Question 1

The matching rule is applied

Accepted Answer

A) because it is required by the Internal Revenue Code. 
B) by expensing certain items immediately and in their entirety. 
C) to help make the bookkeeper's job easier. 
D) to help produce an accurate measurement of a company's performance. 
A) because it is required by the Internal Revenue Code. 
B) by expensing certain items immediately and in their entirety. 
C) to help make the bookkeeper's job easier. 
D) to help produce an accurate measurement of a company's performance.

Question 2

Joan Miller owns an advertising agency.One of the adjustments her accountant made at the end of July was $360 for unpaid wages of the secretary.Joan Miller might ask,"Why go to the trouble of making this adjustment? Why worry about it? Doesn't everything come out in the end,when the secretary is paid in August? Because wages expense in total is the same for the two months,isn't the net income in total unchanged?" Give three reasons why adjusting entries can help Joan Miller assess the performance of her business.(Net income was $1,600. )

Accepted Answer

Adjusting entries are important because

Question 3

Recording incurred but unpaid expenses is an example of an accrual.

Accepted Answer

A) True 
 B)False

Question 4

Unearned Revenue was $600 at the end of February and $750 at the end of March.Service Revenue was $3,600 for the month of March.How much cash was received from revenue during March?

Accepted Answer

A) $4,950 
B) $3,450 
C) $2,250 
D) $3,750 
A) $4,950 
B) $3,450 
C) $2,250 
D) $3,750

Question 5

Which of the following transactions will result in the recognition of an expense?

Accepted Answer

A) Interest accrued on a bank loan. 
B) A cash withdrawal by the owner. 
C) Payment on accounts payable. 
D) All of these choices. 
A) Interest accrued on a bank loan. 
B) A cash withdrawal by the owner. 
C) Payment on accounts payable. 
D) All of these choices.

Question 6

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:
 
-If on December 31,2014,the insurance still unexpired amounted to $20,the adjusting entry would contain a

Accepted Answer

A) debit to Prepaid Insurance for $80. 
B) credit to Prepaid Insurance for $80 
C) debit to Insurance Expense for $20. 
D) credit to Prepaid Insurance for $20. 
A) debit to Prepaid Insurance for $80. 
B) credit to Prepaid Insurance for $80 
C) debit to Insurance Expense for $20. 
D) credit to Prepaid Insurance for $20.

Question 7

Answer the following questions.(Show your work. )
a.Revenue of $60,000 was earned,but only $45,000 was collected.Expenses of $36,000 were incurred,but only $30,000 was paid.What is reported net income?
b.Wages of $4,000 are paid every Friday for a five-day workweek.If year end falls on a Tuesday,the adjusting entry for wages would be recorded at what amount?
c.A company vehicle is purchased for $24,000.Assuming an eight-year useful life and zero value at that time,what is the balance of accumulated depreciation after five years?
d.Supplies Expense of $3,600 was recorded for a given year.Assuming that $2,400 in supplies were purchased during the year and that $640 in supplies remained at year end,what was the cost of supplies at the beginning of the year?

Accepted Answer

a.$24,000 ($60,000 - $36,000)

Question 8

Which of the following pairs of accounts could not be included in the same adjusting entry?

Accepted Answer

A) Unearned Revenue and Service Revenue 
B) Wages Expense and Wages Payable 
C) Interest Expense and Interest Receivable 
D) Rent Expense and Rent Payable 
A) Unearned Revenue and Service Revenue 
B) Wages Expense and Wages Payable 
C) Interest Expense and Interest Receivable 
D) Rent Expense and Rent Payable

Question 9

The general rule for determining the cash flow received from any revenue or paid for any expense (except depreciation,which is a special case)is to determine the potential cash payments or cash receipts and add the amount not paid or not received.

Accepted Answer

A) True 
 B)False

Question 10

An adjusted trial balance will probably list fewer accounts than are listed in the trial balance.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not one of the conditions for recognition of an expense?

Accepted Answer

A) A price has been established or can be determined. 
B) There is an agreement to purchase goods or services. 
C) The goods will be delivered or the services will be provided within the accounting cycle. 
D) The goods or services are used to produce revenue. 
A) A price has been established or can be determined. 
B) There is an agreement to purchase goods or services. 
C) The goods will be delivered or the services will be provided within the accounting cycle. 
D) The goods or services are used to produce revenue.

Question 12

Which of the following accounts most likely would be found on both a trial balance and an adjusted trial balance?

