Question 1

The adjusting entry to recognize an unrecorded expense is necessary:

Accepted Answer

A)  When an expense is paid in advance. 
B)  When an expense has been neither paid nor recorded as of the end of the accounting period. 
C)  Whenever an expense remains unpaid at the end of an accounting period. 
D)  Because the accountant is likely to forget to pay these unrecorded expenses. 
A)  When an expense is paid in advance. 
B)  When an expense has been neither paid nor recorded as of the end of the accounting period. 
C)  Whenever an expense remains unpaid at the end of an accounting period. 
D)  Because the accountant is likely to forget to pay these unrecorded expenses.

Question 2

Unearned revenue may also be called:

Accepted Answer

A)  Net income. 
B)  Deferred revenue. 
C)  Unexpired revenue. 
D)  Services rendered. 
A)  Net income. 
B)  Deferred revenue. 
C)  Unexpired revenue. 
D)  Services rendered.

Question 3

At January 31, the amount of supplies on hand is $2,300. What amount is shown on the January income statement for supplies expense?

Accepted Answer

A)  $2,300. 
B)  $5,400. 
C)  $3,100. 
D)  $7,700. 
A)  $2,300. 
B)  $5,400. 
C)  $3,100. 
D)  $7,700.

Question 4

Which of the following entries causes an immediate decrease in assets and in net income?

Accepted Answer

A)  The entry to record depreciation expense. 
B)  The entry to record revenue earned but not yet received. 
C)  The entry to record the earned portion of rent received in advance. 
D)  The entry to record accrued wages payable. 
A)  The entry to record depreciation expense. 
B)  The entry to record revenue earned but not yet received. 
C)  The entry to record the earned portion of rent received in advance. 
D)  The entry to record accrued wages payable.

Question 5

Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:

Accepted Answer

A)  A debit to Interest Expense and a credit to Cash. 
B)  A debit to Notes Payable and a credit to Interest Payable. 
C)  A debit to an asset and a credit to a liability. 
D)  A debit to Interest Expense and a credit to Interest Payable. 
A)  A debit to Interest Expense and a credit to Cash. 
B)  A debit to Notes Payable and a credit to Interest Payable. 
C)  A debit to an asset and a credit to a liability. 
D)  A debit to Interest Expense and a credit to Interest Payable.

Question 6

Which of the following is the accounting principle that governs the timing of revenue recognition?

Accepted Answer

A)  Realization principle. 
B)  Materiality. 
C)  Matching. 
D)  Depreciation. 
A)  Realization principle. 
B)  Materiality. 
C)  Matching. 
D)  Depreciation.

Question 7

The adjusting entry to record income taxes at the end of an unprofitable accounting period consists of a:

Accepted Answer

A)  Debit to Income Tax Expense and a credit to Income Tax Payable. 
B)  Credit to Income Tax Expense and a debit to Income Tax Payable. 
C)  Credit to Income Tax Receivable and a debit to Income Tax Expense. 
D)  No adjusting entry is required for income taxes if there are no profits. 
A)  Debit to Income Tax Expense and a credit to Income Tax Payable. 
B)  Credit to Income Tax Expense and a debit to Income Tax Payable. 
C)  Credit to Income Tax Receivable and a debit to Income Tax Expense. 
D)  No adjusting entry is required for income taxes if there are no profits.

Question 8

Prepaid expenses appear:

Accepted Answer

A)  As an expense on the income statement. 
B)  As an asset on the balance sheet. 
C)  As a liability on the balance sheet. 
D)  As a reduction to retained earnings. 
A)  As an expense on the income statement. 
B)  As an asset on the balance sheet. 
C)  As a liability on the balance sheet. 
D)  As a reduction to retained earnings.

Question 9

The entry to record depreciation is an example of an adjusting entry:

Accepted Answer

A)  To apportion a recorded cost. 
B)  To apportion unearned revenue. 
C)  To convert a liability to revenue. 
D)  To record unrecorded revenue. 
A)  To apportion a recorded cost. 
B)  To apportion unearned revenue. 
C)  To convert a liability to revenue. 
D)  To record unrecorded revenue.

