Question 1

The adjusted trial balance includes all accounts contained in the ledger with updated, adjusted balances.

Accepted Answer

A) True 
 B)False

Question 2

Net income is reported on the income statement at $30,000. Adjusting entries for accrued revenues of $2,000 and unearned revenue earned during the current period of $5,500 were accidentally omitted. The correct net income is:

Accepted Answer

A) $22,500. 
B) $37,500. 
C) $33,500. 
D) $26,500. 
A) $22,500. 
B) $37,500. 
C) $33,500. 
D) $26,500.

Question 3

Unearned revenue has:

Accepted Answer

A) been earned but the cash has not been received. 
B) not been earned nor has the cash been received. 
C) been earned and the cash has been received. 
D) not been earned but the cash has been received. 
A) been earned but the cash has not been received. 
B) not been earned nor has the cash been received. 
C) been earned and the cash has been received. 
D) not been earned but the cash has been received.

Question 4

The ________ is/are transferred from the income statement to the statement of owner's equity.

Accepted Answer

A) ending capital 
B) withdrawals 
C) net income 
D) beginning capital 
A) ending capital 
B) withdrawals 
C) net income 
D) beginning capital

Question 5

Under accrual accounting, the receipt of cash from a customer in advance of performing the service would be credited to a(n):

Accepted Answer

A) unearned revenue account. 
B) prepaid asset account. 
C) accrued revenue account. 
D) deferred asset account. 
A) unearned revenue account. 
B) prepaid asset account. 
C) accrued revenue account. 
D) deferred asset account.

Question 6

The adjusting entry to record accrued salaries includes a debit to salary expense.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following situations would result in an increase in income under the accrual basis of accounting, but would not result in an increase in income under the cash-basis of accounting?

Accepted Answer

A) cash received from a customer in advance of the service being performed 
B) writing off an uncollectible account receivable 
C) receipt of cash for services that were performed earlier on account 
D) performance of services on account 
A) cash received from a customer in advance of the service being performed 
B) writing off an uncollectible account receivable 
C) receipt of cash for services that were performed earlier on account 
D) performance of services on account

Question 8

The concept that requires that accountants accrue wage expense at the end of the accounting period for unpaid wages is the:

Accepted Answer

A) Cost principle. 
B) Time-period assumption. 
C) Recognition criteria for revenue. 
D) Matching objective. 
A) Cost principle. 
B) Time-period assumption. 
C) Recognition criteria for revenue. 
D) Matching objective.

Question 9

Cash accounting records the effect of every business transaction as it occurs.

Accepted Answer

A) True 
 B)False

Question 10

Capital on the adjusted trial balance represents capital at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 11

One of the differences between IFRS and ASPE is that:

Accepted Answer

A) ASPE is used mostly in Europe. 
B) IFRS uses accrual accounting; ASPE uses cash-basis accounting. 
C) IFRS uses cash-basis accounting; ASPE uses accrual accounting. 
D) to record amortization, IFRS uses the word depreciation; ASPE allows both depreciation and amortization to be used. 
A) ASPE is used mostly in Europe. 
B) IFRS uses accrual accounting; ASPE uses cash-basis accounting. 
C) IFRS uses cash-basis accounting; ASPE uses accrual accounting. 
D) to record amortization, IFRS uses the word depreciation; ASPE allows both depreciation and amortization to be used.

Question 12

The financial statements will contain errors if they are prepared before the adjusting entries are completed.

Accepted Answer

A) True 
 B)False

Question 13

IFRS specify that depreciation is the term to be used, whereas ASPE allow both amortization and depreciation to be used.

Accepted Answer

A) True 
 B)False

Question 14

Given the following adjustment data, state whether the resulting adjustment will be a deferral or an accrual
-Prepaid insurance was used during the month.

Accepted Answer

A) accrual 
B) deferral 
A) accrual 
B) deferral

Question 15

The entry for amortization has what effect on the financial statements?

Accepted Answer

A) increases assets and decreases liabilities 
B) decreases net income and increases assets 
C) increases expenses and decreases assets 
D) decreases assets and increases liabilities 
A) increases assets and decreases liabilities 
B) decreases net income and increases assets 
C) increases expenses and decreases assets 
D) decreases assets and increases liabilities

Question 16

The time-period assumption ensures that accounting information is reported at regular intervals.

Accepted Answer

A) True 
 B)False

Question 17

Failure to record an accrued revenue:

Accepted Answer

A) overstates liabilities. 
B) overstates revenue. 
C) overstates assets. 
D) understates assets. 
A) overstates liabilities. 
B) overstates revenue. 
C) overstates assets. 
D) understates assets.

Question 18

Accumulated amortization on an asset plus its book value equals:

Accepted Answer

A) amortization expense for the current year. 
B) amortization expense to be recorded in future years. 
C) amortization expense recorded in past years. 
D) the cost of the equipment. 
A) amortization expense for the current year. 
B) amortization expense to be recorded in future years. 
C) amortization expense recorded in past years. 
D) the cost of the equipment.

Question 19

Pattie's Event Planning Service collects the fees from its customers in advance. At January 1, 2019, the balance of the unearned revenue account was a credit of $4,000. During January and February, the company collected $2,000 and $1,000 respectively. During the two-month period, the company rendered services of $5,500. At the end of February, the unadjusted trial balance will show what balance in unearned revenues?

Accepted Answer

A) debit balance of $1,500 
B) credit balance of $1,500 
C) debit balance of $7,000 
D) credit balance of $7,000 
A) debit balance of $1,500 
B) credit balance of $1,500 
C) debit balance of $7,000 
D) credit balance of $7,000

Question 20

Prepaid insurance shows a beginning balance of $500 and an ending balance of $2,800. The insurance expense account was debited during the adjusting process for $1,800. How much cash was spent for insurance?

Accepted Answer

A) $1,500 
B) $4,100 
C) $1,000 
D) $3,300 
A) $1,500 
B) $4,100 
C) $1,000 
D) $3,300

The adjusted trial balance includes all accounts contained in the ledger with updated, adjusted balances.

Net income is reported on the income statement at $30,000. Adjusting entries for accrued revenues of $2,000 and unearned revenue earned during the current period of $5,500 were accidentally omitted. The correct net income is:

Unearned revenue has:

The ________ is/are transferred from the income statement to the statement of owner's equity.

Under accrual accounting, the receipt of cash from a customer in advance of performing the service would be credited to a(n):

The adjusting entry to record accrued salaries includes a debit to salary expense.

Which of the following situations would result in an increase in income under the accrual basis of accounting, but would not result in an increase in income under the cash-basis of accounting?

The concept that requires that accountants accrue wage expense at the end of the accounting period for unpaid wages is the:

Cash accounting records the effect of every business transaction as it occurs.

Capital on the adjusted trial balance represents capital at the end of the accounting period.

One of the differences between IFRS and ASPE is that:

The financial statements will contain errors if they are prepared before the adjusting entries are completed.

IFRS specify that depreciation is the term to be used, whereas ASPE allow both amortization and depreciation to be used.

Given the following adjustment data, state whether the resulting adjustment will be a deferral or an accrual -Prepaid insurance was used during the month.

The entry for amortization has what effect on the financial statements?

The time-period assumption ensures that accounting information is reported at regular intervals.

Failure to record an accrued revenue:

Accumulated amortization on an asset plus its book value equals:

Prepaid insurance shows a beginning balance of $500 and an ending balance of $2,800. The insurance expense account was debited during the adjusting process for $1,800. How much cash was spent for insurance?

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters

Exam 3: Measuring Business Income: The Adjusting Process

The adjusted trial balance includes all accounts contained in the ledger with updated, adjusted balances.

Net income is reported on the income statement at $30,000. Adjusting entries for accrued revenues of $2,000 and unearned revenue earned during the current period of $5,500 were accidentally omitted. The correct net income is:

Unearned revenue has:

The ________ is/are transferred from the income statement to the statement of owner's equity.

Under accrual accounting, the receipt of cash from a customer in advance of performing the service would be credited to a(n):

The adjusting entry to record accrued salaries includes a debit to salary expense.

Which of the following situations would result in an increase in income under the accrual basis of accounting, but would not result in an increase in income under the cash-basis of accounting?

The concept that requires that accountants accrue wage expense at the end of the accounting period for unpaid wages is the:

Cash accounting records the effect of every business transaction as it occurs.

Capital on the adjusted trial balance represents capital at the end of the accounting period.

One of the differences between IFRS and ASPE is that:

The financial statements will contain errors if they are prepared before the adjusting entries are completed.

IFRS specify that depreciation is the term to be used, whereas ASPE allow both amortization and depreciation to be used.

Given the following adjustment data, state whether the resulting adjustment will be a deferral or an accrual -Prepaid insurance was used during the month.

The entry for amortization has what effect on the financial statements?

The time-period assumption ensures that accounting information is reported at regular intervals.

Failure to record an accrued revenue:

Accumulated amortization on an asset plus its book value equals:

Prepaid insurance shows a beginning balance of $500 and an ending balance of $2,800. The insurance expense account was debited during the adjusting process for $1,800. How much cash was spent for insurance?

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters