Question 1

Jill Clown earned a salary of $500 for the last week of October.She will be paid on November 1.The adjustment for Jill's employer October 31 is:

Accepted Answer

A) No adjustment is required. 
B) increase Salaries and Wages Expense $500 increase Salaries and Wages Payable $ 500 
C) increase Salaries and Wages Expense $500 decrease Cash $500 
D) decrease Salaries and Wages Payable $500 decrease Cash $500 
A) No adjustment is required. 
B) increase Salaries and Wages Expense $500 increase Salaries and Wages Payable $ 500 
C) increase Salaries and Wages Expense $500 decrease Cash $500 
D) decrease Salaries and Wages Payable $500 decrease Cash $500

Question 2

The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied.

Accepted Answer

A) True 
 B)False

Question 3

The following is selected information from C Corporation for the fiscal year ending October 31 2022. $\begin{array}{|l|lcc|}
 \hline \text { Cash received from customers } &\$150,000\
\hline \text { Revenue recognized } & 225,000\
\hline \text { Cash paid for expenses } &85,000\
 \hline\text { Cash paid for computers on November 1, 2021 that } &  {  }\
 \text { will be used for 3 years } & 24,000\
\hline \text { Expenses incurred including any depreciation } & 119,000\
\hline \text { Proceeds from a bank loan, part of which was used to } & \
\hline \text { pay for the computers } &50,000\
\hline 
\end{array}$
 Based on the accrual basis of accounting what is C Corporation's net income for the year ending October 31 2022?

Accepted Answer

A) $132000 
B) $116000 
C) $106000 
D) $140000 
A) $132000 
B) $116000 
C) $106000 
D) $140000

Question 4

Green Ski Equipment Company borrowed $6000 from Jackson County Community Bank on November 1 by issuing a 12% 3-month note.Prior to adjustment at the end of the month the company's records included the following tabular analysis: $\begin{array}{llcc}
  \underline{\text { Assets } } &=   & \underline{\text { Liabilities }} &+
\underline{ \text {  Stockholders' Equity} }
\end{array}$

$\begin{array}{c}
\begin{array}{lll}
\
\
\text {Bal.}\
\hline \text {Dec. 31}\
\hline \text {Adj. Bal.}\
\hline 
\end{array}
\begin{array}{l}
\
\underline{\text { Cash }}=\
7,500 \
\hline \
\hline \
\hline
\end{array}
\begin{array}{c}
\text {Interest}\
\underline{\text { Payable }}+\
\
\hline\
\hline\
\hline

\end{array}
\begin{array}{c}
\text {Notes}\
\underline{\text {Payable}}+\
6,000\
\hline\
\hline\
\hline
\end{array}

\begin{array}{c}
\text {common}\ 
\underline{\text {Stock}}+\
\
\hline\
\hline\
\hline
\end{array}
\begin{array}{l}
\
\underline{\text {Revenue }} -\
\
\hline-2\
\hline-2\
\hline 
\end{array}

\begin{array}{lll}
\text { Supplies }\
\underline{\text {Expense}}  \
\
\hline  \
\hline  \
\hline
\end{array}
\end{array}$
  The adjusting entry at December 31 will include

Accepted Answer

A) an increase to Notes Payable of $180. 
B) a decrease to Cash of $120. 
C) an increase to Interest Expense of $120. 
D) an increase to Interest Payable of $180. 
A) an increase to Notes Payable of $180. 
B) a decrease to Cash of $120. 
C) an increase to Interest Expense of $120. 
D) an increase to Interest Payable of $180.

Question 5

Which statement is correct?

Accepted Answer

A) Accumulated Depreciation is reported on the income adjustment. 
B) Accumulated Depreciation is added to the long-term liabilities on the balance sheet. 
C) Accumulated Depreciation Equipment represents the total cost of equipment that has expired up to the date of the balance sheet. 
D) Accumulated Depreciation is used to reveal the value of the related asset on the date of the balance sheet. 
A) Accumulated Depreciation is reported on the income adjustment. 
B) Accumulated Depreciation is added to the long-term liabilities on the balance sheet. 
C) Accumulated Depreciation Equipment represents the total cost of equipment that has expired up to the date of the balance sheet. 
D) Accumulated Depreciation is used to reveal the value of the related asset on the date of the balance sheet.

Question 6

Recognizing when an expense contributes to the production of revenue is critical.

Accepted Answer

A) True 
 B)False

Question 7

Nacron Company borrowed $15000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

Accepted Answer

A) increase Interest Expense $75; increase Interest Payable $75. 
B) increase Interest Expense $900; increase Interest Payable $900. 
C) decrease Note Payable $900; decrease Cash $900. 
D) increase Cash $75; increase Interest Payable $75. 
A) increase Interest Expense $75; increase Interest Payable $75. 
B) increase Interest Expense $900; increase Interest Payable $900. 
C) decrease Note Payable $900; decrease Cash $900. 
D) increase Cash $75; increase Interest Payable $75.

