Question 1

Which of the following statements about an adjusted trial balance is correct?

Accepted Answer

A)  Debits should equal credits both before and after adjustments are made. 
B)  Debits will equal credits after adjustments are made but not necessarily before. 
C)  Debits will equal credits before adjustments are made but not necessarily after. 
D)  Debits do not have to equal credits in the adjusted trial balance but they must be equal in the post-closing trial balance. 
A)  Debits should equal credits both before and after adjustments are made. 
B)  Debits will equal credits after adjustments are made but not necessarily before. 
C)  Debits will equal credits before adjustments are made but not necessarily after. 
D)  Debits do not have to equal credits in the adjusted trial balance but they must be equal in the post-closing trial balance.

Question 2

A closing entry may include a:

Accepted Answer

A)  debit to Unearned Revenue 
B)  credit to Interest Revenue 
C)  credit to Wages Expense 
D)  debit to Prepaid Insurance 
A)  debit to Unearned Revenue 
B)  credit to Interest Revenue 
C)  credit to Wages Expense 
D)  debit to Prepaid Insurance

Question 3

A deferral adjustment may involve one asset and one expense account.

Accepted Answer

A) True 
 B)False

Question 4

All of the following accounts will have zero balances on a post-closing trial balance except:

Accepted Answer

A)  Dividends. 
B)  Accumulated Depreciation. 
C)  Salaries and Wages Expense. 
D)  Sales Revenue. 
A)  Dividends. 
B)  Accumulated Depreciation. 
C)  Salaries and Wages Expense. 
D)  Sales Revenue.

Question 5

Adjustments ensure that ____ balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods.

Accepted Answer

A)  asset 
B)  revenue 
C)  expense 
D)  account 
A)  asset 
B)  revenue 
C)  expense 
D)  account

Question 6

One type of deferral adjustment reduces the balance in a(n)______ account on the balance sheet and transfers that reduction into a(n)______ account on the income statement.

Accepted Answer

A)  asset; expense 
B)  asset; revenue 
C)  liability; expense 
D)  liability; asset 
A)  asset; expense 
B)  asset; revenue 
C)  liability; expense 
D)  liability; asset

Question 7

The following account balances are included in the adjusted trial balance of Delta Inc.as of April 30,2015.All of the accounts have normal balances.
   
Required:
Part a.Prepare an income statement.
Part b.Prepare a statement of retained earnings

Accepted Answer

The answer of The following account balances are included in...

Question 8

Accumulated Depreciation appears on the:

Accepted Answer

A)  balance sheet in the stockholders' equity section. 
B)  income statement as an expense. 
C)  balance sheet as a liability account. 
D)  balance sheet as a contra- asset account. 
A)  balance sheet in the stockholders' equity section. 
B)  income statement as an expense. 
C)  balance sheet as a liability account. 
D)  balance sheet as a contra- asset account.

Question 9

The Don't Tread on Me Tire Company had Retained Earnings at December 31,2015 of $200,000.During 2016,the company had revenues of $400,000 and expenses of $350,000,and the company declared and paid dividends of $11,000.Retained earnings on the balance sheet as of December 31,2016 will be:

Accepted Answer

A)  $39,000. 
B)  $239,000. 
C)  $250,000. 
D)  $289,000. 
A)  $39,000. 
B)  $239,000. 
C)  $250,000. 
D)  $289,000.

Question 10

If certain assets are partially used up during the accounting period,then:

Accepted Answer

A)  nothing is recorded on the financial statements until they are completely used up. 
B)  a liability account is decreased and an expense is recorded. 
C)  an asset account is decreased and an expense is recorded. 
D)  nothing is recorded on the financial statements until they are replaced or replenished. 
A)  nothing is recorded on the financial statements until they are completely used up. 
B)  a liability account is decreased and an expense is recorded. 
C)  an asset account is decreased and an expense is recorded. 
D)  nothing is recorded on the financial statements until they are replaced or replenished.

Question 11

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 12

Which of the following would decrease net income?

Accepted Answer

A)  Failing to post an adjusting entry to accrue revenue 
B)  Understating the amount of Depreciation Expense recorded 
C)  Failing to prepare an adjusting entry to recognize the portion of prepaid rent that has expired 
D)  Overstating the year-end balance of the Supplies account 
A)  Failing to post an adjusting entry to accrue revenue 
B)  Understating the amount of Depreciation Expense recorded 
C)  Failing to prepare an adjusting entry to recognize the portion of prepaid rent that has expired 
D)  Overstating the year-end balance of the Supplies account

Question 13

What are the effects on the accounting equation from the adjustment for revenue earned during the accounting period that had previously been recorded as a liability?

Accepted Answer

A)  Total liabilities will increase and total stockholders' equity will decrease. 
B)  Total liabilities will increase and total stockholders' equity will increase. 
C)  Total liabilities will decrease and total stockholders' equity will increase. 
D)  Total liabilities will decrease and total stockholders' equity will decrease. 
A)  Total liabilities will increase and total stockholders' equity will decrease. 
B)  Total liabilities will increase and total stockholders' equity will increase. 
C)  Total liabilities will decrease and total stockholders' equity will increase. 
D)  Total liabilities will decrease and total stockholders' equity will decrease.

Question 14

On December 31,the Human Bean Coffee Shop paid $12,000 for a full year of rent beginning on January 1.The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts.If financial statements are prepared on January 31,the journal entry to record the adjustment would be:

Accepted Answer

A)  Debit Rent Expense and credit Prepaid Rent for $1,000. 
B)  Debit Rent Expense and credit Prepaid Rent for $12,000. 
C)  Debit Prepaid Rent and credit Rent Expense for $12,000. 
D)  Debit Prepaid Rent and credit Rent Expense for $1,000. 
A)  Debit Rent Expense and credit Prepaid Rent for $1,000. 
B)  Debit Rent Expense and credit Prepaid Rent for $12,000. 
C)  Debit Prepaid Rent and credit Rent Expense for $12,000. 
D)  Debit Prepaid Rent and credit Rent Expense for $1,000.

Question 15

What are the effects on the accounting equation from the adjustment for depreciation?

Accepted Answer

A)  Total assets will increase and total stockholders' equity will increase. 
B)  Total assets will increase and total stockholders' equity will decrease. 
C)  Total assets will decrease and total stockholders' equity will decrease. 
D)  Total assets will decrease and total stockholders' equity will increase. 
A)  Total assets will increase and total stockholders' equity will increase. 
B)  Total assets will increase and total stockholders' equity will decrease. 
C)  Total assets will decrease and total stockholders' equity will decrease. 
D)  Total assets will decrease and total stockholders' equity will increase.

Question 16

If adjustments to the financial statements were not made,what would be the effect on the financial results?

Accepted Answer

A)  The financial statements would present an incomplete and misleading picture of company financial performance. 
B)  There would be little effect because any items not recognized in the reporting period would be recognized the next reporting period. 
C)  No effect would result because adjustments do not reflect cash paid or received. 
D)  There would be no effect because some adjustments increase net income and others decrease it, canceling each other out. 
A)  The financial statements would present an incomplete and misleading picture of company financial performance. 
B)  There would be little effect because any items not recognized in the reporting period would be recognized the next reporting period. 
C)  No effect would result because adjustments do not reflect cash paid or received. 
D)  There would be no effect because some adjustments increase net income and others decrease it, canceling each other out.

Question 17

Match the term and its definition.There are more definitions than terms.
Terms
1____ .Contra-Account
2____ .Carrying Value
3____ .Deferral Adjustment
4____ .Closing Journal Entry
5____ .Net Loss
6____ .Adjusted Trial Balance
7____ .Temporary Account
8____ .Accrual Adjustment
9____ .Income Before Income Taxes
Definitions
A.When revenue minus expenses is a negative number.
B.Adds new values into the balance sheet and income statement accounts.
C.Also known as balance sheet accounts.
D.Entries made to update existing accounts and record new events.
E.The level of profit prior to considering income tax.
F.Lists the balances of all accounts to check that revenues equal expenses.
G.The amount at which an asset or liability is reported in the financial statements.
H.An account that is paired with another account and acts to reduce its book value.
I.Lists the balances of all temporary and permanent accounts to provide a check on the equality of the debits and credits.
J.A journal entry that transfers net income or loss to the Retained Earnings account.
K.Converts some of an asset's or a liability's book value into an expense or a revenue.
L.An account that must have a zero balance after Closing entries have been made.
M.Lists the balances of all permanent accounts to check that debits equal credits.

Accepted Answer

1. H
2. G

Question 18

The adjusting entry to record services earned but not yet billed requires:

Accepted Answer

A)  a debit to Accounts Receivable and credit to Service Revenue 
B)  a debit to Service Revenue and credit to Accounts Receivable 
C)  a debit to Accounts Payable and credit to Service Revenue 
D)  no entry since revenues should not be recorded until collected 
A)  a debit to Accounts Receivable and credit to Service Revenue 
B)  a debit to Service Revenue and credit to Accounts Receivable 
C)  a debit to Accounts Payable and credit to Service Revenue 
D)  no entry since revenues should not be recorded until collected

