Question 1

Which of the following are usually NOT directly affected by adjusting entries?

Accepted Answer

A)  Asset accounts 
B)  Liability accounts 
C)  Revenue accounts 
D)  Capital stock accounts 
A)  Asset accounts 
B)  Liability accounts 
C)  Revenue accounts 
D)  Capital stock accounts

Question 2

Palmer Pen Co. has the following adjusted trial balance:

Accepted Answer

The answer of Palmer Pen Co. has the following adjusted...

Question 3

On December 16, 2012, Keen Company received $5,400 from Smith Company for rent on an office building owned by Keen. The $1,800 covers the period December 16, 2012, through February 15, 2013. If Keen Company credited Unearned Rent to record the $5,400 rent collected on December 16, the adjusting entry needed on December 31, 2012, would include

Accepted Answer

A)  A credit to Rent Revenue of $1,350 
B)  A credit to Unearned Rent of $1,350 
C)  A debit to Rent Revenue of $2,700 
D)  A debit to Unearned Rent Revenue of $2,700 
A)  A credit to Rent Revenue of $1,350 
B)  A credit to Unearned Rent of $1,350 
C)  A debit to Rent Revenue of $2,700 
D)  A debit to Unearned Rent Revenue of $2,700

Question 4

Which of the following types of accounts will always be credited when a prepaid expense account is adjusted?

Accepted Answer

A)  Assets 
B)  Liabilities 
C)  Revenues 
D)  Expenses 
A)  Assets 
B)  Liabilities 
C)  Revenues 
D)  Expenses

Question 5

When conducting an audit of a company's financial statements, auditors will usually be more concerned about which of the following?

Accepted Answer

A)  Assets and liabilities are not overstated 
B)  Assets and liabilities are not understated 
C)  Assets are not understated and liabilities are not overstated 
D)  Assets are not overstated and liabilities are not understated 
A)  Assets and liabilities are not overstated 
B)  Assets and liabilities are not understated 
C)  Assets are not understated and liabilities are not overstated 
D)  Assets are not overstated and liabilities are not understated

Question 6

For each account listed below, check whether it appears on the income statement or the balance sheet and whether it would normally have a debit or a credit balance. (Note: This covers the entire accounting cycle.) The first line has been completed as an example.

Accepted Answer

The answer of For each account listed below, check whether...

Question 7

Griesbach, Inc., prepares monthly financial statements. The September 30, 2012, trial balance reveals the following:
  
An inventory of supplies reveals that only $675 are on hand at the end of the month. Of the unearned rent revenue, $600 remains unearned. The note payable was taken out on September 1, 2012, for 12 months, at 10%. Lastly, the weekly payroll is $3,600. Employees are paid each Friday for a 5-day work week, and September 30 is a Wednesday.
Assuming Griesbach, Inc. has a year end of September 30, prepare the appropriate adjusting journal entries.

Accepted Answer

An inventory of supplies reveals that on

Question 8

The audit procedures conducted by the external auditor include all of the following, EXCEPT

Accepted Answer

A)  Review of adjustments 
B)  Review of accounting systems 
C)  Sample of financial ratios 
D)  Sample of selected accounts 
A)  Review of adjustments 
B)  Review of accounting systems 
C)  Sample of financial ratios 
D)  Sample of selected accounts

Question 9

The dividends account is

Accepted Answer

A)  Used for partnerships 
B)  Closed to Retained Earnings by being credited 
C)  A real account 
D)  Closed to Retained Earnings by being debited 
A)  Used for partnerships 
B)  Closed to Retained Earnings by being credited 
C)  A real account 
D)  Closed to Retained Earnings by being debited

Question 10

The entry to close the revenue accounts normally includes a

Accepted Answer

A)  Debit to each revenue account 
B)  Credit to each revenue account 
C)  Debit to each expense account 
D)  Credit to each expense account 
A)  Debit to each revenue account 
B)  Credit to each revenue account 
C)  Debit to each expense account 
D)  Credit to each expense account

Question 11

Given the following data, what is the amount in the supplies account to be shown as an asset on the balance sheet at the end of the period?

Accepted Answer

A)  $350 
B)  $550 
C)  $375 
D)  $425 
A)  $350 
B)  $550 
C)  $375 
D)  $425

Question 12

Which of the following accounts would be closed at year-end?

Accepted Answer

A)  Capital Stock 
B)  Prepaid Rent 
C)  Dividends 
D)  Accounts Payable 
A)  Capital Stock 
B)  Prepaid Rent 
C)  Dividends 
D)  Accounts Payable

Question 13

Which of the following will occur if an adjusting entry to record an accrued but unrecorded liability is NOT made?

Accepted Answer

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

Question 14

Which of the following is a true statement about an auditor's evaluation of an accounting system?

Accepted Answer

A)  If a company has a haphazard accounting system then the auditor has greater confidence that the financial statements are reliable. 
B)  If a company has an efficient and orderly accounting system then the auditor has greater confidence that the financial statements are reliable. 
C)  If a company has an efficient and orderly accounting system then the auditor must do more detailed work to verify that the financial statements are reliable. 
D)  None of these are correct. 
A)  If a company has a haphazard accounting system then the auditor has greater confidence that the financial statements are reliable. 
B)  If a company has an efficient and orderly accounting system then the auditor has greater confidence that the financial statements are reliable. 
C)  If a company has an efficient and orderly accounting system then the auditor must do more detailed work to verify that the financial statements are reliable. 
D)  None of these are correct.

Question 15

Short Company has the following income statement for 2012:
  
-Refer to Exhibit 4-2. Given the information above, the entry to close revenues and expenses would include a

Accepted Answer

A)  Credit to Retained Earnings of $10,500 
B)  Debit to Retained Earnings of $10,500 
C)  Credit to Retained Earnings of $651,000 
D)  Credit to Retained Earnings of $651,00 
A)  Credit to Retained Earnings of $10,500 
B)  Debit to Retained Earnings of $10,500 
C)  Credit to Retained Earnings of $651,000 
D)  Credit to Retained Earnings of $651,00

Question 16

If rent revenue of $5,000 is earned in 2012 but will NOT be received until 2013, what is the appropriate adjusting entry at December 31, 2013?

Accepted Answer

A)  
$\begin{array}{ll}
\text { Rent Receivable } & 5,000 \
\text { Cash } & 5,000
\end{array}$ 
B)  
Cash $\quad 5,000$
Rent Revenue$\quad 5,000$ 
C)  
$\begin{array} { l r } 
\text { Rent Revenue } & 5,000 \
\text { Rent Receivable } & 5,000
\end{array}$ 
D)  
$\begin{array} { r r } 
\text { Rent Receivable } & 5,000 \
\text { Rent Revenue } & 5,000
\end{array}$ 
A)  
$\begin{array}{ll}
\text { Rent Receivable } & 5,000 \
\text { Cash } & 5,000
\end{array}$ 
B)  
Cash $\quad 5,000$
Rent Revenue$\quad 5,000$ 
C)  
$\begin{array} { l r } 
\text { Rent Revenue } & 5,000 \
\text { Rent Receivable } & 5,000
\end{array}$ 
D)  
$\begin{array} { r r } 
\text { Rent Receivable } & 5,000 \
\text { Rent Revenue } & 5,000
\end{array}$

Question 17

An adjusting entry to record the portion of unearned revenue that was earned in the current period usually includes a debit to

Accepted Answer

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

Question 18

For each account listed below, mark the column that BEST describes the correct classification of the account and mark the column for the financial statement on which the account would appear. Assume that all accounts have normal balances. (NOTE: This problem covers the entire accounting cycle.) The first line has been completed as an example.

Accepted Answer

The answer of For each account listed below, mark the...

Question 19

The December 31, 2012, adjusted account balances taken from the Adjusted Trial Balance of Cajon Corporation are as follows:
  
-Refer to Exhibit 4-3. Given the information above, after all closing entries have been made, the balance in Cajon's Cash account would be

Accepted Answer

A)  $250 
B)  $200 
C)  $150 
D)  $0 
A)  $250 
B)  $200 
C)  $150 
D)  $0

Question 20

In accrual basis accounting, when are expenses usually recognized?

Accepted Answer

A)  When cash is paid 
B)  When assets are purchased 
C)  When incurred 
D)  When assets are ordered 
A)  When cash is paid 
B)  When assets are purchased 
C)  When incurred 
D)  When assets are ordered

Exam 4: Completing the Accounting Cycle

Which of the following are usually NOT directly affected by adjusting entries?

Palmer Pen Co. has the following adjusted trial balance:

Which of the following types of accounts will always be credited when a prepaid expense account is adjusted?

When conducting an audit of a company's financial statements, auditors will usually be more concerned about which of the following?

For each account listed below, check whether it appears on the income statement or the balance sheet and whether it would normally have a debit or a credit balance. (Note: This covers the entire accounting cycle.) The first line has been completed as an example.

The audit procedures conducted by the external auditor include all of the following, EXCEPT

The dividends account is

The entry to close the revenue accounts normally includes a

Given the following data, what is the amount in the supplies account to be shown as an asset on the balance sheet at the end of the period?

Which of the following accounts would be closed at year-end?

Which of the following will occur if an adjusting entry to record an accrued but unrecorded liability is NOT made?

Which of the following is a true statement about an auditor's evaluation of an accounting system?

Short Company has the following income statement for 2012: -Refer to Exhibit 4-2. Given the information above, the entry to close revenues and expenses would include a

If rent revenue of $5,000 is earned in 2012 but will NOT be received until 2013, what is the appropriate adjusting entry at December 31, 2013?

An adjusting entry to record the portion of unearned revenue that was earned in the current period usually includes a debit to

The December 31, 2012, adjusted account balances taken from the Adjusted Trial Balance of Cajon Corporation are as follows: -Refer to Exhibit 4-3. Given the information above, after all closing entries have been made, the balance in Cajon's Cash account would be

In accrual basis accounting, when are expenses usually recognized?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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