Question 10

Mounder Corp. charges interest on its past due accounts receivable. A late fee of 18% per annum is added to each past due account. Mounder is preparing financial statements for the month of July and has determined there are $18,000 in past due accounts. Mounder should make an adjusting entry as follows

Accepted Answer

A)  Debiting Late Fee Revenue for $270 and crediting Accounts Receivable for $270. 
B)  Debiting Accounts Receivable for $270 and crediting Late Fee Revenue for $270 
C)  Debiting Late Fee Revenue for $3,240 and crediting Late Fee Receivable for $3,240. 
D)  Crediting Late Fee Payable for $270 and debiting Late Fee Expense for $270. 
A)  Debiting Late Fee Revenue for $270 and crediting Accounts Receivable for $270. 
B)  Debiting Accounts Receivable for $270 and crediting Late Fee Revenue for $270 
C)  Debiting Late Fee Revenue for $3,240 and crediting Late Fee Receivable for $3,240. 
D)  Crediting Late Fee Payable for $270 and debiting Late Fee Expense for $270.

Question 11

The Blue Chip Co. prepared the following income statement for December 31, 2011 but neglected to make the necessary adjusting entries.
 
Required: Prepare a corrected income statement after considering the following:
(1.) The company had purchased a truck for $4,800 on January 1, 2011 which was expected to last 5 years. It was originally debited to the account "Truck" and credited to cash.
(2.) Salaries of $2,400 were owed to employees but not yet recorded.
(3.) The company owed $640 in accrued interest which was to be paid early in January 2012.
(4.) In November 2011, the company had received $3,600 of advance payments which were originally recorded as Unearned Revenue. One-third of this was earned in December, 2011.

Accepted Answer

The answer of The Blue Chip Co. prepared the following...

Question 12

All assets should be depreciated.

Accepted Answer

A) True 
 B)False

Question 13

Adjusting entries
Selected ledger accounts used by American Advertising, Inc., are listed along with identifying numbers. Following this list of account numbers and titles is a series of transactions. For each transaction, you are to indicate the proper accounts to be debited and credited.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline 1 & \text { Cash } & 22 & \text { Accounts Payable } & 41 & \text { Fees Earned } \
\hline 2 . & \text { Accounts Receivable } & 23 & \text { Income Taxes Payable } & 51 & \text { Salaries Expense } \
\hline 3 & \text { Office Supplies } & 24 & \text { Unearned Fees } & 52 & \text { Office Supplies Expense } \
\hline 4 & \text { Unexpired Insurance } & 25 & \text { Dividends Payable } & 53 & \text { Rent Expense } \
\hline 5 & \text { Office Equipment } & 31 & \text { Capital Stock } & 54 & \text { Insurance Expense } \
\hline 6 & \text { Accumulated Depr. } & 32 & \text { Retained Earnings } & 55 & \text { Depreciation Expense: } \
\hline & \text { Expense Office Equip } & 33 & \text { Dividends } & & \text { Office Equip. } \
\hline & & & & 56 & \text { Income Taxes Expense } \
\hline & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Adjusting entries
Selected ledger accounts used by American...

Question 14

According to attendance records, $8,200 of the Unearned Admission Revenue has been earned in January. Compute the amount of admissions revenue to be shown in the January income statement:

Accepted Answer

A)  $35,800. 
B)  $19,400. 
C)  $8,200. 
D)  $3,800. 
A)  $35,800. 
B)  $19,400. 
C)  $8,200. 
D)  $3,800.

Question 15

What amount of interest expense has accrued on the bank loan?

Accepted Answer

A)  $3,200. 
B)  $3,500. 
C)  $3,600. 
D)  $3,900. 
A)  $3,200. 
B)  $3,500. 
C)  $3,600. 
D)  $3,900.

Question 16

The equipment has an original useful life of eight years. Compute the book value of the equipment at January 31 after the proper January adjustment is recorded. $__________

Accepted Answer

January depreciation = $36,000

Question 17

Adjusting entries
Selected ledger accounts used by Cross Country Truck Rentals, Inc. are listed along with identifying numbers. Following this list of account numbers and titles is a series of transactions. For each transaction, you are to indicate the proper accounts to be debited and credited.
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline 1 & \text { Cash } & 22 & \text { Notes Payable } & 41 & \text { Truck Rental Revenue } \
\hline 2 . & \text { Accounts Receivable } & 23 & \text { Dividends Payable } & 51 & \text { Advertising Expense } \
\hline 3 & \text { Office Supplies } & 24 & \text { Income Taxes Payable } & 52 & \text { Office Supplies Expense } \
\hline 4 & \text { Unexpired Insurance } & 25 & \text { Unearned Revenue } & 53 & \text { Rent Expense } \
\hline 5 & \text { Trucks } & 31 & \text { Capital Stock } & 54 & \text { Insurance Expense } \
\hline 6 & \text { Accumulated Depr. } & 32 & \text { Retained Earnings } & 55 & \text { Depreciation Expense: } \
\hline & \text { Expense Trucks } & 33 & \text { Dividends } & & \text { Trucks } \
\hline 21 & \text { Accounts Payable } & & & 56 & \text { Income Taxes Expense } \
\hline & & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of Adjusting entries
Selected ledger accounts used by Cross...

Question 18

End-of-period adjustments - selected computations
Allied Architects adjusts its books each month and closes its books at the end of the year. The trial balance at January 31, 2010, before adjustments is as follows:
  
The following information relates to month-end adjustments:
(a) According to contracts, consulting fees received in advance that were earned in January total $13,500.
(b) On November 1, 2009, the company paid in advance for 5 months' advertising in professional journals.
(c) At January 31, supplies on hand amount to $2,250.
(d) The equipment has an original estimated useful life of 4 years.
(e) The corporation is subject to income taxes of 25% of taxable income. (Assume taxable income is the same as "income before taxes.")

Accepted Answer

1) Unearned consulting fees: $

Question 19

Joseph Jewelers purchased display shelves on March 1 for $36,000. If this asset has an estimated useful life of five years, what is the book value of the display shelves on April 30?

Accepted Answer

A)  $600. 
B)  $34,800. 
C)  $33,600. 
D)  $900. 
A)  $600. 
B)  $34,800. 
C)  $33,600. 
D)  $900.

Question 20

What should be the December 31 balance for Unearned Revenue?

Accepted Answer

A)  $0. 
B)  $1,650. 
C)  $12,360. 
D)  $19,800. 
A)  $0. 
B)  $1,650. 
C)  $12,360. 
D)  $19,800.

Exam 4: The Accounting Cycle: Accruals and Deferrals

The adjusting entry to recognize an unrecorded expense is necessary:

Unearned revenue may also be called:

At January 31, the amount of supplies on hand is $2,300. What amount is shown on the January income statement for supplies expense?

Which of the following entries causes an immediate decrease in assets and in net income?

Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:

Which of the following is the accounting principle that governs the timing of revenue recognition?

The adjusting entry to record income taxes at the end of an unprofitable accounting period consists of a:

Prepaid expenses appear:

The entry to record depreciation is an example of an adjusting entry:

All assets should be depreciated.

According to attendance records, $8,200 of the Unearned Admission Revenue has been earned in January. Compute the amount of admissions revenue to be shown in the January income statement:

What amount of interest expense has accrued on the bank loan?

The equipment has an original useful life of eight years. Compute the book value of the equipment at January 31 after the proper January adjustment is recorded. $__________

Joseph Jewelers purchased display shelves on March 1 for $36,000. If this asset has an estimated useful life of five years, what is the book value of the display shelves on April 30?

What should be the December 31 balance for Unearned Revenue?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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