Question 19

All of the transactions of Starfish Tattoo Parlor Inc.for the year have been journalized and posted.The following information has been gathered for the adjustment process as of December 31,2016:
A) The Supplies account shows a balance of $900. A count of supplies revealed $400 on hand.
B) The $1,200 premium relating to a one-year insurance policy was paid on December 1, 2016.
C) The company's equipment, which was purchased last year, depreciates at a rate of $1,000 per year.
D) On September 30, 2016, a customer paid $10,000 in advance for services; as of December 31, 2016, services in the amount of $3,000 had been performed for this customer.
E) Employees are paid $5,000 on Fridays for the 5-day work week, which ends on that Friday. However, December 31, 2016 falls on a Thursday.
F) The company has completed $500 of work for customers; the customers have not yet been billed and the related revenue has not been recorded.
Required:
Part a. Prepare the required adjusting entries required at December 31, 2016.
Part b. For each of the adjusting items, indicate the amount and the direction of effects of the adjusting journal entry on the elements of the balance sheet and income statement. Complete the following table by entering the amount and the direction (+ or -) or "NE" if the adjustment has no effect on the related financial statement item.

Accepted Answer

The answer of All of the transactions of Starfish Tattoo...

Question 20

The purpose of adjusting entries for income taxes is to record income taxes ______ the accounting period.

Accepted Answer

A)  earned, but not yet collected, at the end of 
B)  accrued, but have not been paid, at the end of 
C)  paid during 
D)  deducted from employee's pay 
A)  earned, but not yet collected, at the end of 
B)  accrued, but have not been paid, at the end of 
C)  paid during 
D)  deducted from employee's pay

Which of the following statements about an adjusted trial balance is correct?

A closing entry may include a:

A deferral adjustment may involve one asset and one expense account.

All of the following accounts will have zero balances on a post-closing trial balance except:

Adjustments ensure that ____ balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods.

One type of deferral adjustment reduces the balance in a(n) account on the balance sheet and transfers that reduction into a(n) account on the income statement.

The following account balances are included in the adjusted trial balance of Delta Inc.as of April 30,2015.All of the accounts have normal balances. Required: Part a.Prepare an income statement. Part b.Prepare a statement of retained earnings

Accumulated Depreciation appears on the:

The Don't Tread on Me Tire Company had Retained Earnings at December 31,2015 of $200,000.During 2016,the company had revenues of $400,000 and expenses of $350,000,and the company declared and paid dividends of $11,000.Retained earnings on the balance sheet as of December 31,2016 will be:

If certain assets are partially used up during the accounting period,then:

Amortization is the expensing of:

Which of the following would decrease net income?

What are the effects on the accounting equation from the adjustment for revenue earned during the accounting period that had previously been recorded as a liability?

On December 31,the Human Bean Coffee Shop paid $12,000 for a full year of rent beginning on January 1.The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts.If financial statements are prepared on January 31,the journal entry to record the adjustment would be:

What are the effects on the accounting equation from the adjustment for depreciation?

If adjustments to the financial statements were not made,what would be the effect on the financial results?

The adjusting entry to record services earned but not yet billed requires:

The purpose of adjusting entries for income taxes is to record income taxes ______ the accounting period.

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 of the following statements about an adjusted trial balance is correct?

A closing entry may include a:

A deferral adjustment may involve one asset and one expense account.

All of the following accounts will have zero balances on a post-closing trial balance except:

Adjustments ensure that ____ balances are reported at amounts representing the economic benefits that remain at the end of the period and will be used-up in future periods.

One type of deferral adjustment reduces the balance in a(n)______ account on the balance sheet and transfers that reduction into a(n)______ account on the income statement.

The following account balances are included in the adjusted trial balance of Delta Inc.as of April 30,2015.All of the accounts have normal balances. Required: Part a.Prepare an income statement. Part b.Prepare a statement of retained earnings

Accumulated Depreciation appears on the:

The Don't Tread on Me Tire Company had Retained Earnings at December 31,2015 of $200,000.During 2016,the company had revenues of $400,000 and expenses of $350,000,and the company declared and paid dividends of $11,000.Retained earnings on the balance sheet as of December 31,2016 will be:

If certain assets are partially used up during the accounting period,then:

Amortization is the expensing of:

Which of the following would decrease net income?

What are the effects on the accounting equation from the adjustment for revenue earned during the accounting period that had previously been recorded as a liability?

On December 31,the Human Bean Coffee Shop paid $12,000 for a full year of rent beginning on January 1.The rent payment was appropriately recorded in the Cash and Prepaid Rent accounts.If financial statements are prepared on January 31,the journal entry to record the adjustment would be:

What are the effects on the accounting equation from the adjustment for depreciation?

If adjustments to the financial statements were not made,what would be the effect on the financial results?

The adjusting entry to record services earned but not yet billed requires:

The purpose of adjusting entries for income taxes is to record income taxes ______ the accounting period.

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

One type of deferral adjustment reduces the balance in a(n) account on the balance sheet and transfers that reduction into a(n) account on the income statement.