Question 1

Which of the following is not a characteristic of the accrual basis of accounting?

Accepted Answer

A)  revenues and expenses are reported in the period in which cash is received or paid 
B)  revenues are reported when services have been performed or products have been delivered to customers 
C)  accrual basis of accounting supports the matching concept 
D)  expenses are reported in the same period as the revenues to which they relate 
A)  revenues and expenses are reported in the period in which cash is received or paid 
B)  revenues are reported when services have been performed or products have been delivered to customers 
C)  accrual basis of accounting supports the matching concept 
D)  expenses are reported in the same period as the revenues to which they relate

Question 2

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period 
A)  still on hand 
B)  purchased 
C)  used 
D)  required for the next accounting period

Question 3

For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the year ending December 31, what is the effect of these errors on revenues, expenses, and net income?

Accepted Answer

A)  revenues are overstated by $4,200 
B)  net income is overstated by $2,300 
C)  expenses are overstated by $6,500 
D)  expenses are understated by $3,500 
A)  revenues are overstated by $4,200 
B)  net income is overstated by $2,300 
C)  expenses are overstated by $6,500 
D)  expenses are understated by $3,500

Question 4

Adjusting entries affect only expense and asset accounts.

Accepted Answer

A) True 
 B)False

Question 5

An adjusting entry to accrue an incurred expense will affect total liabilities.

Accepted Answer

A) True 
 B)False

Question 6

If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following describes the effect of the credit portion of the entry?

Accepted Answer

A)  increases the balance of a revenue account 
B)  decreases the balance of a liability account 
C)  increases the balance of an expense account 
D)  decreases the balance of a revenue account 
A)  increases the balance of a revenue account 
B)  decreases the balance of a liability account 
C)  increases the balance of an expense account 
D)  decreases the balance of a revenue account

Question 7

Accumulated depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 8

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Accepted Answer

The answer of The estimated amount of depreciation on equipment...

Question 9

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Accepted Answer

A)  decreases the balance of a stockholders' equity account 
B)  increases the balance of a liability account 
C)  increases the balance of an asset account 
D)  decreases the balance of an expense account 
A)  decreases the balance of a stockholders' equity account 
B)  increases the balance of a liability account 
C)  increases the balance of an asset account 
D)  decreases the balance of an expense account

Question 10

Which of the following is not true regarding depreciation?

Accepted Answer

A)  depreciation allocates the cost of a fixed asset over its estimated life. 
B)  depreciation expense reflects the decrease in market value each year. 
C)  depreciation is an allocation not a valuation method. 
D)  depreciation expense does not measure changes in market value. 
A)  depreciation allocates the cost of a fixed asset over its estimated life. 
B)  depreciation expense reflects the decrease in market value each year. 
C)  depreciation is an allocation not a valuation method. 
D)  depreciation expense does not measure changes in market value.

Question 11

Accumulated Depreciation and Depreciation Expense are classified, respectively, as

Accepted Answer

A)  expense, contra asset 
B)  asset, contra liability 
C)  revenue, asset 
D)  contra asset, expense 
A)  expense, contra asset 
B)  asset, contra liability 
C)  revenue, asset 
D)  contra asset, expense

Question 12

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Accepted Answer

A)  debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800 
B)  debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500 
C)  debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100 
D)  debit Prepaid Insurance, $1,800; credit Cash, $1,800 
A)  debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800 
B)  debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500 
C)  debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100 
D)  debit Prepaid Insurance, $1,800; credit Cash, $1,800

Question 13

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday.
​

Accepted Answer

$10,000/5 = $2,000 p

Question 14

Softex and Sanibel Solutions are manufacturers of cotton products. Their income statements for a current year are below.

Accepted Answer

The answer of Softex and Sanibel Solutions are manufacturers of...

Question 15

Adjusting entries affect at least one

Accepted Answer

A)  income statement account and one balance sheet account 
B)  revenue and the dividends account 
C)  asset and one stockholders' equity account 
D)  revenue and one stockholders' equity account 
A)  income statement account and one balance sheet account 
B)  revenue and the dividends account 
C)  asset and one stockholders' equity account 
D)  revenue and one stockholders' equity account

Question 16

The unexpired insurance at the end of the fiscal period represents

Accepted Answer

A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense 
A)  an accrued asset 
B)  an accrued liability 
C)  an accrued expense 
D)  a deferred expense

Question 17

Two income statements for Danielle's Design Services are shown below:
​   (a) Prepare a vertical analysis of Danielle's Design Services income statements.
(b) What types of trends are indicated: favorable or unfavorable?
(c) What other information would enhance the analysis?

Accepted Answer

(a) @#IMG-DLM&_TB2281_00 ​*Differences due to roun

Question 18

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 19

The financial statements are prepared from the unadjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 20

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

Accepted Answer

A) True 
 B)False

Which of the following is not a characteristic of the accrual basis of accounting?

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

Adjusting entries affect only expense and asset accounts.

An adjusting entry to accrue an incurred expense will affect total liabilities.

If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following describes the effect of the credit portion of the entry?

Accumulated depreciation is reported on the income statement.

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Which of the following is not true regarding depreciation?

Accumulated Depreciation and Depreciation Expense are classified, respectively, as

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

Softex and Sanibel Solutions are manufacturers of cotton products. Their income statements for a current year are below.

Adjusting entries affect at least one

The unexpired insurance at the end of the fiscal period represents

Two income statements for Danielle's Design Services are shown below: (a) Prepare a vertical analysis of Danielle's Design Services income statements. (b) What types of trends are indicated: favorable or unfavorable? (c) What other information would enhance the analysis?

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

The financial statements are prepared from the unadjusted trial balance.

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

Accounting and Business

Double-Entry Accounting

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 3: Adjustments: Accruals and Deferrals

Which of the following is not a characteristic of the accrual basis of accounting?

Supplies are recorded as assets when purchased. Therefore, the credit to Supplies in the adjusting entry is for the amount of supplies

Adjusting entries affect only expense and asset accounts.

An adjusting entry to accrue an incurred expense will affect total liabilities.

If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following describes the effect of the credit portion of the entry?

Accumulated depreciation is reported on the income statement.

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Which of the following is not true regarding depreciation?

Accumulated Depreciation and Depreciation Expense are classified, respectively, as

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday. ​

Softex and Sanibel Solutions are manufacturers of cotton products. Their income statements for a current year are below.

Adjusting entries affect at least one

The unexpired insurance at the end of the fiscal period represents

Two income statements for Danielle's Design Services are shown below: ​ (a) Prepare a vertical analysis of Danielle's Design Services income statements. (b) What types of trends are indicated: favorable or unfavorable? (c) What other information would enhance the analysis?

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

The financial statements are prepared from the unadjusted trial balance.

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be understated.

Accounting and Business

Double-Entry Accounting

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Zoey Bella Corp. has a payroll of $10,000 for a five-day workweek. Its employees are paid each Friday for the five-day workweek. Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

Two income statements for Danielle's Design Services are shown below: (a) Prepare a vertical analysis of Danielle's Design Services income statements. (b) What types of trends are indicated: favorable or unfavorable? (c) What other information would enhance the analysis?