Question 1

The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 2

The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

Accepted Answer

A) True 
 B)False

Question 3

The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

Accepted Answer

A) True 
 B)False

Question 4

On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

Accepted Answer

A)  credit to Prepaid Insurance $4,500. 
B)  credit to Insurance Expense $4,500. 
C)  credit to Prepaid Insurance $9,000. 
D)  debit to Insurance expense $9,000. 
A)  credit to Prepaid Insurance $4,500. 
B)  credit to Insurance Expense $4,500. 
C)  credit to Prepaid Insurance $9,000. 
D)  debit to Insurance expense $9,000.

Question 5

On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Accepted Answer

A)  Debit Interest Expense and credit Cash for $500 
B)  Debit Interest Expense and credit Interest Payable for $500 
C)  Debit Interest Payable and credit Interest Expense for $500 
D)  Debit Interest Receivable and credit Interest Revenue for $500 
A)  Debit Interest Expense and credit Cash for $500 
B)  Debit Interest Expense and credit Interest Payable for $500 
C)  Debit Interest Payable and credit Interest Expense for $500 
D)  Debit Interest Receivable and credit Interest Revenue for $500

Question 6

Which of the following entries records the adjustment for revenue earned,but not yet collected?

Accepted Answer

A)  Debit Accounts Receivable and credit Sales Revenue 
B)  Debit Sales Revenue and credit Accounts Receivable 
C)  Debit Unearned Revenue and credit Sales Revenue 
D)  Debit Accounts Receivable 
A)  Debit Accounts Receivable and credit Sales Revenue 
B)  Debit Sales Revenue and credit Accounts Receivable 
C)  Debit Unearned Revenue and credit Sales Revenue 
D)  Debit Accounts Receivable

Question 7

When a deferral adjustment is made to an asset account,that asset becomes a(n):

Accepted Answer

A)  liability. 
B)  other asset. 
C)  revenue. 
D)  expense. 
A)  liability. 
B)  other asset. 
C)  revenue. 
D)  expense.

Question 8

Temporary accounts are closed at what stage of the accounting process?

Accepted Answer

A)  At the time that adjustments are made. 
B)  After adjustments are made and before the income statement is prepared. 
C)  After the income statement and the statement of retained earnings are prepared, but before the balance sheet is prepared. 
D)  As the last journal entries at the end of each accounting year. 
A)  At the time that adjustments are made. 
B)  After adjustments are made and before the income statement is prepared. 
C)  After the income statement and the statement of retained earnings are prepared, but before the balance sheet is prepared. 
D)  As the last journal entries at the end of each accounting year.

Question 9

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

Accepted Answer

A)  Accrual adjustments can increase assets and increase revenues. 
B)  Accrual adjustments can increase liabilities and decrease expenses. 
C)  Accrual adjustments can decrease assets and decrease expenses. 
D)  Accrual adjustments can increase assets and increase expenses. 
A)  Accrual adjustments can increase assets and increase revenues. 
B)  Accrual adjustments can increase liabilities and decrease expenses. 
C)  Accrual adjustments can decrease assets and decrease expenses. 
D)  Accrual adjustments can increase assets and increase expenses.

Question 10

One major difference between deferral and accrual adjustments is that:

Accepted Answer

A)  accrual adjustments affect income statement accounts and deferral adjustments affect balance sheet accounts. 
B)  deferral adjustments increase net income and accrual adjustments decrease net income. 
C)  deferral adjustments are made under the cash basis of accounting and accrual adjustments are made under the accrual basis of accounting.. 
D)  accounts affected by an accrual adjustment always go in the same direction (i.e., both accounts are increased or both accounts are decreased) and accounts affected by a deferral adjustment always go in opposite directions (one account is increased and one account is decreased). 
A)  accrual adjustments affect income statement accounts and deferral adjustments affect balance sheet accounts. 
B)  deferral adjustments increase net income and accrual adjustments decrease net income. 
C)  deferral adjustments are made under the cash basis of accounting and accrual adjustments are made under the accrual basis of accounting.. 
D)  accounts affected by an accrual adjustment always go in the same direction (i.e., both accounts are increased or both accounts are decreased) and accounts affected by a deferral adjustment always go in opposite directions (one account is increased and one account is decreased).

Question 11

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Accepted Answer

A)  Revenue earned, but not yet collected, on investments 
B)  Revenue earned during the period from an amount that was previously recorded as a liability when the cash was received 
C)  Wages incurred, but not yet paid to employees, at the end of the accounting period 
D)  Interest owed, but not yet paid, on a note payable 
A)  Revenue earned, but not yet collected, on investments 
B)  Revenue earned during the period from an amount that was previously recorded as a liability when the cash was received 
C)  Wages incurred, but not yet paid to employees, at the end of the accounting period 
D)  Interest owed, but not yet paid, on a note payable

Question 12

Which of the following best describes when an accrual adjustment is required?

