Question 1

In accrual accounting,accrued revenues are recorded as liabilities.

Accepted Answer

A) True 
 B)False

Question 2

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a.Estimated depreciation on equipment for the year,$4,500.
b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $600 of insurance expired.
c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $950 of unexpired insurance.
d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31.
e.On November 1,the company received 6 months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account.
f.The company collects rent monthly from its tenants.One tenant whose rent is $1,000 per month has not paid his rent for December.

Accepted Answer

a.Dec.31 Depr.Expense-Equipment……………………

Question 3

Recording expenses early overstates current-period income; recording expenses late understates current period income.

Accepted Answer

A) True 
 B)False

Question 4

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Accepted Answer

A)  Fiscal year. 
B)  Calendar year. 
C)  Natural business year. 
D)  Accounting period. 
E)  Interim period. 
A)  Fiscal year. 
B)  Calendar year. 
C)  Natural business year. 
D)  Accounting period. 
E)  Interim period.

Question 5

Which of the following statements is true?

Accepted Answer

A)  Retained earnings must be closed each accounting period. 
B)  A post-closing trial balance should include only permanent accounts. 
C)  The work sheet can be substituted for preparing financial statements. 
D)  By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E)  Closing entries are only necessary if errors have been made. 
A)  Retained earnings must be closed each accounting period. 
B)  A post-closing trial balance should include only permanent accounts. 
C)  The work sheet can be substituted for preparing financial statements. 
D)  By using a work sheet to prepare adjusting entries you need not post these entries to the ledger accounts. 
E)  Closing entries are only necessary if errors have been made.

Question 6

Profit margin can also be called return on sales.

Accepted Answer

A) True 
 B)False

Question 7

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Accepted Answer

A)  Recognition principle. 
B)  Cost principle. 
C)  Cash basis of accounting. 
D)  Expense recognition (Matching) principle. 
E)  Time period principle. 
A)  Recognition principle. 
B)  Cost principle. 
C)  Cash basis of accounting. 
D)  Expense recognition (Matching) principle. 
E)  Time period principle.

Question 8

Match the following terms with the appropriate definition.
-Entries recorded at the end of each accounting period to transfer end-of-period balances in
revenue,expense,and dividends accounts to the permanent retained earnings account.

Accepted Answer

A) Stockholders' equity 
B) Unclassified balance sheet 
C) Long-term investments 
D) Current liabilities 
E) Closing entries
F)Current ratio
G)Plant assets
H)Current assets
I)Intangible assets
J)Classified balance sheet 
A) Stockholders' equity 
B) Unclassified balance sheet 
C) Long-term investments 
D) Current liabilities 
E) Closing entries
F)Current ratio
G)Plant assets
H)Current assets
I)Intangible assets
J)Classified balance sheet

Question 9

Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

Accepted Answer

None

Question 10

Classified balance sheets commonly include the following categories:
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity.
Match the typical classification of each item below with its correct balance sheet category (A through G).
-Equity

Accepted Answer

A) G 
B) B 
C) A 
D) C 
E) F
F)D
G)E 
A) G 
B) B 
C) A 
D) C 
E) F
F)D
G)E

Question 11

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

Accepted Answer

A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability. 
A)  Increase an expense; increase a liability. 
B)  Increase an asset; increase revenue. 
C)  Decrease a liability; increase revenue. 
D)  Increase an expense; decrease an asset. 
E)  Increase an expense; decrease a liability.

Question 12

List the steps in the accounting cycle.

Accepted Answer

The accounting cycle consists of ten ste

Question 13

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Accepted Answer

A)  $75. 
B)  $125. 
C)  $175. 
D)  $250. 
E)  $325. 
A)  $75. 
B)  $125. 
C)  $175. 
D)  $250. 
E)  $325.