Question 8

James & Younger Corporation purchased a one-year insurance policy in January 2022 for $42000.The insurance policy is in effect from March 2022 through February 2023.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 $35000. 
B) net income and assets will be overstated by $35000. 
C) net income and assets will be understated by $7000. 
D) net income and assets will be overstated by $7000. 
A) net income and assets will be understated by $35000. 
B) net income and assets will be overstated by $35000. 
C) net income and assets will be understated by $7000. 
D) net income and assets will be overstated by $7000.

Question 9

Can financial statements be prepared directly from the adjusted tabular summary?

Accepted Answer

A) They cannot.A separate list must be used. 
B) Yes adjustments have been recorded. 
C) No adjusted tabular summary merely proves the equality of the basic accounting equation after adjustments are recorded.It has no other purpose. 
D) They can because the adjusted tabular summary reflects the adjusted balance to retained earnings. 
A) They cannot.A separate list must be used. 
B) Yes adjustments have been recorded. 
C) No adjusted tabular summary merely proves the equality of the basic accounting equation after adjustments are recorded.It has no other purpose. 
D) They can because the adjusted tabular summary reflects the adjusted balance to retained earnings.

Question 10

Baden Industries borrows $20000 at 7% annual interest for six months on October 1 2022.Which is the appropriate adjustment to accrue interest if Baden employs a December 31 2022 fiscal year?

Accepted Answer

A) Increase Interest Expense $350 Increase Interest Payable $350 
B) Increase Interest Expense $1400 Increase Interest Payable $1400 
C) Increase Interest Expense $350 Decrease Notes Payable $350 
D) Decrease Notes Payable $1400 Increase Interest Payable $1400 
A) Increase Interest Expense $350 Increase Interest Payable $350 
B) Increase Interest Expense $1400 Increase Interest Payable $1400 
C) Increase Interest Expense $350 Decrease Notes Payable $350 
D) Decrease Notes Payable $1400 Increase Interest Payable $1400

Question 11

In a service-type business revenue is recognized:

Accepted Answer

A) at the end of the month. 
B) at the end of the year. 
C) when the service is performed. 
D) when cash is received. 
A) at the end of the month. 
B) at the end of the year. 
C) when the service is performed. 
D) when cash is received.

Question 12

An adjustment to a prepaid expense is required to recognize expired costs.

Accepted Answer

A) True 
 B)False

Question 13

If Prepaid Insurance has an $82 unadjusted balance at December 31 2022 and the insurance still unexpired amounted to $20 the year-end adjustment would contain a(n):

Accepted Answer

A) increase to Prepaid Insurance for $62. 
B) decrease to Prepaid Insurance for $20. 
C) increase to Insurance Expense for $62. 
D) increase to Prepaid Insurance for $20. 
A) increase to Prepaid Insurance for $62. 
B) decrease to Prepaid Insurance for $20. 
C) increase to Insurance Expense for $62. 
D) increase to Prepaid Insurance for $20.

Question 14

An adjustment can include a(n):

Accepted Answer

A) increase to an asset and an increase to a liability. 
B) decrease to a revenue and a decrease to an asset. 
C) decrease to a liability and an increase to a revenue. 
D) increase to an expense and an increase to a revenue. 
A) increase to an asset and an increase to a liability. 
B) decrease to a revenue and a decrease to an asset. 
C) decrease to a liability and an increase to a revenue. 
D) increase to an expense and an increase to a revenue.

Question 15

Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Accepted Answer

A) annual annual 
B) monthly annual 
C) quarterly monthly 
D) monthly monthly 
A) annual annual 
B) monthly annual 
C) quarterly monthly 
D) monthly monthly

Question 16

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 under-stated. 
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 under-stated. 
D) Assets will be overstated and net income and stockholders' equity will be overstated.

Question 17

Which is not an application of revenue recognition?

Accepted Answer

A) Recording revenue as an adjustment on the last day of the accounting period. 
B) Recording cash from an established customer for services to be performed over the next three months. 
C) Billing customers on June 30 for services completed during June. 
D) Receiving cash for services performed. 
A) Recording revenue as an adjustment on the last day of the accounting period. 
B) Recording cash from an established customer for services to be performed over the next three months. 
C) Billing customers on June 30 for services completed during June. 
D) Receiving cash for services performed.

Question 18

Equipment was purchased by Noland Manufacturing on January 1 2022 for $125000.Noland's policy is to adjust its accounts at year-end.Which is the appropriate adjustment to record depreciation at year-end if the company expects to use equipment consistently for five years?