Accepted Answer

A)  An expense has been incurred and paid in cash. 
B)  An expense has been incurred but not yet paid in cash. 
C)  An expense has not been incurred, but cash has been paid. 
D)  An expense has not been incurred nor has it been paid in cash. 
A)  An expense has been incurred and paid in cash. 
B)  An expense has been incurred but not yet paid in cash. 
C)  An expense has not been incurred, but cash has been paid. 
D)  An expense has not been incurred nor has it been paid in cash.

Question 13

Supplies should be ______ and Supplies Expense should be ______ for supplies used up during the period.

Accepted Answer

A)  increased; increased 
B)  increased; decreased 
C)  decreased; decreased 
D)  decreased; increased 
A)  increased; increased 
B)  increased; decreased 
C)  decreased; decreased 
D)  decreased; increased

Question 14

What is the purpose of the closing process?

Accepted Answer

A)  To record transactions for the period 
B)  To set all account balances to zero 
C)  To prepare the accounting records so they are ready to track results for the following year 
D)  To adjust for accrual and deferral transactions 
A)  To record transactions for the period 
B)  To set all account balances to zero 
C)  To prepare the accounting records so they are ready to track results for the following year 
D)  To adjust for accrual and deferral transactions

Question 15

Which of the following statements about revenues and expenses is correct?

Accepted Answer

A)  If revenues are less than expenses, the company has a net loss and Retained Earnings decreases. 
B)  If revenues are greater than expenses, the company has net income and Common Stock increases. 
C)  If revenues are less than expenses, the company has a net loss and Common Stock increases to balance off the loss. 
D)  If revenues are greater than expenses, the company has net income and Retained Earnings decreases. 
A)  If revenues are less than expenses, the company has a net loss and Retained Earnings decreases. 
B)  If revenues are greater than expenses, the company has net income and Common Stock increases. 
C)  If revenues are less than expenses, the company has a net loss and Common Stock increases to balance off the loss. 
D)  If revenues are greater than expenses, the company has net income and Retained Earnings decreases.

Question 16

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

Accepted Answer

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

Question 17

The annual depreciation taken on a vehicle totals $3,000.The vehicle has been in service for three full years and the adjusting entries have been completed for the year.At the end of the third year,the balance in the Depreciation Expense account is $______ and the balance in the Accumulated Depreciation account is $______.

Accepted Answer

A)  $3,000; $3,000 
B)  $3,000; $9,000 
C)  $9,000; $3,000 
D)  $9,000; $9,000 
A)  $3,000; $3,000 
B)  $3,000; $9,000 
C)  $9,000; $3,000 
D)  $9,000; $9,000

Question 18

The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

Accepted Answer

A)  have a debit balance of $367,200. 
B)  have a zero balance. 
C)  still have a credit balance of $367,200. 
D)  be removed entirely from the general ledger. 
A)  have a debit balance of $367,200. 
B)  have a zero balance. 
C)  still have a credit balance of $367,200. 
D)  be removed entirely from the general ledger.

Question 19

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

Accepted Answer

A)  total depreciation that has accrued on the long-lived assets since their purchase 
B)  decline in the market value of the long-lived assets 
C)  cash paid for the long-lived assets in the accounting period 
D)  depreciation for the current period 
A)  total depreciation that has accrued on the long-lived assets since their purchase 
B)  decline in the market value of the long-lived assets 
C)  cash paid for the long-lived assets in the accounting period 
D)  depreciation for the current period

Question 20

The adjusting entry to record the amount earned that previously had been collected in advance will:

Accepted Answer

A)  increase liabilities and increase revenues 
B)  increase liabilities and decrease revenues 
C)  decrease liabilities and increase revenue 
D)  decrease liabilities and decrease revenues 
A)  increase liabilities and increase revenues 
B)  increase liabilities and decrease revenues 
C)  decrease liabilities and increase revenue 
D)  decrease liabilities and decrease revenues

The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Which of the following entries records the adjustment for revenue earned,but not yet collected?

When a deferral adjustment is made to an asset account,that asset becomes a(n):

Temporary accounts are closed at what stage of the accounting process?

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

One major difference between deferral and accrual adjustments is that:

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Which of the following best describes when an accrual adjustment is required?

Supplies should be and Supplies Expense should be for supplies used up during the period.

What is the purpose of the closing process?

Which of the following statements about revenues and expenses is correct?

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

The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

The adjusting entry to record the amount earned that previously had been collected in advance will:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 4: Adjustments,financial Statements,and Financial Results

The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Which of the following entries records the adjustment for revenue earned,but not yet collected?

When a deferral adjustment is made to an asset account,that asset becomes a(n):

Temporary accounts are closed at what stage of the accounting process?

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

One major difference between deferral and accrual adjustments is that:

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Which of the following best describes when an accrual adjustment is required?

Supplies should be ______ and Supplies Expense should be ______ for supplies used up during the period.

What is the purpose of the closing process?

Which of the following statements about revenues and expenses is correct?

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

The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

The adjusting entry to record the amount earned that previously had been collected in advance will:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Supplies should be and Supplies Expense should be for supplies used up during the period.