Question 1

Which account below is a temporary account?

Accepted Answer

A)  Note Payable 
B)  Unearned Revenue 
C)  Accounts Receivable 
D)  Depreciation Expense 
A)  Note Payable 
B)  Unearned Revenue 
C)  Accounts Receivable 
D)  Depreciation Expense

Question 2

As of December 31,$2,500 of interest expense has accrued on a $50,000 note payable.The note payable and the accrued interest will become due and payable next year.How will the interest affect the adjustments at the end of the period?

Accepted Answer

A)  Interest Expense does not affect this period since it will not be paid. The expense will be recorded when the note and interest are paid in full. 
B)  Interest Expense should be increased, because the cost of interest relates to the current period. 
C)  Note Payable should be increased to reflect the additional interest that will be due when the note is paid off next year. 
D)  Interest Receivable should be increased to reflect the accrued interest on the note payable. 
A)  Interest Expense does not affect this period since it will not be paid. The expense will be recorded when the note and interest are paid in full. 
B)  Interest Expense should be increased, because the cost of interest relates to the current period. 
C)  Note Payable should be increased to reflect the additional interest that will be due when the note is paid off next year. 
D)  Interest Receivable should be increased to reflect the accrued interest on the note payable.

Question 3

A company owes rent at a rate of $6,000 per month.The company pays the rent owed on the tenth of each month for the previous month.At the end of each month,what kind of adjustment is required?

Accepted Answer

A)  An accrual adjustment 
B)  A closing adjustment 
C)  A deferral adjustment 
D)  No adjustment 
A)  An accrual adjustment 
B)  A closing adjustment 
C)  A deferral adjustment 
D)  No adjustment

Question 4

Which financial statement reports the dividends during the current accounting period?

Accepted Answer

A)  Dividends are reported on the Income Statement. 
B)  Dividends are reported on the Statement of Retained Earnings. 
C)  Dividends are reported on the Balance Sheet. 
D)  Dividends are not reported on any of the financial statements. 
A)  Dividends are reported on the Income Statement. 
B)  Dividends are reported on the Statement of Retained Earnings. 
C)  Dividends are reported on the Balance Sheet. 
D)  Dividends are not reported on any of the financial statements.

Question 5

Garvey Company's unadjusted trial balance includes the following account balances as of December 31,2015:
   
The following data are available to determine adjusting entries: 
A) Insurance purchased at the beginning of July for $8,700 provided coverage for twelve months (July 2015 through June 2016). The insurance coverage for July through December totaling $4,250 has now been used.
B) The company estimates $8,150 in depreciation each year.
C) A count showed $85,700 of supplies on hand at the end of the year.
D) An additional $260 of interest has been earned but has not yet been uncollected on the outstanding notes receivable.
E) Services in the amount of $5,600 were performed for customers who had previously paid in advance.
F) Services in the amount of $2,000 were performed; these services have not yet been billed or recorded.

Accepted Answer

The answer of Garvey Company's unadjusted trial balance includes the...

Question 6

A company pays salaries and wages every two weeks.Salaries and wages amount to $100 a day and the company has a seven-day work week.On March 31,the company pays wages for the two weeks ending March 24 and recorded the related journal entry.The adjusting journal entry,dated March 31,to record unpaid wages and salaries owed since March 25 will include a debit to:

Accepted Answer

A)  Salaries and Wages Payable and a credit to Salaries and Wages Expense for $1,400. 
B)  Salaries and Wage Expense and a credit to Salaries and Wages Payable for $700. 
C)  Salaries and Wages Payable and a credit to Cash for $700. 
D)  Salaries and Wages Expense and a credit to Salaries and Wages Payable for $1,400. 
A)  Salaries and Wages Payable and a credit to Salaries and Wages Expense for $1,400. 
B)  Salaries and Wage Expense and a credit to Salaries and Wages Payable for $700. 
C)  Salaries and Wages Payable and a credit to Cash for $700. 
D)  Salaries and Wages Expense and a credit to Salaries and Wages Payable for $1,400.

Question 7

Which of the following trial balances is used as a source for preparing the income statement?

Accepted Answer

A)  Unadjusted trial balance 
B)  Pre-adjusted trial balance 
C)  Adjusted trial balance 
D)  Post-closing trial balance 
A)  Unadjusted trial balance 
B)  Pre-adjusted trial balance 
C)  Adjusted trial balance 
D)  Post-closing trial balance

Question 8

Which of the following statements about adjusting entries is not correct?

Accepted Answer

A)  Adjustments are needed to ensure that the accounting system includes all of the revenues and expenses of the period. 
B)  Adjustments help to ensure the related accounts on the balance sheet and income statement are up to date and complete. 
C)  Adjusting entries often affect the cash account. 
D)  Adjusting entries generally include one balance sheet and one income statement account. 
A)  Adjustments are needed to ensure that the accounting system includes all of the revenues and expenses of the period. 
B)  Adjustments help to ensure the related accounts on the balance sheet and income statement are up to date and complete. 
C)  Adjusting entries often affect the cash account. 
D)  Adjusting entries generally include one balance sheet and one income statement account.

