchased a one-year insurance policy in January 2021 for $36,000.The insurance policy is in effect from March 2021 through February 2022.If the company neglects to make the proper year-end adjustment for the expired insurance:

Accounts often need to be adjusted because:

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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