Question 1

External business transactions are transactions between the business entity and some other (outside)party.

Accepted Answer

A) True 
 B)False

Question 2

The Surrey Service Company issued financial statements for last year,but failed to include the following adjusting entries:
(A)Accrued service fees earned of $2,300.
(B)Depreciation expense of $5,000.
(C)Office supplies used,$2,100.
(D)Accrued salaries of $3,400.
(E)Revenues of $4,600,originally recorded as unearned,but earned by the end of the year.
Determine the correct amounts for last year's financial statements by completing the following schedule:

Accepted Answer

The answer of The Surrey Service Company issued financial statements...

Question 3

A contra-asset account has a normal debit balance.

Accepted Answer

A) True 
 B)False

Question 4

Explain the purpose of preparing adjusting entries at the end of a period.

Accepted Answer

Although all external transactions may b

Question 5

Adjusting entries are used to record the effects of internal economic events.

Accepted Answer

A) True 
 B)False

Question 6

The Creative Company has several insurance policies in force with payments due at various times.The following information refers to prepaid insurance and insurance expense on two successive dates.   The amount of cash paid for insurance by Creative Company in 2016 was:

Accepted Answer

A)  $3,250. 
B)  $3,750. 
C)  $4,500. 
D)  $5,000. 
E)  $8,750. 
A)  $3,250. 
B)  $3,750. 
C)  $4,500. 
D)  $5,000. 
E)  $8,750.

Question 7

On December 31,2015,the accountant for a proprietorship forgot to record $7,000 of depreciation on office equipment.In the 2015 financial statements,what is the effect of this error on assets,net income,and equity?

Accepted Answer

(1)Assets are overstated by $7

Question 8

The entry to record a cash receipt from a customer when the service to be provided to earn the cash has not yet been performed involves a debit to an unearned revenue account.

Accepted Answer

A) True 
 B)False

Question 9

If you fail to record accrued salaries at the end of the month,net income for the month will be overstated.

Accepted Answer

A) True 
 B)False

Question 10

All items of plant and equipment,including land,eventually wear out or lose their usefulness.

Accepted Answer

A) True 
 B)False

Question 11

Correcting entries are a specialized type of adjusting entry.

Accepted Answer

A) True 
 B)False

Question 12

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Accepted Answer

A) True 
 B)False

Question 13

Before adjusting for accrued revenues,both assets and equity are understated.

Accepted Answer

A) True 
 B)False

Question 14

Before adjustment,a prepaid expense account would contain an asset amount that is ___________________ and an expense amount that is ___________________.

Accepted Answer

Overstated

Question 15

Before making adjusting entries at the end of an accounting period,some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.

Accepted Answer

A) True 
 B)False

Question 16

The book value of an asset is equivalent to the market value of that asset.

Accepted Answer

A) True 
 B)False

Question 17

Correcting an error always requires two entries.

Accepted Answer

A) True 
 B)False

Question 18

An adjusting entry could be made for all of the following except:

Accepted Answer

A)  Prepaid expenses. 
B)  Depreciation expense. 
C)  Owner withdrawals. 
D)  Unearned revenues. 
E)  Accrued revenues. 
A)  Prepaid expenses. 
B)  Depreciation expense. 
C)  Owner withdrawals. 
D)  Unearned revenues. 
E)  Accrued revenues.

Question 19

Zang Company had no office supplies on hand at the beginning of the year.During the year,the company purchased $250 worth of office supplies.At the end of the year,$50 worth of office supplies were on hand.How much should Zang Company report as office supplies expense for the year?

Accepted Answer

A)  $75. 
B)  $125. 
C)  $175. 
D)  $200. 
E)  $325. 
A)  $75. 
B)  $125. 
C)  $175. 
D)  $200. 
E)  $325.

Question 20

Prepaid expenses may be recorded as debits to expense accounts.

Accepted Answer

A) True 
 B)False

External business transactions are transactions between the business entity and some other (outside)party.

A contra-asset account has a normal debit balance.

Explain the purpose of preparing adjusting entries at the end of a period.

Adjusting entries are used to record the effects of internal economic events.

The Creative Company has several insurance policies in force with payments due at various times.The following information refers to prepaid insurance and insurance expense on two successive dates. The amount of cash paid for insurance by Creative Company in 2016 was:

On December 31,2015,the accountant for a proprietorship forgot to record $7,000 of depreciation on office equipment.In the 2015 financial statements,what is the effect of this error on assets,net income,and equity?

The entry to record a cash receipt from a customer when the service to be provided to earn the cash has not yet been performed involves a debit to an unearned revenue account.

If you fail to record accrued salaries at the end of the month,net income for the month will be overstated.

All items of plant and equipment,including land,eventually wear out or lose their usefulness.

Correcting entries are a specialized type of adjusting entry.

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Before adjusting for accrued revenues,both assets and equity are understated.

Before adjustment,a prepaid expense account would contain an asset amount that is _ and an expense amount that is _.

Before making adjusting entries at the end of an accounting period,some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.

The book value of an asset is equivalent to the market value of that asset.

Correcting an error always requires two entries.

An adjusting entry could be made for all of the following except:

Zang Company had no office supplies on hand at the beginning of the year.During the year,the company purchased $250 worth of office supplies.At the end of the year,$50 worth of office supplies were on hand.How much should Zang Company report as office supplies expense for the year?

Prepaid expenses may be recorded as debits to expense accounts.

Accounting in Business

Analyzing and Reporting Transactions

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Exam 3: Adjusting Accounts for Financial Statements

External business transactions are transactions between the business entity and some other (outside)party.

A contra-asset account has a normal debit balance.

Explain the purpose of preparing adjusting entries at the end of a period.

Adjusting entries are used to record the effects of internal economic events.

The Creative Company has several insurance policies in force with payments due at various times.The following information refers to prepaid insurance and insurance expense on two successive dates. The amount of cash paid for insurance by Creative Company in 2016 was:

On December 31,2015,the accountant for a proprietorship forgot to record $7,000 of depreciation on office equipment.In the 2015 financial statements,what is the effect of this error on assets,net income,and equity?

The entry to record a cash receipt from a customer when the service to be provided to earn the cash has not yet been performed involves a debit to an unearned revenue account.

If you fail to record accrued salaries at the end of the month,net income for the month will be overstated.

All items of plant and equipment,including land,eventually wear out or lose their usefulness.

Correcting entries are a specialized type of adjusting entry.

Adjustments are necessary for transactions and events that extend over more than one accounting period.

Before adjusting for accrued revenues,both assets and equity are understated.

Before adjustment,a prepaid expense account would contain an asset amount that is ___________________ and an expense amount that is ___________________.

Before making adjusting entries at the end of an accounting period,some accounts may not show proper financial statement amounts even though all transactions were correctly recorded.

The book value of an asset is equivalent to the market value of that asset.

Correcting an error always requires two entries.

An adjusting entry could be made for all of the following except:

Zang Company had no office supplies on hand at the beginning of the year.During the year,the company purchased $250 worth of office supplies.At the end of the year,$50 worth of office supplies were on hand.How much should Zang Company report as office supplies expense for the year?

Prepaid expenses may be recorded as debits to expense accounts.

Accounting in Business

Analyzing and Reporting Transactions

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Merchandise Inventory and Cost of Sales

Accounting Information Systems

Internal Control and Cash

Receivables

Filters

Before adjustment,a prepaid expense account would contain an asset amount that is _ and an expense amount that is _.