Question 9

Three months of rent were prepaid on May 1 for $7,200,but two months have now expired,leaving only one month prepaid at June 30.What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?

Accepted Answer

A)  $0 
B)  $2,400 
C)  $4,800 
D)  $7,200 
A)  $0 
B)  $2,400 
C)  $4,800 
D)  $7,200

Question 10

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a:

Accepted Answer

A)  debit to Unearned Revenue 
B)  credit to Unearned Revenue 
C)  debit to Service Revenue 
D)  credit to Accounts Receivable 
A)  debit to Unearned Revenue 
B)  credit to Unearned Revenue 
C)  debit to Service Revenue 
D)  credit to Accounts Receivable

Question 11

Which of the following statements about the need for adjustments is not correct?

Accepted Answer

A)  Without adjustments, the financial statements present an incomplete and misleading picture of the company. 
B)  Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance. 
C)  Adjustments help the financial statements present the best picture of whether the company's activities were profitable for the period. 
D)  Adjustments help the financial statements present the economic resources that the company owns and owes at the end of the period. 
A)  Without adjustments, the financial statements present an incomplete and misleading picture of the company. 
B)  Adjusting entries are intended to change the operating results to reflect management's objectives for operating performance. 
C)  Adjustments help the financial statements present the best picture of whether the company's activities were profitable for the period. 
D)  Adjustments help the financial statements present the economic resources that the company owns and owes at the end of the period.

Question 12

The process of allocating the cost of buildings,vehicles,and equipment to the accounting periods in which they are used.is called:

Accepted Answer

A)  accumulated allocation. 
B)  unearned revenue. 
C)  depreciation. 
D)  prepaid expense. 
A)  accumulated allocation. 
B)  unearned revenue. 
C)  depreciation. 
D)  prepaid expense.

Question 13

Match each transaction with the type of entry that will be required at April 30,the company's year-end.
Transaction
1____ .The company has $8,300 in Prepaid Rent at the beginning of April and uses $3,600 of that for its April rent.
2____ .The company provides lawn care in April for customers who will be billed and make payment in May.
3____ .The company owes interest on loans for the month of April and will not pay this interest until May.
4____ .The company uses $1,600 worth of fertilizer from its stock of supplies.
5____ .The company provides lawn care in April for customers who paid in March.
6____ .The company transfers revenues of $50,000 and expenses of $32,000 to Retained Earnings.
7____ .The company makes an entry to allocate the use of equipment during the current account period.
8____ .The company transfers the balance in the Dividends account of $1,200 to Retained Earnings.
9____ .The company records income taxes.
10____ .The weekly payroll of $5,000 to be paid next week is recorded.
Type of Entry
A - Accrual adjusting entry
D - Deferral adjusting entry
C - Closing entry

Accepted Answer

1.D
2.A
3.

Question 14

Lansing Limited had a beginning balance in its Retained Earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported Retained Earnings of $399,860.The company's net income for the year was:

Accepted Answer

A)  $14,260. 
B)  $18,960. 
C)  $9,560. 
D)  $0. 
A)  $14,260. 
B)  $18,960. 
C)  $9,560. 
D)  $0.

Question 15

The adjusting entry to record the supplies used during the period will result in a(n):

Accepted Answer

A)  increase to Supplies and a decrease to Supplies Expense 
B)  increase to Supplies and an increase to Supplies Expense 
C)  decrease to Supplies and an increase to Supplies Expense 
D)  decrease to Supplies and a decrease to Supplies Expense 
A)  increase to Supplies and a decrease to Supplies Expense 
B)  increase to Supplies and an increase to Supplies Expense 
C)  decrease to Supplies and an increase to Supplies Expense 
D)  decrease to Supplies and a decrease to Supplies Expense

Question 16

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 17

Which of the following statements is correct?

Accepted Answer

A)  Financial statements are prepared before adjustments to ensure that debits equal credits before beginning the adjustment process. 
B)  Financial statements are prepared after adjustments to ensure that all accounts have been brought to their correct balance. 
C)  Financial statements are prepared before adjustments to ensure that all accounts have been brought to their correct balance. 
D)  Financial statements are prepared before adjustments to ensure that debits equal credits before concluding the adjustment process. 
A)  Financial statements are prepared before adjustments to ensure that debits equal credits before beginning the adjustment process. 
B)  Financial statements are prepared after adjustments to ensure that all accounts have been brought to their correct balance. 
C)  Financial statements are prepared before adjustments to ensure that all accounts have been brought to their correct balance. 
D)  Financial statements are prepared before adjustments to ensure that debits equal credits before concluding the adjustment process.