Accepted Answer

A)  Increase Depreciation Expense - Equipment $ \$ 25,000 $ Increase Accumulated Depreciation - Equipment $ \$ 25,000 $ 
B)  Decrease Accumulated Depreciation - Equipment $ \$ 25,000 $
Decrease Depreciation Expense - Equipment $ \$ 25,000 $ 
C)  Increase Depreciation Expense - Equipment $ \$ 25,000 $
Increase Equipment $ \$ 25,000 $ 
D)  Decrease Accumulated Depreciation - Equipment $ \$ 25,000 $
Decrease Equipment $ \$ 25,000 $ 
A)  Increase Depreciation Expense - Equipment $ \$ 25,000 $ Increase Accumulated Depreciation - Equipment $ \$ 25,000 $ 
B)  Decrease Accumulated Depreciation - Equipment $ \$ 25,000 $
Decrease Depreciation Expense - Equipment $ \$ 25,000 $ 
C)  Increase Depreciation Expense - Equipment $ \$ 25,000 $
Increase Equipment $ \$ 25,000 $ 
D)  Decrease Accumulated Depreciation - Equipment $ \$ 25,000 $
Decrease Equipment $ \$ 25,000 $

Question 19

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 20

A company purchased office supplies costing $5000 and increased Supplies for the full amount.At the end of the accounting period a physical count of office supplies revealed $900 still on hand.The appropriate adjustment to be made at the end of the period would be:

Accepted Answer

A) increase Supplies Expense $5900; Supplies $5900. 
B) increase Supplies $900; Supplies Expense $900. 
C) increase Supplies Expense $4100; Supplies $4100. 
D) increase Supplies $4100; Supplies Expense $4100. 
A) increase Supplies Expense $5900; Supplies $5900. 
B) increase Supplies $900; Supplies Expense $900. 
C) increase Supplies Expense $4100; Supplies $4100. 
D) increase Supplies $4100; Supplies Expense $4100.

Jill Clown earned a salary of $500 for the last week of October.She will be paid on November 1.The adjustment for Jill's employer October 31 is:

The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied.

Which statement is correct?

Recognizing when an expense contributes to the production of revenue is critical.

Nacron Company borrowed $15000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

James & Younger Corporation purchased a one-year insurance policy in January 2022 for $42000.The insurance policy is in effect from March 2022 through February 2023.If the company neglects to make the proper year-end adjustment for the expired insurance:

Can financial statements be prepared directly from the adjusted tabular summary?

Baden Industries borrows $20000 at 7% annual interest for six months on October 1 2022.Which is the appropriate adjustment to accrue interest if Baden employs a December 31 2022 fiscal year?

In a service-type business revenue is recognized:

An adjustment to a prepaid expense is required to recognize expired costs.

If Prepaid Insurance has an $82 unadjusted balance at December 31 2022 and the insurance still unexpired amounted to $20 the year-end adjustment would contain a(n):

An adjustment can include a(n):

Management usually wants financial statements and the IRS requires all businesses to file _ tax returns.

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

Which is not an application of revenue recognition?

Equipment was purchased by Noland Manufacturing on January 1 2022 for $125000.Noland's policy is to adjust its accounts at year-end.Which is the appropriate adjustment to record depreciation at year-end if the company expects to use equipment consistently for five years?

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

A company purchased office supplies costing $5000 and increased Supplies for the full amount.At the end of the accounting period a physical count of office supplies revealed $900 still on hand.The appropriate adjustment to be made at the end of the period would be:

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

Jill Clown earned a salary of $500 for the last week of October.She will be paid on November 1.The adjustment for Jill's employer October 31 is:

The revenue recognition principle dictates that revenue be recognized in the accounting period in which the performance obligation is satisfied.

Which statement is correct?

Recognizing when an expense contributes to the production of revenue is critical.

Nacron Company borrowed $15000 from the bank signing a 6% 3-month note on September 1.Principal and interest are payable to the bank on December 1.If the company prepares monthly financial statements the adjustment that the company should make for interest on September 30 would be:

James & Younger Corporation purchased a one-year insurance policy in January 2022 for $42000.The insurance policy is in effect from March 2022 through February 2023.If the company neglects to make the proper year-end adjustment for the expired insurance:

Can financial statements be prepared directly from the adjusted tabular summary?

Baden Industries borrows $20000 at 7% annual interest for six months on October 1 2022.Which is the appropriate adjustment to accrue interest if Baden employs a December 31 2022 fiscal year?

In a service-type business revenue is recognized:

An adjustment to a prepaid expense is required to recognize expired costs.

If Prepaid Insurance has an $82 unadjusted balance at December 31 2022 and the insurance still unexpired amounted to $20 the year-end adjustment would contain a(n):

An adjustment can include a(n):

Management usually wants ________ financial statements and the IRS requires all businesses to file _________ tax returns.

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

Which is not an application of revenue recognition?

Equipment was purchased by Noland Manufacturing on January 1 2022 for $125000.Noland's policy is to adjust its accounts at year-end.Which is the appropriate adjustment to record depreciation at year-end if the company expects to use equipment consistently for five years?

The periodicity assumption states that the economic life of a business entity can be divided into artificial time periods.

A company purchased office supplies costing $5000 and increased Supplies for the full amount.At the end of the accounting period a physical count of office supplies revealed $900 still on hand.The appropriate adjustment to be made at the end of the period would be:

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

Management usually wants financial statements and the IRS requires all businesses to file _ tax returns.