Question 14

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

Accepted Answer

A) True 
 B)False

Question 15

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

Accepted Answer

A)  A debit to an expense and credit to a prepaid expense for $7,500. 
B)  A debit to an expense and credit to Cash for $7,500. 
C)  A debit to a prepaid expense and a credit to Cash for $7,500. 
D)  A credit to a prepaid expense and a debit to Cash for $7,500. 
E)  A debit to Cash for $7,500 and a credit to an expense for $7,500. 
A)  A debit to an expense and credit to a prepaid expense for $7,500. 
B)  A debit to an expense and credit to Cash for $7,500. 
C)  A debit to a prepaid expense and a credit to Cash for $7,500. 
D)  A credit to a prepaid expense and a debit to Cash for $7,500. 
E)  A debit to Cash for $7,500 and a credit to an expense for $7,500.

Question 16

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?

Accepted Answer

A)  $0. 
B)  $516. 
C)  $387. 
D)  $129. 
E)  $430. 
A)  $0. 
B)  $516. 
C)  $387. 
D)  $129. 
E)  $430.

Question 17

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Accepted Answer

A)  Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B)  Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C)  Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D)  Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E)  Debit Office Supplies $105 and credit Supplies Expense $254. 
A)  Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B)  Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C)  Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D)  Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E)  Debit Office Supplies $105 and credit Supplies Expense $254.

Question 18

Which of the following is the usual final step in the accounting cycle?

Accepted Answer

A)  Journalizing transactions. 
B)  Preparing an adjusted trial balance. 
C)  Preparing a post-closing trial balance. 
D)  Preparing the financial statements. 
E)  Preparing a work sheet. 
A)  Journalizing transactions. 
B)  Preparing an adjusted trial balance. 
C)  Preparing a post-closing trial balance. 
D)  Preparing the financial statements. 
E)  Preparing a work sheet.

Question 19

Complete the following by filling in the blanks:
(1)The Prepaid Insurance account had a $545 debit balance at the beginning of the current year; $650 of insurance premiums were paid during the year; and the year-end balance sheet showed $420 of prepaid insurance; consequently,the income statement for the year must have shown $________ of insurance expense.
(2)The Office Supplies account began the current year with a $235 debit balance; the income statement for the year showed $475 of office supplies expense; and the year-end balance sheet showed the current asset,office supplies,at $275; consequently,if all supplies were accounted for,$________ of office supplies must have been purchased during the year.

Accepted Answer

(1)$775 = $545 + $65

Question 20

An ________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Accepted Answer

unadjusted

In accrual accounting,accrued revenues are recorded as liabilities.

Recording expenses early overstates current-period income; recording expenses late understates current period income.

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Which of the following statements is true?

Profit margin can also be called return on sales.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Match the following terms with the appropriate definition. -Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue,expense,and dividends accounts to the permanent retained earnings account.

Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

List the steps in the accounting cycle.

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Which of the following is the usual final step in the accounting cycle?

An ________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

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

Filters

Exam 3: Adjusting Accounts for Financial Statements

In accrual accounting,accrued revenues are recorded as liabilities.

Recording expenses early overstates current-period income; recording expenses late understates current period income.

The 12-month period that ends when a company's sales activities are at their lowest level is called the:

Which of the following statements is true?

Profit margin can also be called return on sales.

The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses is the:

Match the following terms with the appropriate definition. -Entries recorded at the end of each accounting period to transfer end-of-period balances in revenue,expense,and dividends accounts to the permanent retained earnings account.

Using the information presented below,prepare an income statement from the adjusted trial balance of Dodson Containers.

Assuming prepaid expenses are originally recorded in balance sheet accounts,the adjusting entry to record use of a prepaid expense is:

List the steps in the accounting cycle.

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Assets are often classified into current assets,long-term investments,plant assets,and intangible assets.

On July 1 Plum Co.paid $7,500 cash for management services to be performed over a two-year period.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.On July 1 Plum should record:

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Which of the following is the usual final step in the accounting cycle?

An ________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

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

Filters