Question 18

How does the timing of adjusting entries differ from the accounting for daily transactions?

Accepted Answer

A)  Adjustments are made at the discretion of management and are not necessary for each accounting period. 
B)  Adjustments are made at the beginning of the accounting period to ensure accuracy is maintained during the cycle. 
C)  Adjustments are made throughout the accounting period as information becomes available. 
D)  Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient. 
A)  Adjustments are made at the discretion of management and are not necessary for each accounting period. 
B)  Adjustments are made at the beginning of the accounting period to ensure accuracy is maintained during the cycle. 
C)  Adjustments are made throughout the accounting period as information becomes available. 
D)  Adjustments are made at the end of the accounting period because making them on a daily basis would be inefficient.

Question 19

Which of the following will happen if the accrual adjustment entry is not made to record an expense incurred but not yet recorded?

Accepted Answer

A)  Both expenses and liabilities will be overstated. 
B)  Both expenses and liabilities will be understated. 
C)  Expenses will be understated and liabilities will be overstated. 
D)  Expenses will be overstated and liabilities will be understated. 
A)  Both expenses and liabilities will be overstated. 
B)  Both expenses and liabilities will be understated. 
C)  Expenses will be understated and liabilities will be overstated. 
D)  Expenses will be overstated and liabilities will be understated.

Question 20

Interest earned and receivable on a note receivable equals $50 for the month of March.What adjusting entry,if any,should be recorded as of March 31?

Accepted Answer

A)  Debit Cash $50 and credit Interest Revenue $50. 
B)  Debit Interest Receivable $50 and credit Interest Revenue $50. 
C)  Debit Interest Receivable for $150 and credit Interest Revenue $150. 
D)  No journal entry is needed at this time. 
A)  Debit Cash $50 and credit Interest Revenue $50. 
B)  Debit Interest Receivable $50 and credit Interest Revenue $50. 
C)  Debit Interest Receivable for $150 and credit Interest Revenue $150. 
D)  No journal entry is needed at this time.

Which account below is a temporary account?

As of December 31,$2,500 of interest expense has accrued on a $50,000 note payable.The note payable and the accrued interest will become due and payable next year.How will the interest affect the adjustments at the end of the period?

A company owes rent at a rate of $6,000 per month.The company pays the rent owed on the tenth of each month for the previous month.At the end of each month,what kind of adjustment is required?

Which financial statement reports the dividends during the current accounting period?

Which of the following trial balances is used as a source for preparing the income statement?

Which of the following statements about adjusting entries is not correct?

Three months of rent were prepaid on May 1 for $7,200,but two months have now expired,leaving only one month prepaid at June 30.What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a:

Which of the following statements about the need for adjustments is not correct?

The process of allocating the cost of buildings,vehicles,and equipment to the accounting periods in which they are used.is called:

Lansing Limited had a beginning balance in its Retained Earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported Retained Earnings of $399,860.The company's net income for the year was:

The adjusting entry to record the supplies used during the period will result in a(n):

When should supplies be recorded as an expense?

Which of the following statements is correct?

How does the timing of adjusting entries differ from the accounting for daily transactions?

Which of the following will happen if the accrual adjustment entry is not made to record an expense incurred but not yet recorded?

Interest earned and receivable on a note receivable equals $50 for the month of March.What adjusting entry,if any,should be recorded as of March 31?

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

Which account below is a temporary account?

As of December 31,$2,500 of interest expense has accrued on a $50,000 note payable.The note payable and the accrued interest will become due and payable next year.How will the interest affect the adjustments at the end of the period?

A company owes rent at a rate of $6,000 per month.The company pays the rent owed on the tenth of each month for the previous month.At the end of each month,what kind of adjustment is required?

Which financial statement reports the dividends during the current accounting period?

Which of the following trial balances is used as a source for preparing the income statement?

Which of the following statements about adjusting entries is not correct?

Three months of rent were prepaid on May 1 for $7,200,but two months have now expired,leaving only one month prepaid at June 30.What is the amount of rent expense that will be recorded in the related adjusting entry dated June 30?

The deferral adjustment to record the amount of unearned service revenue that is now earned includes a:

Which of the following statements about the need for adjustments is not correct?

The process of allocating the cost of buildings,vehicles,and equipment to the accounting periods in which they are used.is called:

Lansing Limited had a beginning balance in its Retained Earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported Retained Earnings of $399,860.The company's net income for the year was:

The adjusting entry to record the supplies used during the period will result in a(n):

When should supplies be recorded as an expense?

Which of the following statements is correct?

How does the timing of adjusting entries differ from the accounting for daily transactions?

Which of the following will happen if the accrual adjustment entry is not made to record an expense incurred but not yet recorded?

Interest earned and receivable on a note receivable equals $50 for the month of March.What adjusting entry,if any,should be recorded as of March 31?

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