Question 1

Failure to record depreciation expense will overstate assets and understate expenses.

Accepted Answer

A) True 
 B)False

Question 2

Statements that show the financial statements as if proposed transactions had already occurred are called:

Accepted Answer

A) Pro forma statements. 
B) Professional statements. 
C) Simplified statements. 
D) Temporary statements. 
E) Interim statements. 
A) Pro forma statements. 
B) Professional statements. 
C) Simplified statements. 
D) Temporary statements. 
E) Interim statements.

Question 3

On October 1,Vista View Company rented warehouse space to a tenant for $2,500 per month.The tenant paid five months' rent in advance on that date,with the lease beginning immediately.The cash receipt was credited to the Unearned Rent account.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Accepted Answer

A) Debit Rent Receivable,$12,500; credit Rent Earned,$12,500. 
B) Debit Rent Receivable,$7,500; credit Rent Earned,$7,500. 
C) Debit Unearned Rent,$7,500; credit Rent Earned,$7,500. 
D) Debit Unearned Rent,$5,000; credit Rent Earned,$5,000. 
E) Debit Unearned Rent,$12,500; credit Rent Earned,$12,500. 
A) Debit Rent Receivable,$12,500; credit Rent Earned,$12,500. 
B) Debit Rent Receivable,$7,500; credit Rent Earned,$7,500. 
C) Debit Unearned Rent,$7,500; credit Rent Earned,$7,500. 
D) Debit Unearned Rent,$5,000; credit Rent Earned,$5,000. 
E) Debit Unearned Rent,$12,500; credit Rent Earned,$12,500.

Question 4

The following information is available for Cubic Company before closing the accounts.After all closing entries are made,what will be the balance in the Retained earnings account?

Accepted Answer

A) $115,000. 
B) $225,000. 
C) $264,000. 
D) $186,000. 
E) $956,000. 
A) $115,000. 
B) $225,000. 
C) $264,000. 
D) $186,000. 
E) $956,000.

Question 5

A company performs 20 days of work on a 30-day contract before the end of the year.The total contract is valued at $6,000,with payment received in advance.The $6,000 cash receipt was initially recorded as Unearned Revenue.The required adjusting entry includes a $4,000 debit to Unearned Revenue.

Accepted Answer

A) True 
 B)False

Question 6

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ________ and equity would be ________.

Accepted Answer

overstated

Question 7

An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200.Assuming the company does not prepare reversing entries,which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 8

Closing entries are designed to transfer the end-of-period balances in the revenue accounts,the expense accounts,and the dividends account to retained earnings.

Accepted Answer

A) True 
 B)False

Question 9

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

Accepted Answer

A) Balance Sheet and Statement of Retained Earnings-Credit and Income Statement-Credit. 
B) Balance Sheet and Statement of Retained Earnings-Debit and Income Statement-Debit. 
C) Income Statement-Debit and Income Statement-Credit. 
D) Balance Sheet and Statement of Retained Earnings-Debit and Balance Sheet and Statement of Retained Earnings-Credit. 
E) Balance Sheet and Statement of Retained Earnings-Debit; and Income Statement-Credit. 
A) Balance Sheet and Statement of Retained Earnings-Credit and Income Statement-Credit. 
B) Balance Sheet and Statement of Retained Earnings-Debit and Income Statement-Debit. 
C) Income Statement-Debit and Income Statement-Credit. 
D) Balance Sheet and Statement of Retained Earnings-Debit and Balance Sheet and Statement of Retained Earnings-Credit. 
E) Balance Sheet and Statement of Retained Earnings-Debit; and Income Statement-Credit.

Question 10

Which of the following statements is true?

Accepted Answer

A) Retained earnings must be closed each accounting period. 
B) A post-closing trial balance should include only permanent accounts. 
C) The work sheet can be substituted for preparing financial statements. 
D) By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E) Closing entries are only necessary if errors have been made. 
A) Retained earnings must be closed each accounting period. 
B) A post-closing trial balance should include only permanent accounts. 
C) The work sheet can be substituted for preparing financial statements. 
D) By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E) Closing entries are only necessary if errors have been made.

Question 11

________ revenues are liabilities requiring delivery of products and for services.

Accepted Answer

The answer of ________ revenues are liabilities requiring delivery of...

