Question 1

Adjustments are:

Accepted Answer

A) the same as corrections. 
B) needed to ensure that the expense recognition principle is followed. 
C) optional. 
D) rarely needed. 
A) the same as corrections. 
B) needed to ensure that the expense recognition principle is followed. 
C) optional. 
D) rarely needed. B

Question 2

Regions Inc.pays its rent of $60000 annually on January 1 and makes monthly adjustments.If the February 28 monthly adjustment 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 $5000 and net income and stockholders' equity will be understated by $5000. 
C) Assets will be overstated by $10000 and net income and stockholders' equity will be understated by $10000. 
D) Assets will be overstated by $5000 and net income and stockholders' equity will be overstated by $5000. 
A) Failure to make the adjustment does not affect the February financial statements. 
B) Expenses will be overstated by $5000 and net income and stockholders' equity will be understated by $5000. 
C) Assets will be overstated by $10000 and net income and stockholders' equity will be understated by $10000. 
D) Assets will be overstated by $5000 and net income and stockholders' equity will be overstated by $5000. D

Question 3

If a company fails to adjust an Unearned Rent Revenue account for rent that has been recognized what effect will this have on that month's financial statements?

Accepted Answer

A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated. 
A) Assets will be understated and revenues will be understated. 
B) Liabilities will be understated and revenues will be understated. 
C) Liabilities will be overstated and revenues will be understated. 
D) Assets will be overstated and revenues will be understated. C

Question 4

Asset prepayments become expenses when they expire.

Accepted Answer

A) True 
 B)False

Question 5

Adjustments are not recorded to update the accounts.

Accepted Answer

A) True 
 B)False

Question 6

Unearned revenue is a prepayment that requires an adjustment when services are performed.

Accepted Answer

A) True 
 B)False

Question 7

Given the data below for a firm in its first year of operation determine net income under the accrual basis of accounting. $\begin{array} { l r } 
\text { Revenue recognized } & \$ 19,000 \
\text { Accounts receivable } & 3,000 \
\text { Expenses incurred } & 7,250 \
\text { Accounts payable (related to expenses) } & 750 \
\text { Supplies purchased with cash } & 1,800
\end{array}$

Accepted Answer

A) $11750 
B) $14000 
C) $9500 
D) $12200 
A) $11750 
B) $14000 
C) $9500 
D) $12200

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The expense recognition principle states that expenses should be matched with revenues.Another way of stating the principle is to say that:

Accepted Answer

A) assets should be matched with liabilities. 
B) efforts should be matched with accomplishments. 
C) dividends should be matched with stockholder investments. 
D) cash payments should be matched with cash receipts. 
A) assets should be matched with liabilities. 
B) efforts should be matched with accomplishments. 
C) dividends should be matched with stockholder investments. 
D) cash payments should be matched with cash receipts.

Question 10

An adjustment would be made to the revenue account only when cash is received.

Accepted Answer

A) True 
 B)False

Question 11

Which of the statements below is not true?

Accepted Answer

A) An adjusted tabular summary should show account balances. 
B) An adjusted tabular summary can be used to prepare financial statements. 
C) An adjusted tabular summary proves the mathematical equality of basic accounting equation. 
D) An adjusted tabular summary is prepared before all transactions have been recorded. 
A) An adjusted tabular summary should show account balances. 
B) An adjusted tabular summary can be used to prepare financial statements. 
C) An adjusted tabular summary proves the mathematical equality of basic accounting equation. 
D) An adjusted tabular summary is prepared before all transactions have been recorded.

Question 12

Accumulated Depreciation is a(n):

Accepted Answer

A) expense account. 
B) stockholders' equity account. 
C) liability account. 
D) contra asset account. 
A) expense account. 
B) stockholders' equity account. 
C) liability account. 
D) contra asset account.

Question 13

The adjustment to an unearned revenue account will

Accepted Answer

A) decrease liabilities and increase revenues. 
B) increase liabilities and increase revenues. 
C) increase assets and increase revenues. 
D) decrease revenues and decrease assets. 
A) decrease liabilities and increase revenues. 
B) increase liabilities and increase revenues. 
C) increase assets and increase revenues. 
D) decrease revenues and decrease assets.

Question 14

De Meaning Corporation issued a one-year 6% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

Accepted Answer

A) $24000. 
B) $18000. 
C) $16000. 
D) $14000. 
A) $24000. 
B) $18000. 
C) $16000. 
D) $14000.

