Question 1

Accruals occur when a company receives or pays cash before recognizing the revenue or expense in the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Mattox Corporation had a unadjusted balance of $5,400 in Supplies.The actual balance was $150.The accountant failed to make the adjusting entry.What is the effect on the current year financial statements?

Accepted Answer

A) Net income is understated by $5,250. 
B) Current assets are overstated by $5,250. 
C) Current assets are understated by $5,400. 
D) Retained Earnings is overstated by $5,400. 
A) Net income is understated by $5,250. 
B) Current assets are overstated by $5,250. 
C) Current assets are understated by $5,400. 
D) Retained Earnings is overstated by $5,400.

Question 3

Realistic Rentals collected $10,000 in payment of advance rent for 6 months.This an example of ________.

Accepted Answer

A) an accrued receivable 
B) a prepaid expense 
C) an unearned revenue 
D) an accrued liability 
A) an accrued receivable 
B) a prepaid expense 
C) an unearned revenue 
D) an accrued liability

Question 4

The employees of Lucid Laboratories are paid every two weeks on Friday.Total payroll is $25,000 and covers 10 workdays.The end of the current month falls on Tuesday of the pay period.What is the adjusting journal entry to accrue payroll at the end of the month?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 5

Deferred expenses may be initially recorded as assets or expenses.

Accepted Answer

A) True 
 B)False

Question 6

Douglas Corporation paid $6,000 for monthly rental on its warehouse.This transaction ________.

Accepted Answer

A) decreased liability 
B) increased shareholders' equity 
C) increased assets 
D) increased expenses 
A) decreased liability 
B) increased shareholders' equity 
C) increased assets 
D) increased expenses

Question 7

If a prepaid expense is recorded as an expense,and the adjusting entry is not made at the end of the period,expenses on the income statement will be overstated.

Accepted Answer

A) True 
 B)False

Question 8

The normal balance of a liability account is a debit.

Accepted Answer

A) True 
 B)False

Question 9

Gains and losses result from peripheral transactions of a company.

Accepted Answer

A) True 
 B)False

Question 10

Financial statements are prepared using data from the unadjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 11

Unearned revenues may be initially recorded as liabilities or revenues.

Accepted Answer

A) True 
 B)False

Question 12

List the steps in preparing a worksheet.

Accepted Answer

1.Prepare an unadjusted trial balance di

Question 13

Which of the following is an adjusting entry?

Accepted Answer

A) Allowance for Uncollectible Accounts   
B) Depletion Expense   
C) Cash   
D) Interest Expense   
A) Allowance for Uncollectible Accounts   
B) Depletion Expense   
C) Cash   
D) Interest Expense

Question 14

Which of the following accounts would not be shown on the post-closing trial balance?

Accepted Answer

A) Dividends Payable 
B) Depletion 
C) Patent 
D) Investment in Bonds 
A) Dividends Payable 
B) Depletion 
C) Patent 
D) Investment in Bonds

Question 15

Each of the following accounts has a normal credit balance except ________.

Accepted Answer

A) Sales Revenue 
B) Accumulated Depreciation 
C) Investments 
D) Accounts Payable 
A) Sales Revenue 
B) Accumulated Depreciation 
C) Investments 
D) Accounts Payable

Question 16

New York Enterprises provides advertising services to travel agencies.The company bills annually and receives payments in advance.All advertising is earned equally each month.In January,the company received $120,000; in February,it received $144,000.The fiscal year ends on February 28.
Required:
1.How much revenue should be recognized from these contracts on February 28?
2.What adjusting entry will be required on February 28?

Accepted Answer

1.The company should recognize

Question 17

Decreases in equity that result from peripheral transactions of an entity are referred to as ________.

Accepted Answer

A) liabilities 
B) expenses 
C) losses 
D) dividends 
A) liabilities 
B) expenses 
C) losses 
D) dividends

Question 18

Which of the following accounts is a temporary account?

Accepted Answer

A) Supplies 
B) Interest Expense 
C) Patents 
D) Insurance 
A) Supplies 
B) Interest Expense 
C) Patents 
D) Insurance

Question 19

Smith Corporation purchased $65,000 of merchandise on credit.The company uses the perpetual method of recording inventory purchases.What would be the correct journal entry to record the purchase?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

When a prepaid expense initially recorded as an asset is incurred,the adjusting entry includes ________.

Accepted Answer

A) a debit to an asset 
B) a credit to a liability 
C) a credit to an expense 
D) a debit to an expense 
A) a debit to an asset 
B) a credit to a liability 
C) a credit to an expense 
D) a debit to an expense

Exam 4: Review of the Accounting Cycle

Accruals occur when a company receives or pays cash before recognizing the revenue or expense in the financial statements.

Mattox Corporation had a unadjusted balance of $5,400 in Supplies.The actual balance was $150.The accountant failed to make the adjusting entry.What is the effect on the current year financial statements?

Realistic Rentals collected $10,000 in payment of advance rent for 6 months.This an example of ________.

The employees of Lucid Laboratories are paid every two weeks on Friday.Total payroll is $25,000 and covers 10 workdays.The end of the current month falls on Tuesday of the pay period.What is the adjusting journal entry to accrue payroll at the end of the month?

Deferred expenses may be initially recorded as assets or expenses.

Douglas Corporation paid $6,000 for monthly rental on its warehouse.This transaction ________.

If a prepaid expense is recorded as an expense,and the adjusting entry is not made at the end of the period,expenses on the income statement will be overstated.

The normal balance of a liability account is a debit.

Gains and losses result from peripheral transactions of a company.

Financial statements are prepared using data from the unadjusted trial balance.

Unearned revenues may be initially recorded as liabilities or revenues.

List the steps in preparing a worksheet.

Which of the following is an adjusting entry?

Which of the following accounts would not be shown on the post-closing trial balance?

Each of the following accounts has a normal credit balance except ________.

Decreases in equity that result from peripheral transactions of an entity are referred to as ________.

Which of the following accounts is a temporary account?

Smith Corporation purchased $65,000 of merchandise on credit.The company uses the perpetual method of recording inventory purchases.What would be the correct journal entry to record the purchase?

When a prepaid expense initially recorded as an asset is incurred,the adjusting entry includes ________.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

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