Accepted Answer

A) Utilities Expense 
B) Insurance Expense 
C) Supplies Expense 
D) Depreciation Expense-Equipment 
A) Utilities Expense 
B) Insurance Expense 
C) Supplies Expense 
D) Depreciation Expense-Equipment

Question 13

The principal difference between depreciation expense and most other types of expenses is that

Accepted Answer

A) depreciation expense can be avoided if the asset is worth at least what the company paid for it. 
B) depreciation expense requires an annual outlay of cash. 
C) the total amount of depreciation expense for the asset is reported on the balance sheet. 
D) depreciation expense is subject to more precise measurement than most other expenses. 
A) depreciation expense can be avoided if the asset is worth at least what the company paid for it. 
B) depreciation expense requires an annual outlay of cash. 
C) the total amount of depreciation expense for the asset is reported on the balance sheet. 
D) depreciation expense is subject to more precise measurement than most other expenses.

Question 14

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:
 
-If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a

Accepted Answer

A) credit to Supplies for $120. 
B) credit to Supplies Expense for $180. 
C) debit to Supplies Expense for $180. 
D) debit to Supplies for $120. 
A) credit to Supplies for $120. 
B) credit to Supplies Expense for $180. 
C) debit to Supplies Expense for $180. 
D) debit to Supplies for $120.

Question 15

An adjusting entry made to record salaries earned but not yet paid or recorded is made with which of the following entries?

Accepted Answer

A) Salaries Expense - Debit;Cash - Credit 
B) Salaries Payable - Debit;Salaries Expense - Credit 
C) Salaries Expense - Debit;Salaries Payable - Credit 
D) Cash - Debit;Salaries Expense - Credit 
A) Salaries Expense - Debit;Cash - Credit 
B) Salaries Payable - Debit;Salaries Expense - Credit 
C) Salaries Expense - Debit;Salaries Payable - Credit 
D) Cash - Debit;Salaries Expense - Credit

Question 16

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows:
 
-If services totaling $250 had been performed but not billed,

Accepted Answer

A) the adjusting entry would include a credit to Unearned Service Revenue for $250. 
B) the adjusted balance in Accounts Receivable would be $1,250. 
C) the adjusted balance of Service Revenue would be $750. 
D) All of these choices. 
A) the adjusting entry would include a credit to Unearned Service Revenue for $250. 
B) the adjusted balance in Accounts Receivable would be $1,250. 
C) the adjusted balance of Service Revenue would be $750. 
D) All of these choices.

Question 17

Which of the following is one of the conditions for recognition of an expense?

Accepted Answer

A) There is a reasonable expectation that cash will be paid. 
B) The expense will be recognized only when cash is paid. 
C) The goods will be delivered or the services will be provided within the accounting cycle. 
D) The goods or services are used to produce revenue. 
A) There is a reasonable expectation that cash will be paid. 
B) The expense will be recognized only when cash is paid. 
C) The goods will be delivered or the services will be provided within the accounting cycle. 
D) The goods or services are used to produce revenue.

Question 18

Expenses are incurred

Accepted Answer

A) to generate revenue. 
B) to produce liabilities. 
C) only during the adjustment process. 
D) to produce assets. 
A) to generate revenue. 
B) to produce liabilities. 
C) only during the adjustment process. 
D) to produce assets.

Question 19

Which of the following accounts could increase as a result of adjusting entries?

Accepted Answer

A) Prepaid Insurance. 
B) Accounts Receivable. 
C) Unearned Fees. 
D) Office Equipment. 
A) Prepaid Insurance. 
B) Accounts Receivable. 
C) Unearned Fees. 
D) Office Equipment.

Question 20

Adjusting entries affect cash flows in the current period.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting the Accounts

The matching rule is applied

Recording incurred but unpaid expenses is an example of an accrual.

Unearned Revenue was $600 at the end of February and $750 at the end of March.Service Revenue was $3,600 for the month of March.How much cash was received from revenue during March?

Which of the following transactions will result in the recognition of an expense?

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: -If on December 31,2014,the insurance still unexpired amounted to $20,the adjusting entry would contain a

Which of the following pairs of accounts could not be included in the same adjusting entry?

The general rule for determining the cash flow received from any revenue or paid for any expense (except depreciation,which is a special case)is to determine the potential cash payments or cash receipts and add the amount not paid or not received.

An adjusted trial balance will probably list fewer accounts than are listed in the trial balance.

Which of the following is not one of the conditions for recognition of an expense?

Which of the following accounts most likely would be found on both a trial balance and an adjusted trial balance?

The principal difference between depreciation expense and most other types of expenses is that

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: -If on December 31,2014,supplies on hand were $120,the adjusting entry would contain a

An adjusting entry made to record salaries earned but not yet paid or recorded is made with which of the following entries?

Use this information to answer the following question. The trial balance for Nowwick Company appears as follows: -If services totaling $250 had been performed but not billed,

Which of the following is one of the conditions for recognition of an expense?

Expenses are incurred

Which of the following accounts could increase as a result of adjusting entries?

Adjusting entries affect cash flows in the current period.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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