Question 15

The preparation of adjustments is:

Accepted Answer

A) straightforward because the accounts that need adjustment will be out of balance. 
B) needed to ensure that the expense recognition principle is followed. 
C) only required for accounts that do not have a normal balance. 
D) optional when financial statements are prepared. 
A) straightforward because the accounts that need adjustment will be out of balance. 
B) needed to ensure that the expense recognition principle is followed. 
C) only required for accounts that do not have a normal balance. 
D) optional when financial statements are prepared.

Question 16

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

Accepted Answer

A) been recognized and unearned revenues have not been. 
B) been paid and unearned revenues have not. 
C) been recorded and unearned revenues have not. 
D) not been recorded and unearned revenues have. 
A) been recognized and unearned revenues have not been. 
B) been paid and unearned revenues have not. 
C) been recorded and unearned revenues have not. 
D) not been recorded and unearned revenues have.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

If service for $175 had been performed but not billed the adjustment to record this would include a(n):

Accepted Answer

A) decrease to Service Revenue for $175. 
B) increase to Unearned Service Revenue for $175. 
C) increase to Service Revenue for $175. 
D) decrease to Unearned Revenue for $175. 
A) decrease to Service Revenue for $175. 
B) increase to Unearned Service Revenue for $175. 
C) increase to Service Revenue for $175. 
D) decrease to Unearned Revenue for $175.

Question 20

LR Corporation is a cash-basis business.LR signed a six-month 12% note payable of $10000 on October 1 2022.By recording the interest expense related to the note only when it is paid on April 1 2023 LR will understate expenses by ________ on its year-end financial statements on December 31 2022.

Accepted Answer

A) $300 
B) $600 
C) $0 
D) $11200 
A) $300 
B) $600 
C) $0 
D) $11200

Adjustments are:

Regions Inc.pays its rent of $60000 annually on January 1 and makes monthly adjustments.If the February 28 monthly adjustment for prepaid rent is omitted which of the following are true?

If a company fails to adjust an Unearned Rent Revenue account for rent that has been recognized what effect will this have on that month's financial statements?

Asset prepayments become expenses when they expire.

Adjustments are not recorded to update the accounts.

Unearned revenue is a prepayment that requires an adjustment when services are performed.

Given the data below for a firm in its first year of operation determine net income under the accrual basis of accounting. Revenue recognized \ 19,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800

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

The expense recognition principle states that expenses should be matched with revenues.Another way of stating the principle is to say that:

An adjustment would be made to the revenue account only when cash is received.

Which of the statements below is not true?

Accumulated Depreciation is a(n):

The adjustment to an unearned revenue account will

De Meaning Corporation issued a one-year 6% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

The preparation of adjustments is:

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

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

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

If service for $175 had been performed but not billed the adjustment to record this would include a(n):

LR Corporation is a cash-basis business.LR signed a six-month 12% note payable of $10000 on October 1 2022.By recording the interest expense related to the note only when it is paid on April 1 2023 LR will understate expenses by ________ on its year-end financial statements on December 31 2022.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 4: Accrual Accounting Concepts

Adjustments are:

Regions Inc.pays its rent of $60000 annually on January 1 and makes monthly adjustments.If the February 28 monthly adjustment for prepaid rent is omitted which of the following are true?

If a company fails to adjust an Unearned Rent Revenue account for rent that has been recognized what effect will this have on that month's financial statements?

Asset prepayments become expenses when they expire.

Adjustments are not recorded to update the accounts.

Unearned revenue is a prepayment that requires an adjustment when services are performed.

Given the data below for a firm in its first year of operation determine net income under the accrual basis of accounting. Revenue recognized \ 19,000 Accounts receivable 3,000 Expenses incurred 7,250 Accounts payable (related to expenses) 750 Supplies purchased with cash 1,800

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

The expense recognition principle states that expenses should be matched with revenues.Another way of stating the principle is to say that:

An adjustment would be made to the revenue account only when cash is received.

Which of the statements below is not true?

Accumulated Depreciation is a(n):

The adjustment to an unearned revenue account will

De Meaning Corporation issued a one-year 6% $400000 note on April 30 2022.Interest expense for the year ended December 31 2022 was:

The preparation of adjustments is:

The primary difference between accrued revenues and unearned revenues is that accrued revenues have:

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

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

If service for $175 had been performed but not billed the adjustment to record this would include a(n):

LR Corporation is a cash-basis business.LR signed a six-month 12% note payable of $10000 on October 1 2022.By recording the interest expense related to the note only when it is paid on April 1 2023 LR will understate expenses by ________ on its year-end financial statements on December 31 2022.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters