Question 1

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

Accepted Answer

A) net income to be understated. 
B) an overstatement of assets and an overstatement of liabilities. 
C) an understatement of expenses and an understatement of liabilities. 
D) an overstatement of expenses and an overstatement of liabilities. 
A) net income to be understated. 
B) an overstatement of assets and an overstatement of liabilities. 
C) an understatement of expenses and an understatement of liabilities. 
D) an overstatement of expenses and an overstatement of liabilities.

Question 2

If supplies are recorded as assets when purchased, the credit to supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A) remaining. 
B) purchased. 
C) used. 
D) purchased less the amount used. 
A) remaining. 
B) purchased. 
C) used. 
D) purchased less the amount used.

Question 3

A company usually determines the amount of supplies used during a period by

Accepted Answer

A) adding the supplies on hand to the balance of the Supplies account. 
B) totalling the amount of supplies purchased during the period. 
C) taking the difference between the supplies purchased and the supplies paid for during the period. 
D) taking the difference between the change in the beginning and ending balances of the Supplies account and the cost of supplies on hand. 
A) adding the supplies on hand to the balance of the Supplies account. 
B) totalling the amount of supplies purchased during the period. 
C) taking the difference between the supplies purchased and the supplies paid for during the period. 
D) taking the difference between the change in the beginning and ending balances of the Supplies account and the cost of supplies on hand.

Question 4

If a company fails to make an adjusting entry to record Supplies Expense, then

Accepted Answer

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

Question 5

Prepaid expenses are costs that are paid for before they are used.

Accepted Answer

A) True 
 B)False

Question 6

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 statement of financial position 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 statement of financial position accounts only.

Question 7

Which one of the following accounts shows a balance on the post-closing trial balance?

Accepted Answer

A) Interest Expense 
B) Service Revenue 
C) Retained Earnings, beginning of the year 
D) Common Shares 
A) Interest Expense 
B) Service Revenue 
C) Retained Earnings, beginning of the year 
D) Common Shares

Question 8

Deferred revenues are

Accepted Answer

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

Question 9

The primary difference between prepaid and accrued expenses is that prepaid expenses have

Accepted Answer

A) been incurred and accrued expenses have not. 
B) not been paid and accrued expenses have. 
C) been paid and accrued expenses have not. 
D) not been recorded and accrued expenses have. 
A) been incurred and accrued expenses have not. 
B) not been paid and accrued expenses have. 
C) been paid and accrued expenses have not. 
D) not been recorded and accrued expenses have.

Question 10

Fang's Tune-Up Shop Ltd.uses the accrual basis of accounting.Fang services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Fang on June 5.Fang receives the cheque in the mail on June 6.When would Fang recognize the revenue as being earned?

Accepted Answer

A) June 6 
B) June 5 
C) June 1 
D) May 31 
A) June 6 
B) June 5 
C) June 1 
D) May 31

Question 11

Under the accrual basis of accounting

Accepted Answer

A) cash must be received before revenue is recognized. 
B) net income is calculated by matching cash outflows against cash inflows. 
C) revenue is recognized when earned, while expenses are recognized when incurred to generate revenue. 
D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. 
A) cash must be received before revenue is recognized. 
B) net income is calculated by matching cash outflows against cash inflows. 
C) revenue is recognized when earned, while expenses are recognized when incurred to generate revenue. 
D) the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles.

Question 12

A legal firm received $2,000 cash for legal services to be rendered in the future.The full amount was credited to Deferred Revenue.If the legal services have been provided at the end of the accounting period and no adjusting entry has previously been made, this would cause

Accepted Answer

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

Question 13

If a business has received cash in advance of services being performed and credits a liability account, the adjusting entry needed after the services are performed will be

Accepted Answer

A) debit Deferred Revenue and credit Cash. 
B) debit Deferred Revenue and credit Sales. 
C) credit Deferred Revenue and debit Sales. 
D) debit Deferred Revenue and credit Accounts Receivable. 
A) debit Deferred Revenue and credit Cash. 
B) debit Deferred Revenue and credit Sales. 
C) credit Deferred Revenue and debit Sales. 
D) debit Deferred Revenue and credit Accounts Receivable.

Question 14

Wong's Tune-Up Shop Limited uses the cash basis of accounting.Wong services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Wong on June 5.Wong receives the cheque in the mail on June 6.When would Wong recognize the revenue as being earned?

Accepted Answer

A) June 6 
B) June 5 
C) June 1 
D) May 31 
A) June 6 
B) June 5 
C) June 1 
D) May 31

Question 15

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

Accepted Answer

A) $25,000. 
B) $125,000. 
C) $26,000. 
D) $2,167. 
A) $25,000. 
B) $125,000. 
C) $26,000. 
D) $2,167.

Question 16

An adjusting entry would not include which of the following accounts?

