Question 1

Which of the following correctly describes the following journal entry? Depreciation expense
$ \quad $$ \quad $Accumulated depreciation

Accepted Answer

A) Total assets decrease. 
B) Liabilities will increase. 
C) Stockholders' equity is not affected. 
D) Net income is not affected. 
A) Total assets decrease. 
B) Liabilities will increase. 
C) Stockholders' equity is not affected. 
D) Net income is not affected. A

Question 2

On December 31,2011,Krug Company reported stockholders' equity of $280,000 prior to the following adjusting entries:
 Depreciation expense was $31,000;
 Accrued service revenues totaled $29,000;
 Accrued expenses totaled $12,000;
 Expired insurance which was prepaid totaled $9,000;
Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much is Krug's stockholders' equity after adjusting entries?

Accepted Answer

A) $280,000 
B) $262,000 
C) $295,000 
D) $264,000 
A) $280,000 
B) $262,000 
C) $295,000 
D) $264,000 D

Question 3

Explain how adjusting entries provide for potential manipulation by managers.In addition,discuss how compensation arrangements may result in incentives for such manipulation to occur.

Accepted Answer

Answers will vary

Question 4

Which one of the following accounts would not be closed at the end of the accounting year?

Accepted Answer

A) Utilities expense 
B) Sales revenue 
C) Prepaid rent expense 
D) Wages expense 
A) Utilities expense 
B) Sales revenue 
C) Prepaid rent expense 
D) Wages expense

Question 5

Which of the following does not correctly describe the following journal entry? Rent expense
$ \quad $$ \quad $Prepaid rent

Accepted Answer

A) Total assets decrease. 
B) Retained earnings are not affected. 
C) Stockholders' equity decreases. 
D) Net income decreases. 
A) Total assets decrease. 
B) Retained earnings are not affected. 
C) Stockholders' equity decreases. 
D) Net income decreases.

Question 6

Earnings per share are calculated by dividing net income minus preferred dividends by the average number of shares of common stock outstanding.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following journal entries was created as the result of a deferral?

Accepted Answer

A)  Salaries expense
$ \quad $Salaries payable 
B)  Interest expense
$ \quad $$ \quad $Interest payable 
C)  Cash
$ \quad $Unearned revenue 
D)  Cash
$ \quad $Revenue 
A)  Salaries expense
$ \quad $Salaries payable 
B)  Interest expense
$ \quad $$ \quad $Interest payable 
C)  Cash
$ \quad $Unearned revenue 
D)  Cash
$ \quad $Revenue

Question 8

Which of the following accounts would most likely not require an adjusting entry in the future?

Accepted Answer

A) Unearned subscriptions revenue 
B) Office supplies 
C) Utilities payable 
D) Prepaid rent 
A) Unearned subscriptions revenue 
B) Office supplies 
C) Utilities payable 
D) Prepaid rent

Question 9

Which of the following accounts was created as the result of a deferral?

Accepted Answer

A) Interest payable 
B) Interest revenue 
C) Supplies inventory 
D) Accounts receivable 
A) Interest payable 
B) Interest revenue 
C) Supplies inventory 
D) Accounts receivable

Question 10

Which of the following statements regarding earnings per share is not correct?

Accepted Answer

A) It can be reported on the income statement. 
B) The numerator is net income. 
C) The denominator is the average number of shares of common stock outstanding. 
D) It doesn't have to be disclosed on the income statement or the notes to the financial statements. 
A) It can be reported on the income statement. 
B) The numerator is net income. 
C) The denominator is the average number of shares of common stock outstanding. 
D) It doesn't have to be disclosed on the income statement or the notes to the financial statements.

Question 11

An accrued expense has been both incurred and paid for using cash.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a false statement about the unadjusted trial balance?

Accepted Answer

A) It is not a financial statement for external reporting purposes. 
B) It provides data in a convenient form for preparing the adjusting entries and financial statements. 
C) It provides a check of the equality of the debits and credits of the ledger accounts after transactions have been journalized and posted. 
D) It provides a listing of balance sheet accounts only. 
A) It is not a financial statement for external reporting purposes. 
B) It provides data in a convenient form for preparing the adjusting entries and financial statements. 
C) It provides a check of the equality of the debits and credits of the ledger accounts after transactions have been journalized and posted. 
D) It provides a listing of balance sheet accounts only.

Question 13

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

Accepted Answer

A) Interest expense 
B) Accumulated depreciation 
C) Retained earnings 
D) Unearned revenues 
A) Interest expense 
B) Accumulated depreciation 
C) Retained earnings 
D) Unearned revenues

Question 14

Which of the following statements regarding the balance sheet is false?

Accepted Answer

A) Property and equipment is reported at book value. 
B) Assets are reported in the order of liquidity. 
C) Current liabilities are obligations to be paid with current assets. 
D) It is a period of time financial statement. 
A) Property and equipment is reported at book value. 
B) Assets are reported in the order of liquidity. 
C) Current liabilities are obligations to be paid with current assets. 
D) It is a period of time financial statement.

Question 15

Which of the following journal entries was created as the result of an accrual?

Accepted Answer

A)  Salaries expense
$ \quad $$ \quad $Salaries payable 
B)  Depreciation expense
$ \quad $$ \quad $Accumulated depreciation 
C)  Prepaid Rent
$ \quad $$ \quad $Cash 
D)  Cash
$ \quad $Unearned revenue 
A)  Salaries expense
$ \quad $$ \quad $Salaries payable 
B)  Depreciation expense
$ \quad $$ \quad $Accumulated depreciation 
C)  Prepaid Rent
$ \quad $$ \quad $Cash 
D)  Cash
$ \quad $Unearned revenue

Question 16

The net profit margin ratio is calculated by dividing net sales by net income.

Accepted Answer

A) True 
 B)False

Question 17

A.Describe how the income statement is related to the statement of stockholders' equity.
B.Describe how the statement of stockholders' equity is related to the balance sheet.
C.Describe how the statement of cash flows is related to the balance sheet.

Accepted Answer

The income statement is related to the s

Question 18

On November 1,2011,Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date.Bug credited unearned rent revenue for $6,000.Prepare the adjusting entry required on December 31,2011 (assuming that no adjusting entries have been made during the year).

Accepted Answer

On November 1, 2011, Bug Busters collect

Question 19

Which of the following account balances would not be affected by closing journal entries?

Accepted Answer

A) Interest expense 
B) Accumulated depreciation 
C) Dividends 
D) Retained earnings 
A) Interest expense 
B) Accumulated depreciation 
C) Dividends 
D) Retained earnings

Question 20

On December 31,2011,Krug Company reported total liabilities of $110,000 prior to the following adjusting entries:
 Depreciation expense was $31,000;
 Accrued service revenues totaled $29,000;
Accrued expenses totaled $12,000;
Expired insurance which was prepaid totaled $9,000;
Rent revenue earned was $7,000; the rent was prepaid by the tenant and credited to unearned rent revenue.
How much are Krug's total liabilities after adjusting entries?

Accepted Answer

A) $115,000 
B) $141,000 
C) $86,000 
D) $110,000 
A) $115,000 
B) $141,000 
C) $86,000 
D) $110,000

Which of the following correctly describes the following journal entry? Depreciation expense $\quad$ $\quad$ Accumulated depreciation

Explain how adjusting entries provide for potential manipulation by managers.In addition,discuss how compensation arrangements may result in incentives for such manipulation to occur.

Which one of the following accounts would not be closed at the end of the accounting year?

Which of the following does not correctly describe the following journal entry? Rent expense $\quad$ $\quad$ Prepaid rent

Earnings per share are calculated by dividing net income minus preferred dividends by the average number of shares of common stock outstanding.

Which of the following journal entries was created as the result of a deferral?

Which of the following accounts would most likely not require an adjusting entry in the future?

Which of the following accounts was created as the result of a deferral?

Which of the following statements regarding earnings per share is not correct?

An accrued expense has been both incurred and paid for using cash.

Which of the following is a false statement about the unadjusted trial balance?

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

Which of the following statements regarding the balance sheet is false?

Which of the following journal entries was created as the result of an accrual?

The net profit margin ratio is calculated by dividing net sales by net income.

A.Describe how the income statement is related to the statement of stockholders' equity. B.Describe how the statement of stockholders' equity is related to the balance sheet. C.Describe how the statement of cash flows is related to the balance sheet.

On November 1,2011,Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date.Bug credited unearned rent revenue for $6,000.Prepare the adjusting entry required on December 31,2011 (assuming that no adjusting entries have been made during the year).

Which of the following account balances would not be affected by closing journal entries?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters

Exam 4: Adjustments,Financial Statements,and the Quality of Earnings

Which of the following correctly describes the following journal entry? Depreciation expense \quad \quad Accumulated depreciation

Explain how adjusting entries provide for potential manipulation by managers.In addition,discuss how compensation arrangements may result in incentives for such manipulation to occur.

Which one of the following accounts would not be closed at the end of the accounting year?

Which of the following does not correctly describe the following journal entry? Rent expense \quad \quad Prepaid rent

Earnings per share are calculated by dividing net income minus preferred dividends by the average number of shares of common stock outstanding.

Which of the following journal entries was created as the result of a deferral?

Which of the following accounts would most likely not require an adjusting entry in the future?

Which of the following accounts was created as the result of a deferral?

Which of the following statements regarding earnings per share is not correct?

An accrued expense has been both incurred and paid for using cash.

Which of the following is a false statement about the unadjusted trial balance?

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

Which of the following statements regarding the balance sheet is false?

Which of the following journal entries was created as the result of an accrual?

The net profit margin ratio is calculated by dividing net sales by net income.

A.Describe how the income statement is related to the statement of stockholders' equity. B.Describe how the statement of stockholders' equity is related to the balance sheet. C.Describe how the statement of cash flows is related to the balance sheet.

On November 1,2011,Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date.Bug credited unearned rent revenue for $6,000.Prepare the adjusting entry required on December 31,2011 (assuming that no adjusting entries have been made during the year).

Which of the following account balances would not be affected by closing journal entries?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

Filters

Which of the following correctly describes the following journal entry? Depreciation expense $\quad$ $\quad$ Accumulated depreciation

Which of the following does not correctly describe the following journal entry? Rent expense $\quad$ $\quad$ Prepaid rent