Question 12

Based on the unadjusted trial balance for Glow Styling and the adjusting information given below,prepare the adjusting journal entries for Glow Styling.After completing the adjusting entries,prepare the trial balance for Glow Styling.
Glow Styling unadjusted trial balance for the current year follows:
 Additional information:
a.An insurance policy examination showed $1,240 of expired insurance.
b.An inventory count showed $210 of unused shop supplies still available.
c.Depreciation expense on shop equipment,$350.
d.Depreciation expense on the building,$2,220.
e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared.
f.$800 of the Unearned Rent account balance was earned by year-end.
g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid.
h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded.
i.One month's interest on the note payable,$600,has accrued but is unrecorded.
Use the above information to prepare the adjusted trial balance for Glow Styling.

Accepted Answer

The answer of Based on the unadjusted trial balance for...

Question 13

If a company has current assets of $15,000 and current liabilities of $9,500,its current ratio is 1.6

Accepted Answer

A) True 
 B)False

Question 14

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

Accepted Answer

A) Fiscal year. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Calendar year. 
A) Fiscal year. 
B) Natural business year. 
C) Accounting period. 
D) Business cycle. 
E) Calendar year.

Question 15

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Accepted Answer

A) True 
 B)False

Question 16

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.
-The Net Income for the year is:

Accepted Answer

A) $185,000 
B) $63,300 
C) $81,300 
D) $360,300 
E) $378,300 
A) $185,000 
B) $63,300 
C) $81,300 
D) $360,300 
E) $378,300

Question 17

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Accepted Answer

A) Debit Prepaid Insurance,$1,800; credit Cash,$1,800. 
B) Debit Prepaid Insurance,$1,440; credit Insurance Expense,$1,440. 
C) Debit Prepaid Insurance,$360; credit Insurance Expense,$360. 
D) Debit Insurance Expense,$360; credit Prepaid Insurance,$360. 
E) Debit Insurance Expense,$360; credit Prepaid Insurance,$1,440. 
A) Debit Prepaid Insurance,$1,800; credit Cash,$1,800. 
B) Debit Prepaid Insurance,$1,440; credit Insurance Expense,$1,440. 
C) Debit Prepaid Insurance,$360; credit Insurance Expense,$360. 
D) Debit Insurance Expense,$360; credit Prepaid Insurance,$360. 
E) Debit Insurance Expense,$360; credit Prepaid Insurance,$1,440.

Question 18

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

Accepted Answer

A) True 
 B)False

Question 19

On October 1,Vista View Goodwell Company rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months' rent in advance on that date,with the lease beginning immediately.The cash receipt was credited to the Unearned Rent account.The company's annual accounting period ends on December 31.The Unearned Rent account balance at the end of December,after adjustment,should be:

Accepted Answer

A) $5,000. 
B) $7,500. 
C) $12,500. 
D) $2,500. 
E) $10,000. 
A) $5,000. 
B) $7,500. 
C) $12,500. 
D) $2,500. 
E) $10,000.

Question 20

Profit margin can also be called return on sales.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts for Financial Statements

Failure to record depreciation expense will overstate assets and understate expenses.

Statements that show the financial statements as if proposed transactions had already occurred are called:

The following information is available for Cubic Company before closing the accounts.After all closing entries are made,what will be the balance in the Retained earnings account?

A company performs 20 days of work on a 30-day contract before the end of the year.The total contract is valued at $6,000,with payment received in advance.The $6,000 cash receipt was initially recorded as Unearned Revenue.The required adjusting entry includes a $4,000 debit to Unearned Revenue.

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be ________ and equity would be ________.

An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200.Assuming the company does not prepare reversing entries,which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?

Closing entries are designed to transfer the end-of-period balances in the revenue accounts,the expense accounts,and the dividends account to retained earnings.

Accumulated Depreciation and Service Fees Earned would be sorted to which respective columns in completing a work sheet?

Which of the following statements is true?

________ revenues are liabilities requiring delivery of products and for services.

If a company has current assets of $15,000 and current liabilities of $9,500,its current ratio is 1.6

The length of time covered by a set of periodic financial statements,primarily a year for most companies,is referred to as the:

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000. -The Net Income for the year is:

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits.

Profit margin can also be called return on sales.

Accounting in Business

Accounting for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters

If a prepaid expense account were not adjusted for the amount used,on the balance sheet assets would be and equity would be .