Accepted Answer

A) Cash 
B) Interest Receivable 
C) Accounts Payable 
D) Unearned Revenue 
A) Cash 
B) Interest Receivable 
C) Accounts Payable 
D) Unearned Revenue

Question 17

When money is received from a customer prior to the delivery of goods or the performance of a service, it is recorded as revenue.

Accepted Answer

A) True 
 B)False

Question 18

Maggie Bakeries has a weekly payroll of $8,250 and pays its employees every Friday.None of the staff work on weekends.This year, the last day of the company's fiscal year end is a Tuesday.What is the correct adjusting entry to accrue salaries expense?

Accepted Answer

The answer of Maggie Bakeries has a weekly payroll of...

Question 19

Which permanent account is affected by the closing entries?

Accepted Answer

A) Income Summary 
B) Common Shares 
C) Retained Earnings 
D) Cash 
A) Income Summary 
B) Common Shares 
C) Retained Earnings 
D) Cash

Question 20

Adjusting entries are needed

Accepted Answer

A) to produce relevant financial information. 
B) only under the cash basis of accounting. 
C) to update accounts at the beginning of the accounting period. 
D) for budgeting purposes. 
A) to produce relevant financial information. 
B) only under the cash basis of accounting. 
C) to update accounts at the beginning of the accounting period. 
D) for budgeting purposes.

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

If supplies are recorded as assets when purchased, the credit to supplies in the adjusting entry is for the amount of supplies

A company usually determines the amount of supplies used during a period by

If a company fails to make an adjusting entry to record Supplies Expense, then

Prepaid expenses are costs that are paid for before they are used.

Adjusting entries are

Which one of the following accounts shows a balance on the post-closing trial balance?

Deferred revenues are

The primary difference between prepaid and accrued expenses is that prepaid expenses have

Fang's Tune-Up Shop Ltd.uses the accrual basis of accounting.Fang services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Fang on June 5.Fang receives the cheque in the mail on June 6.When would Fang recognize the revenue as being earned?

Under the accrual basis of accounting

A legal firm received $2,000 cash for legal services to be rendered in the future.The full amount was credited to Deferred Revenue.If the legal services have been provided at the end of the accounting period and no adjusting entry has previously been made, this would cause

If a business has received cash in advance of services being performed and credits a liability account, the adjusting entry needed after the services are performed will be

Wong's Tune-Up Shop Limited uses the cash basis of accounting.Wong services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Wong on June 5.Wong receives the cheque in the mail on June 6.When would Wong recognize the revenue as being earned?

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

An adjusting entry would not include which of the following accounts?

When money is received from a customer prior to the delivery of goods or the performance of a service, it is recorded as revenue.

Maggie Bakeries has a weekly payroll of $8,250 and pays its employees every Friday.None of the staff work on weekends.This year, the last day of the company's fiscal year end is a Tuesday.What is the correct adjusting entry to accrue salaries expense?

Which permanent account is affected by the closing entries?

Adjusting entries are needed

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 4: Accrual Accounting Concepts

Failure to prepare an adjusting entry at the end of the period to record an accrued expense would cause

If supplies are recorded as assets when purchased, the credit to supplies in the adjusting entry is for the amount of supplies

A company usually determines the amount of supplies used during a period by

If a company fails to make an adjusting entry to record Supplies Expense, then

Prepaid expenses are costs that are paid for before they are used.

Adjusting entries are

Which one of the following accounts shows a balance on the post-closing trial balance?

Deferred revenues are

The primary difference between prepaid and accrued expenses is that prepaid expenses have

Fang's Tune-Up Shop Ltd.uses the accrual basis of accounting.Fang services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Fang on June 5.Fang receives the cheque in the mail on June 6.When would Fang recognize the revenue as being earned?

Under the accrual basis of accounting

A legal firm received $2,000 cash for legal services to be rendered in the future.The full amount was credited to Deferred Revenue.If the legal services have been provided at the end of the accounting period and no adjusting entry has previously been made, this would cause

If a business has received cash in advance of services being performed and credits a liability account, the adjusting entry needed after the services are performed will be

Wong's Tune-Up Shop Limited uses the cash basis of accounting.Wong services a car on May 31.The customer picks up the vehicle on June 1 and mails payment to Wong on June 5.Wong receives the cheque in the mail on June 6.When would Wong recognize the revenue as being earned?

An asset purchased for $130,000 on the first day of the fiscal year with a useful life of 5 years has an annual depreciation expense of

An adjusting entry would not include which of the following accounts?

When money is received from a customer prior to the delivery of goods or the performance of a service, it is recorded as revenue.

Maggie Bakeries has a weekly payroll of $8,250 and pays its employees every Friday.None of the staff work on weekends.This year, the last day of the company's fiscal year end is a Tuesday.What is the correct adjusting entry to accrue salaries expense?

Which permanent account is affected by the closing entries?

Adjusting entries are needed

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters