Question 1

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Accepted Answer

A) ensure that revenues and expenses are recognized during the period they are earned and incurred. 
B) ensure that all estimates of future activities are eliminated from consideration. 
C) ensure that revenues and expenses are recognized conservatively during the period in which they are paid. 
D) provide an opportunity to manipulate the numbers to the best advantage of the reporting company. 
A) ensure that revenues and expenses are recognized during the period they are earned and incurred. 
B) ensure that all estimates of future activities are eliminated from consideration. 
C) ensure that revenues and expenses are recognized conservatively during the period in which they are paid. 
D) provide an opportunity to manipulate the numbers to the best advantage of the reporting company.

Question 2

Which of the following statements about the post-closing trial balance is correct?

Accepted Answer

A) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements. 
B) The post-closing trial balance is an internal report prepared at the end of the accounting cycle. 
C) The post-closing trial balance is a report prepared before the adjustments and the financial statements to prove that debits equal credits. 
D) The post-closing trial balance proves that all entries have been made correctly and accurately during the accounting period. 
A) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements. 
B) The post-closing trial balance is an internal report prepared at the end of the accounting cycle. 
C) The post-closing trial balance is a report prepared before the adjustments and the financial statements to prove that debits equal credits. 
D) The post-closing trial balance proves that all entries have been made correctly and accurately during the accounting period.

Question 3

When should supplies be recorded as an expense?

Accepted Answer

A) In the period the supplies are purchased,regardless of when cash is paid. 
B) In the period cash is paid for the supplies,regardless of when the supplies were received. 
C) In the period the supplies are used,regardless of when they were purchased. 
D) In the period the supplies are sold,regardless of when they were received. 
A) In the period the supplies are purchased,regardless of when cash is paid. 
B) In the period cash is paid for the supplies,regardless of when the supplies were received. 
C) In the period the supplies are used,regardless of when they were purchased. 
D) In the period the supplies are sold,regardless of when they were received.

Question 4

Which of these accounts would normally be affected by an adjustment?

Accepted Answer

A) Notes Payable. 
B) Equipment. 
C) Cash. 
D) Deferred Revenue. 
A) Notes Payable. 
B) Equipment. 
C) Cash. 
D) Deferred Revenue.

Question 5

After the adjustments have been completed,the adjusted balance in the Interest Payable account represents:

Accepted Answer

A) total interest that has been paid or accrued during the period. 
B) interest on notes receivable owed to the company. 
C) interest that has accrued,but has not been paid,at the end of the period. 
D) interest that has been prepaid on existing debt at the end of the period. 
A) total interest that has been paid or accrued during the period. 
B) interest on notes receivable owed to the company. 
C) interest that has accrued,but has not been paid,at the end of the period. 
D) interest that has been prepaid on existing debt at the end of the period.

Question 6

Which of the following accounts would be classified as a current liability on a classified balance sheet?

Accepted Answer

A) Dividends 
B) Deferred Revenue 
C) Wages Expense 
D) Accounts Receivable 
A) Dividends 
B) Deferred Revenue 
C) Wages Expense 
D) Accounts Receivable

Question 7

As a company uses supplies,an adjustment should be made to decrease an expense account and increase an asset account.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following steps is performed last at the end of the year?

Accepted Answer

A) Prepare adjusting entries. 
B) Prepare an adjusted trial balance. 
C) Prepare closing journal entries. 
D) Prepare a post-closing trial balance. 
A) Prepare adjusting entries. 
B) Prepare an adjusted trial balance. 
C) Prepare closing journal entries. 
D) Prepare a post-closing trial balance.

Question 9

The unadjusted trial balance of Sketch Star Makers Inc. ,prepared as of December 31,2018,includes the following account balances.All of the accounts listed have normal balances.
 $\begin{array}{lr}
\text { Cash } & \$ 5,000 \
\text { Accounts Receivable } & 3,000 \
\text { Supplies } & 1,500 \
\text { Prepaid Insurance } & 7,200 \
\text { Equipment } & 15,000 \
\text { Accumulated Depreciation } & 3,000 \
\text { Notes Payable (long-term) } & 30,000 \
\text { Deferred Revenue } & 7,500 \
\text { Service Revenue } & 45,000 \
\text { Salaries and Wages Expense } & 45,000
\end{array}$ The following information is also available: 
A)A count of supplies revealed $600 worth on hand at December 31,2018.
B)An insurance policy,purchased on January 1,2018,covers four years.
C)The equipment depreciates at a rate of $1,500 per year;no depreciation has been recorded for 2018.
D)Three-fifths (or 60%)of the amount recorded as Deferred Revenue remains deferred as of December 31,2018.
E)The accrued amount of salaries and wages at December 31,2018 is $3,000.

