Question 1

Adjusting entries do not involve a cash flow and therefore do not impact the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 2

A calendar year reporting company preparing its annual financial statements should use the phrase "As of December 31,2011" in the heading of which financial statements?

Accepted Answer

A) On all of the required financial statements. 
B) On only the income statement. 
C) On the income statement and balance sheet, but not the statement of cash flows. 
D) On the balance sheet only. 
A) On all of the required financial statements. 
B) On only the income statement. 
C) On the income statement and balance sheet, but not the statement of cash flows. 
D) On the balance sheet only.

Question 3

Which of the following correctly describes the following journal entry? Utilities expense
$ \quad $$ \quad $Utilities payable

Accepted Answer

A) Total assets decrease and net income decreases. 
B) Stockholders' equity decreases and liabilities increase. 
C) The transaction is an example of a deferral. 
D) Net income decreases and stockholders' equity doesn't change. 
A) Total assets decrease and net income decreases. 
B) Stockholders' equity decreases and liabilities increase. 
C) The transaction is an example of a deferral. 
D) Net income decreases and stockholders' equity doesn't change.

Question 4

The adjusting entry to record an accrued expense increases liabilities.

Accepted Answer

A) True 
 B)False

Question 5

On January 1,2011,the general ledger of Global Corporation included supplies inventory of $1,000.During 2011,supplies purchases amounted to $5,000.A physical count of inventory on hand at December 31,2011 determined that the supplies inventory was $1,200.How much is the 2011 supplies expense?

Accepted Answer

A) $6,000 
B) $5,200 
C) $4,800 
D) $1,000 
A) $6,000 
B) $5,200 
C) $4,800 
D) $1,000

Question 6

What is the purpose of adjusting entries? Give two examples of accruals and deferrals.

Accepted Answer

The answer of What is the purpose of adjusting entries?...

Question 7

Which of the following isn't a correct closing entry?

Accepted Answer

A)  Retained earnings 
Revenues 
$ \quad $$ \quad $Expenses 
B)  Revenues
Gain on sale of land 
$ \quad $$ \quad $Expenses 
$ \quad $$ \quad $Retained earnings 
C)  Revenues
$ \quad $$ \quad $Loss on sale of Building 
$ \quad $$ \quad $$ \quad $$ \quad $Expenses 
$ \quad $$ \quad $$ \quad $$ \quad $Retained earnings 
D)  Loss on sale of land
Expenses
$ \quad $$ \quad $Revenues
$ \quad $$ \quad $Retained earnings 
A)  Retained earnings 
Revenues 
$ \quad $$ \quad $Expenses 
B)  Revenues
Gain on sale of land 
$ \quad $$ \quad $Expenses 
$ \quad $$ \quad $Retained earnings 
C)  Revenues
$ \quad $$ \quad $Loss on sale of Building 
$ \quad $$ \quad $$ \quad $$ \quad $Expenses 
$ \quad $$ \quad $$ \quad $$ \quad $Retained earnings 
D)  Loss on sale of land
Expenses
$ \quad $$ \quad $Revenues
$ \quad $$ \quad $Retained earnings

Question 8

Below are four transactions that were completed during 2011 by Timber Lodge.The annual accounting period ends on December 31.Each transaction will require an adjusting entry at December 31,2011.You are to provide the 2011 adjusting entries required for Timber Lodge. $\begin{array}{lll}
\text { Prepaid insurance } & 8,000 & \
\text { Cash } & & 8,000
\end{array}$ B.On December 31,2011 a tenant renting some storage space from Timber Lodge had not paid the rent of $750 for December 2011.
C.On September 1,2011,Timber Lodge borrowed $25,000 cash and gave a one-year,10 percent,note payable.The interest is payable on the due date,August 31,2012.The September 1,2011 transaction was recorded as follows: Cash  $ \quad $$ \quad $25,000
$ \quad $Note payable  $ \quad $$ \quad $25,000 D.On October 1,2011,Timber Lodge collected $3,600 from a tenant for two years rent beginning October 1,2011.The $3,600 collection was recorded as follows: Cash$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $3,600
$ \quad $Unearned rent revenues$ \quad $$ \quad $$ \quad $$ \quad $3,600

Accepted Answer

Adjusting entry for prepaid insurance:
I

Question 9

On January 1,2011,Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000.At that time,the full amount paid was recorded as prepaid insurance.After recording the adjusting entry for the insurance policy on December 31,2011,Ryan Company's records would reflect what balance in the prepaid insurance account?

Accepted Answer

A) $6,000 
B) $2,000 
C) $3,000 
D) $4,000 
A) $6,000 
B) $2,000 
C) $3,000 
D) $4,000

Question 10

For each of the following transactions,indicate the amounts and direction of effects of the adjusting entry on the elements of the balance sheet and income statement.Using the following format,indicate + for increase,and - for decrease,and NE for no effect.
Transactions:
   
A.Wages of $5,800 have been earned, but not paid to employees at the end of the year.
B.Supplies in the amount of $2,000 were used during the year, which are currently recorded in the office supplies inventory account.
C.Interest has accrued on a bank loan.

Accepted Answer

The answer of For each of the following transactions,indicate the...

Question 11

On December 31,2011,Krug Company reported total assets of $390,000 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 assets after adjusting entries?

Accepted Answer

A) $350,000 
B) $386,000 
C) $379,000 
D) $374,000 
A) $350,000 
B) $386,000 
C) $379,000 
D) $374,000

Question 12

Describe the adjusted trial balance.

Accepted Answer

The answer of Describe the adjusted trial balance....

Question 13

Center Company is completing the accounting cycle at the end of the annual accounting period,December 31,2011.No adjusting entries have been made during the year so three adjusting entries must be made at this date to update the accounts.The following accounts,selected from Center Company's chart of accounts,are to be used for this purpose.They are coded to the left for easy reference. $$\begin{array} { l l l l } 
\text { A. } & \text { Supplies expense } & \text { I. } & \text { Unearned rent } \
\text { B. } & \text { Supplies } & \text { J. } & \text { Rent expense } \
\text { C. } & \text { Interest receivable } & \text { K. } & \text { Wage expense } \
\text { D. } & \text { Equipment }&\text { L. } & \text { Depreciation expense } \
\text { E. } & \text { Accumulated depreciation } & \text { M. } & \text { Interest expense } \
\text { F. } & \text { Notes payable } & \text { N. } & \text { Interest revenue } \
\text { G. } & \text { Interest payable } & \text { O. } & \text { Rent revenue } \
\text { H. } & \text { Wages payable } & \text { P. } & \text { Some other account not listed }
\end{array}$$

Accepted Answer

The answer of Center Company is completing the accounting cycle...

Question 14

Which of the following transactions results in a decrease in both total assets and net income?

Accepted Answer

A) The accrual of salaries expense at year-end. 
B) Collecting cash from an account receivable. 
C) Recognizing revenue which was previously recorded as unearned revenue. 
D) Adjustment of the prepaid rent account for rent which expired during the period. 
A) The accrual of salaries expense at year-end. 
B) Collecting cash from an account receivable. 
C) Recognizing revenue which was previously recorded as unearned revenue. 
D) Adjustment of the prepaid rent account for rent which expired during the period.

Question 15

Which of the following accounts was created as the result of an accrual for expenses?

Accepted Answer

A) Prepaid rent 
B) Unearned revenues 
C) Accounts receivable 
D) Interest payable 
A) Prepaid rent 
B) Unearned revenues 
C) Accounts receivable 
D) Interest payable

Question 16

An objective of preparing the trial balance is to test the equality of debits and credits.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following correctly describes the following journal entry? Accounts receivable
$ \quad $$ \quad $Franchise fees revenue

Accepted Answer

A) Total assets do not change. 
B) The transaction is an example of an accrual. 
C) Stockholders' equity is not affected. 
D) Net income is not affected. 
A) Total assets do not change. 
B) The transaction is an example of an accrual. 
C) Stockholders' equity is not affected. 
D) Net income is not affected.

Question 18

The net profit margin ratio is a measure of how much profit was created per sales dollar.

Accepted Answer

A) True 
 B)False

Question 19

The year-end closing process transfers net income to retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following doesn't correctly describe a journal entry which debits rent expense and credits prepaid rent?

Accepted Answer

A) It increases expenses and decreases retained earnings. 
B) It decreases net income and decreases assets. 
C) It increases expenses and decreases assets. 
D) It decreases net income and decreases liabilities. 
A) It increases expenses and decreases retained earnings. 
B) It decreases net income and decreases assets. 
C) It increases expenses and decreases assets. 
D) It decreases net income and decreases liabilities.

Adjusting entries do not involve a cash flow and therefore do not impact the cash flow statement.

A calendar year reporting company preparing its annual financial statements should use the phrase "As of December 31,2011" in the heading of which financial statements?

Which of the following correctly describes the following journal entry? Utilities expense $\quad$ $\quad$ Utilities payable

The adjusting entry to record an accrued expense increases liabilities.

On January 1,2011,the general ledger of Global Corporation included supplies inventory of $1,000.During 2011,supplies purchases amounted to $5,000.A physical count of inventory on hand at December 31,2011 determined that the supplies inventory was $1,200.How much is the 2011 supplies expense?

What is the purpose of adjusting entries? Give two examples of accruals and deferrals.

Which of the following isn't a correct closing entry?

Describe the adjusted trial balance.

Which of the following transactions results in a decrease in both total assets and net income?

Which of the following accounts was created as the result of an accrual for expenses?

An objective of preparing the trial balance is to test the equality of debits and credits.

Which of the following correctly describes the following journal entry? Accounts receivable $\quad$ $\quad$ Franchise fees revenue

The net profit margin ratio is a measure of how much profit was created per sales dollar.

The year-end closing process transfers net income to retained earnings.

Which of the following doesn't correctly describe a journal entry which debits rent expense and credits prepaid rent?

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

Adjusting entries do not involve a cash flow and therefore do not impact the cash flow statement.

A calendar year reporting company preparing its annual financial statements should use the phrase "As of December 31,2011" in the heading of which financial statements?

Which of the following correctly describes the following journal entry? Utilities expense \quad \quad Utilities payable

The adjusting entry to record an accrued expense increases liabilities.

On January 1,2011,the general ledger of Global Corporation included supplies inventory of $1,000.During 2011,supplies purchases amounted to $5,000.A physical count of inventory on hand at December 31,2011 determined that the supplies inventory was $1,200.How much is the 2011 supplies expense?

What is the purpose of adjusting entries? Give two examples of accruals and deferrals.

Which of the following isn't a correct closing entry?

Describe the adjusted trial balance.

Which of the following transactions results in a decrease in both total assets and net income?

Which of the following accounts was created as the result of an accrual for expenses?

An objective of preparing the trial balance is to test the equality of debits and credits.

Which of the following correctly describes the following journal entry? Accounts receivable \quad \quad Franchise fees revenue

The net profit margin ratio is a measure of how much profit was created per sales dollar.

The year-end closing process transfers net income to retained earnings.

Which of the following doesn't correctly describe a journal entry which debits rent expense and credits prepaid rent?

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? Utilities expense $\quad$ $\quad$ Utilities payable

Which of the following correctly describes the following journal entry? Accounts receivable $\quad$ $\quad$ Franchise fees revenue