Exam 3: Adjusting Accounts for Financial Statements

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

(Multiple Choice)

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Question 21

Two main accounting principles used in accrual accounting are expense recognition and full closure.

(True/False)

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Question 22

Which of the following statements is incorrect?

(Multiple Choice)

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Question 23

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

(Multiple Choice)

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Question 24

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

(True/False)

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Question 25

Abdulla,Co.collected 6-months' rent in advance from a tenant on October 1 of the current year.When it collected the cash,it recorded the following entry: Oct. 01 15,000 Rent Revenue Earned 15,000 Assuming Abdulla only prepares adjustments at year-end,prepare the required adjusting entry at December 31 of the current year.

(Essay)

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Question 26

Match the following terms with the appropriate definition. -A balance sheet that broadly groups items into assets,liabilities and equity.

(Multiple Choice)

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Question 27

A trial balance prepared after adjustments have been recorded is called a(n):

(Multiple Choice)

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Question 28

Two common subgroups for liabilities on a classified balance sheet are:

(Multiple Choice)

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Question 29

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

(True/False)

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Question 30

Reversing entries are optional.

(True/False)

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Question 31

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

(True/False)

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Question 32

Cash and office supplies are both classified as current assets.

(True/False)

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Question 33

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

(Essay)

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Question 34

Profit margin reflects the percent of profit in each dollar of revenue.

(True/False)

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Question 35

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

(Short Answer)

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Question 36

Flagg records adjusting entries at its December 31 year-end.At December 31,employees had earned $12,000 of unpaid and unrecorded salaries.The next payday is January 3,at which time $30,000 will be paid.Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

(Multiple Choice)

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Question 37

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

(Multiple Choice)

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Question 38

Adjusting entries always affect the cash account.

(True/False)

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Question 39

Depreciation expense is an example of an accrued expense.

(True/False)

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Question 40

Showing 21 - 40 of 445

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Two main accounting principles used in accrual accounting are expense recognition and full closure.

Which of the following statements is incorrect?

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Match the following terms with the appropriate definition. -A balance sheet that broadly groups items into assets,liabilities and equity.

A trial balance prepared after adjustments have been recorded is called a(n):

Two common subgroups for liabilities on a classified balance sheet are:

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Reversing entries are optional.

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Cash and office supplies are both classified as current assets.

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

Profit margin reflects the percent of profit in each dollar of revenue.

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Adjusting entries always affect the cash account.

Depreciation expense is an example of an accrued expense.

Accounting in Business

Analyzing for Business Transactions

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash, fraud, and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Investments

Partnership Accounting

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