Accepted Answer

A.Supplies ($1,500 - $600)= $9

Question 10

Hourly employees at Gilbert Manufacturing have worked 1,200 hours for the week at an average pay rate of $32.50 per hour.Which of the following is the required adjusting entry?

Accepted Answer

A) Debit Salaries and Wages Expense and credit Cash for $39,000. 
B) Debit Salaries and Wages Expense and credit Salaries and Wages Payable for $39,000. 
C) Debit Salaries and Wages Payable and credit Salaries and Wages Expense for $39,000. 
D) Debit Salaries and Wages Payable and credit Cash for $39,000. 
A) Debit Salaries and Wages Expense and credit Cash for $39,000. 
B) Debit Salaries and Wages Expense and credit Salaries and Wages Payable for $39,000. 
C) Debit Salaries and Wages Payable and credit Salaries and Wages Expense for $39,000. 
D) Debit Salaries and Wages Payable and credit Cash for $39,000.

Question 11

Accounts Receivable should be increased for:

Accepted Answer

A) revenues earned during the period but not yet collected. 
B) inventory purchased during the period but not yet paid. 
C) cash collected from customers in advance of being earned. 
D) cash collected from customers for revenues earned during the period. 
A) revenues earned during the period but not yet collected. 
B) inventory purchased during the period but not yet paid. 
C) cash collected from customers in advance of being earned. 
D) cash collected from customers for revenues earned during the period.

Question 12

Coaster Brothers,Inc.billed a client for services performed on March 12.The customer paid one-half of the amount owed on March 22 and the other one-half on April 24.When should the company record the related Service Revenue?

Accepted Answer

A) On March 12. 
B) On March 22. 
C) One-half on March 22 and the other half on April 24. 
D) At year-end in an adjusting entry. 
A) On March 12. 
B) On March 22. 
C) One-half on March 22 and the other half on April 24. 
D) At year-end in an adjusting entry.

Question 13

On December 31,2018,Ditka Inc.had Retained Earnings of $267,800 before its closing entries were prepared and posted.During 2018,the company had service revenue of $168,100 and interest revenue of $81,300.The company used supplies in the amount of $87,900,advertising expenses were $16,400,salaries and wages totaled $18,300,and income tax expense was calculated as $13,700.During the year,the company declared and paid dividends of $6,000.
Required:
Part a.Prepare the closing entries dated December 31,2018.
Part b.Prepare T-account for the Retained Earnings account.Enter the beginning balance into the T-account,post the closing entries,and then determine the ending balance.

Accepted Answer

Part a.
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Question 14

Match each transaction with the type of entry that will be required at April 30,the company's year-end.
-The company transfers revenues of $50,000 and expenses of $32,000 to Retained Earnings.

Accepted Answer

A) Closing entry 
B) Deferral adjusting entry 
C) Accrual adjusting entry 
A) Closing entry 
B) Deferral adjusting entry 
C) Accrual adjusting entry

Question 15

Amortization is the concept that applies to the:

Accepted Answer

A) expensing of long-term assets that lack physical substance over their useful lives. 
B) depreciation of prepaids and supplies as they are used. 
C) recording of amounts collected in advance that have not yet been earned. 
D) recording of Deferred revenue in the period cash is collected in advance of being earned. 
A) expensing of long-term assets that lack physical substance over their useful lives. 
B) depreciation of prepaids and supplies as they are used. 
C) recording of amounts collected in advance that have not yet been earned. 
D) recording of Deferred revenue in the period cash is collected in advance of being earned.

Question 16

Amortization is the expensing of:

Accepted Answer

A) long-term assets that lack physical substance. 
B) equipment and buildings. 
C) supplies. 
D) land. 
A) long-term assets that lack physical substance. 
B) equipment and buildings. 
C) supplies. 
D) land.

Question 17

Match the term and its definition.There are more definitions than terms.
-Adjusted Trial Balance

Accepted Answer

A) Also known as balance sheet accounts. 
B) Lists the balances of all temporary and permanent accounts to provide a check on the equality of the debits and credits. 
C) Lists the balances of all accounts to check that revenues equal expenses. 
D) The level of profit prior to considering income tax. 
E) An account that is paired with another account and acts to reduce its book value.
F)Converts some of an asset's or a liability's book value into an expense or a revenue.
G)An account that must have a zero balance after closing entries have been made.
H)Adds new values into the balance sheet and income statement accounts.
I)The amount at which an asset or liability is reported in the financial statements.
J)Lists the balances of all permanent accounts to check that debits equal credits.
K)A journal entry that transfers net income or loss to the Retained Earnings account.
L)When revenue minus expenses is a negative number.
M)Entries made to update existing accounts and record new events. 
A) Also known as balance sheet accounts. 
B) Lists the balances of all temporary and permanent accounts to provide a check on the equality of the debits and credits. 
C) Lists the balances of all accounts to check that revenues equal expenses. 
D) The level of profit prior to considering income tax. 
E) An account that is paired with another account and acts to reduce its book value.
F)Converts some of an asset's or a liability's book value into an expense or a revenue.
G)An account that must have a zero balance after closing entries have been made.
H)Adds new values into the balance sheet and income statement accounts.
I)The amount at which an asset or liability is reported in the financial statements.
J)Lists the balances of all permanent accounts to check that debits equal credits.
K)A journal entry that transfers net income or loss to the Retained Earnings account.
L)When revenue minus expenses is a negative number.
M)Entries made to update existing accounts and record new events.

