Question 1

The matching principle

Accepted Answer

A)  addresses the relationship between the journal and the balance sheet 
B)  determines whether the normal balance of an account is a debit or credit 
C)  requires that the dollar amount of debits equal the dollar amount of credits on a trial balance 
D)  states that the revenues and related expenses should be reported in the same period 
A)  addresses the relationship between the journal and the balance sheet 
B)  determines whether the normal balance of an account is a debit or credit 
C)  requires that the dollar amount of debits equal the dollar amount of credits on a trial balance 
D)  states that the revenues and related expenses should be reported in the same period

Question 2

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day.The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

Accepted Answer

A)  debit to Salary Expense of $8,000 
B)  debit to Salaries Payable of $8,000 
C)  credit to Salary Expense of $16,000 
D)  credit to Salaries Payable of $16,000 
A)  debit to Salary Expense of $8,000 
B)  debit to Salaries Payable of $8,000 
C)  credit to Salary Expense of $16,000 
D)  credit to Salaries Payable of $16,000

Question 3

The accounting principle upon which deferrals and accruals are based is

Accepted Answer

A)  matching 
B)  cost 
C)  price-level adjustment 
D)  conservatism 
A)  matching 
B)  cost 
C)  price-level adjustment 
D)  conservatism

Question 4

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

Question 5

A company receives $6,500 for two season tickets sold on September 1.If $2,500 is earned by December 31,the adjusting entry made at that time is a debit to Cash,$2,500,and a credit to Ticket Revenue,$2,500.

Accepted Answer

A) True 
 B)False

Question 6

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Accepted Answer

A) True 
 B)False

Question 7

At the end of the fiscal year,the usual adjusting entry to prepaid insurance to record expired insurance was omitted.Which of the following statements is true?

Accepted Answer

A)  total assets at the end of the year will be understated. 
B)  stockholders' equity at the end of the year will be understated. 
C)  net income for the year will be overstated. 
D)  insurance expense will be overstated 
A)  total assets at the end of the year will be understated. 
B)  stockholders' equity at the end of the year will be understated. 
C)  net income for the year will be overstated. 
D)  insurance expense will be overstated

Question 8

Which of the following is the proper adjusting entry,based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000,for the fiscal year ending on April 30?

Accepted Answer

A)  debit Insurance Expense,$3,000; credit Prepaid Insurance,$3,000 
B)  debit Insurance Expense,$14,000; credit Prepaid Insurance,$14,000 
C)  debit Prepaid Insurance,$11,000; credit Insurance Expense,$11,000 
D)  debit Insurance Expense,$11,000; credit Prepaid Insurance,$11,000 
A)  debit Insurance Expense,$3,000; credit Prepaid Insurance,$3,000 
B)  debit Insurance Expense,$14,000; credit Prepaid Insurance,$14,000 
C)  debit Prepaid Insurance,$11,000; credit Insurance Expense,$11,000 
D)  debit Insurance Expense,$11,000; credit Prepaid Insurance,$11,000

Question 9

Which of the following is an example of an accrued expense?

Accepted Answer

A)  salary owed but not yet paid 
B)  fees received but not yet earned 
C)  supplies on hand 
D)  a two-year premium paid on a fire insurance policy 
A)  salary owed but not yet paid 
B)  fees received but not yet earned 
C)  supplies on hand 
D)  a two-year premium paid on a fire insurance policy

Question 10

Which of the following is an example of accrued revenue?

Accepted Answer

A)  snow removal services that have been paid for three months in advance 
B)  snow removal services that have been provided but have not been billed or paid 
C)  an agreement that has been signed for snow removal services for the next three months 
D)  snow removal services that have been provided and paid on the same day 
A)  snow removal services that have been paid for three months in advance 
B)  snow removal services that have been provided but have not been billed or paid 
C)  an agreement that has been signed for snow removal services for the next three months 
D)  snow removal services that have been provided and paid on the same day

Question 11

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Accepted Answer

A) True 
 B)False

Question 12

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 13

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

Accepted Answer

A) True 
 B)False

Question 14

For each of the following,journalize the necessary adjusting entry:

Accepted Answer

The answer of For each of the following,journalize the necessary...

Question 15

The balance in the supplies account before adjustment at the end of the year is $6,250.The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Accepted Answer

A)  debit Supplies,$1,500; credit Supplies Expense,$1,500 
B)  debit Supplies Expense,$4,750; credit Supplies,$4,750 
C)  debit Supplies Expense,$1,500; credit Supplies,$1,500 
D)  debit Supplies,$4,750; credit Supplies Expense,$4,750 
A)  debit Supplies,$1,500; credit Supplies Expense,$1,500 
B)  debit Supplies Expense,$4,750; credit Supplies,$4,750 
C)  debit Supplies Expense,$1,500; credit Supplies,$1,500 
D)  debit Supplies,$4,750; credit Supplies Expense,$4,750

Question 16

Vertical analysis is useful for analyzing financial statement changes over time.

Accepted Answer

A) True 
 B)False

Question 17

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 18

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day.The last payday of December is Friday,December 27.Assume the next pay period begins on Monday,December 30 and the proper adjusting entry is journalized at the end of the fiscal period (December 31).Journalize the entry for the payment of the payroll on Friday,January 10.

Accepted Answer

Accrued salaries for December

Question 19

Adjusting entries affect balance sheet accounts to the exclusion of income statement accounts.

Accepted Answer

A) True 
 B)False

Question 20

At the end of April,the first month of the company's year,the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted.Indicate which items will be incorrectly stated,because of the error,on (a)the income statement for April and (b)the balance sheet as of April 30.Also indicate whether the items in error will be overstated or understated.

Accepted Answer

The answer of At the end of April,the first month...

Exam 3: The Adjusting Process

The matching principle

A business pays biweekly salaries of $20,000 every other Friday for a ten-day period ending on that day.The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a

The accounting principle upon which deferrals and accruals are based is

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.

A company receives $6,500 for two season tickets sold on September 1.If $2,500 is earned by December 31,the adjusting entry made at that time is a debit to Cash,$2,500,and a credit to Ticket Revenue,$2,500.

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

At the end of the fiscal year,the usual adjusting entry to prepaid insurance to record expired insurance was omitted.Which of the following statements is true?

Which of the following is the proper adjusting entry,based on a prepaid insurance account balance before adjustment of $14,000 and unexpired insurance of $3,000,for the fiscal year ending on April 30?

Which of the following is an example of an accrued expense?

Which of the following is an example of accrued revenue?

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

For each of the following,journalize the necessary adjusting entry:

The balance in the supplies account before adjustment at the end of the year is $6,250.The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Vertical analysis is useful for analyzing financial statement changes over time.

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Adjusting entries affect balance sheet accounts to the exclusion of income statement accounts.

Introduction to Accounting and Business

Analyzing Transactions

Completing the Accounting Cycle

Accounting for Merchandising 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

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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