Question 18

Adjusting entries affect:

Accepted Answer

A) only balance sheet accounts. 
B) only income statement accounts. 
C) only statement of cash flow accounts. 
D) both income statement and balance sheet accounts. 
A) only balance sheet accounts. 
B) only income statement accounts. 
C) only statement of cash flow accounts. 
D) both income statement and balance sheet accounts.

Question 19

After net income has been determined,it is then transferred to the:

Accepted Answer

A) balance sheet. 
B) income statement. 
C) statement of cash flows. 
D) statement of retained earnings. 
A) balance sheet. 
B) income statement. 
C) statement of cash flows. 
D) statement of retained earnings.

Question 20

On December 31,2018,interest of $700 is owed on a bank loan that will not be paid until June 30,2019.What is the necessary adjusting journal entry on December 31,2018?

Accepted Answer

A) Debit Interest Expense and credit Cash for $700. 
B) Debit Interest Expense and credit Interest Payable for $700. 
C) Debit Interest Payable and credit Interest Expense for $700. 
D) Debit Interest Receivable and credit Interest Revenue for $700. 
A) Debit Interest Expense and credit Cash for $700. 
B) Debit Interest Expense and credit Interest Payable for $700. 
C) Debit Interest Payable and credit Interest Expense for $700. 
D) Debit Interest Receivable and credit Interest Revenue for $700.

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Which of the following statements about the post-closing trial balance is correct?

When should supplies be recorded as an expense?

Which of these accounts would normally be affected by an adjustment?

After the adjustments have been completed,the adjusted balance in the Interest Payable account represents:

Which of the following accounts would be classified as a current liability on a classified balance sheet?

As a company uses supplies,an adjustment should be made to decrease an expense account and increase an asset account.

Which of the following steps is performed last at the end of the year?

Hourly employees at Gilbert Manufacturing have worked 1,200 hours for the week at an average pay rate of $32.50 per hour.Which of the following is the required adjusting entry?

Accounts Receivable should be increased for:

Coaster Brothers,Inc.billed a client for services performed on March 12.The customer paid one-half of the amount owed on March 22 and the other one-half on April 24.When should the company record the related Service Revenue?

Match each transaction with the type of entry that will be required at April 30,the company's year-end. -The company transfers revenues of $50,000 and expenses of $32,000 to Retained Earnings.

Amortization is the concept that applies to the:

Amortization is the expensing of:

Match the term and its definition.There are more definitions than terms. -Adjusted Trial Balance

Adjusting entries affect:

After net income has been determined,it is then transferred to the:

On December 31,2018,interest of $700 is owed on a bank loan that will not be paid until June 30,2019.What is the necessary adjusting journal entry on December 31,2018?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 4: Adjustments,Financial Statements,and Financial Results

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Which of the following statements about the post-closing trial balance is correct?

When should supplies be recorded as an expense?

Which of these accounts would normally be affected by an adjustment?

After the adjustments have been completed,the adjusted balance in the Interest Payable account represents:

Which of the following accounts would be classified as a current liability on a classified balance sheet?

As a company uses supplies,an adjustment should be made to decrease an expense account and increase an asset account.

Which of the following steps is performed last at the end of the year?

Hourly employees at Gilbert Manufacturing have worked 1,200 hours for the week at an average pay rate of $32.50 per hour.Which of the following is the required adjusting entry?

Accounts Receivable should be increased for:

Coaster Brothers,Inc.billed a client for services performed on March 12.The customer paid one-half of the amount owed on March 22 and the other one-half on April 24.When should the company record the related Service Revenue?

Match each transaction with the type of entry that will be required at April 30,the company's year-end. -The company transfers revenues of $50,000 and expenses of $32,000 to Retained Earnings.

Amortization is the concept that applies to the:

Amortization is the expensing of:

Match the term and its definition.There are more definitions than terms. -Adjusted Trial Balance

Adjusting entries affect:

After net income has been determined,it is then transferred to the:

On December 31,2018,interest of $700 is owed on a bank loan that will not be paid until June 30,2019.What is the necessary adjusting journal entry on December 31,2018?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters