Question 1

The realization principle underlies the accounting practices of depreciating plant assets and amortizing the cost of unexpired insurance policies.

Accepted Answer

A) True 
 B)False

Question 2

Recording depreciation expense is an example of an adjusting entry to accrue unpaid expenses resulting from expenses being incurred before cash is paid.

Accepted Answer

A) True 
 B)False

Question 3

An example of a contra-asset account is:

Accepted Answer

A) Depreciation Expense. 
B) Accumulated Depreciation. 
C) Prepaid expenses. 
D) Unearned revenue. 
A) Depreciation Expense. 
B) Accumulated Depreciation. 
C) Prepaid expenses. 
D) Unearned revenue.

Question 4

An adjusting entry to recognize revenue that has been earned but not yet billed or collected will cause an increase in total liabilities.

Accepted Answer

A) True 
 B)False

Question 5

During the last month of its fiscal year,Echo Lake Resort provided catering services for local business.Echo Lake Resort has not yet received payment from the local business.The entry to record this event is an example of an adjusting entry:

Accepted Answer

A) To apportion unearned revenue. 
B) To accrue an uncollected revenue. 
C) To record unrecorded expenses. 
D) To record unearned revenue. 
A) To apportion unearned revenue. 
B) To accrue an uncollected revenue. 
C) To record unrecorded expenses. 
D) To record unearned revenue.

Question 6

The adjusting entry to record estimated income taxes in a profitable period consists of a debit to Income Tax Payable and a credit to Income Tax Expense.

Accepted Answer

A) True 
 B)False

Question 7

Which statement is true about an adjusted trial balance?

Accepted Answer

A) It is prepared before adjusting entries. 
B) Revenue accounts and expense accounts should not appear on the adjusted trial balance. 
C) Balance sheet items are presented before income statement items. 
D) Accumulated depreciation should equal depreciation expense. 
A) It is prepared before adjusting entries. 
B) Revenue accounts and expense accounts should not appear on the adjusted trial balance. 
C) Balance sheet items are presented before income statement items. 
D) Accumulated depreciation should equal depreciation expense.

Question 8

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.

Accepted Answer

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

Question 9

The accrual of interest on a note payable will:

Accepted Answer

A) Reduce total liabilities. 
B) Increase total liabilities. 
C) Have no effect upon total liabilities. 
D) Will have no effect upon the income statement but will affect the balance sheet. 
A) Reduce total liabilities. 
B) Increase total liabilities. 
C) Have no effect upon total liabilities. 
D) Will have no effect upon the income statement but will affect the balance sheet.

Question 10

The adjusted trial balance may be used in place of the income statement.

Accepted Answer

A) True 
 B)False

Question 11

Adjusting entries

Accepted Answer

A) Are generally made daily. 
B) Assign revenues to the period in which they are received. 
C) Generally fall into one of two categories. 
D) Are needed whenever revenue transactions affect more than one period. 
A) Are generally made daily. 
B) Assign revenues to the period in which they are received. 
C) Generally fall into one of two categories. 
D) Are needed whenever revenue transactions affect more than one period.

Question 12

One of the purposes of adjusting entries is to convert assets to expenses.

Accepted Answer

A) True 
 B)False

Question 13

Materiality is determined by the Financial Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 14

Every adjusting entry involves the recognition of either revenue or an expense.

Accepted Answer

A) True 
 B)False

Question 15

If a depreciable asset's market value increases during the year,no depreciation expense should be recorded.

Accepted Answer

A) True 
 B)False

Question 16

Colonial Systems prepares monthly financial statements.Colonial would record a prepaid expense in each of the following situations except:

Accepted Answer

A) Colonial Systems purchased a two-year fire insurance policy. 
B) Colonial Systems paid for six months' gardening services in advance. 
C) A tenant paid Colonial Systems three months' rent in advance. 
D) Colonial Systems purchased enough office supplies to last several months. 
A) Colonial Systems purchased a two-year fire insurance policy. 
B) Colonial Systems paid for six months' gardening services in advance. 
C) A tenant paid Colonial Systems three months' rent in advance. 
D) Colonial Systems purchased enough office supplies to last several months.

Question 17

Adjusting Entries
Identify four types of timing differences between cash flows and the recognition of expenses or revenues that may require adjusting entries.

Accepted Answer

(1.)To convert assets to expen

Question 18

Hahn Corp.has three employees.Each earns $600 per week for a five day work week ending on Friday.This month the last day of the month falls on a Wednesday.The company should make an adjusting entry:

Accepted Answer

A) Debiting Wage Expense for $1,080 and crediting Wages Payable for $1,080. 
B) Debiting Wage Expense for $360 and crediting Wages Payable for $360. 
C) Crediting Wage Expense for $1,080 and debiting Wages Payable for $1,080. 
D) Crediting Wage Expense for $360 and debiting Wages Payable for $360. 
A) Debiting Wage Expense for $1,080 and crediting Wages Payable for $1,080. 
B) Debiting Wage Expense for $360 and crediting Wages Payable for $360. 
C) Crediting Wage Expense for $1,080 and debiting Wages Payable for $1,080. 
D) Crediting Wage Expense for $360 and debiting Wages Payable for $360.

Question 19

In which of the following situations would an adjusting entry be made at the end of January to record an accrued expense?

Accepted Answer

A) Ramona's Nursery purchased playground equipment on January 1 with an estimated useful life of six years. 
B) On January 25,Ramona's Nursery hired a college student to drive the minibus; the new employee is to begin work in February. 
C) January 31 falls on a Tuesday; salaries are paid on Friday of each week. 
D) On January 31,Ramona's Nursery paid the interest owed on a note payable for January. 
A) Ramona's Nursery purchased playground equipment on January 1 with an estimated useful life of six years. 
B) On January 25,Ramona's Nursery hired a college student to drive the minibus; the new employee is to begin work in February. 
C) January 31 falls on a Tuesday; salaries are paid on Friday of each week. 
D) On January 31,Ramona's Nursery paid the interest owed on a note payable for January.

Question 20

Shop supplies are expensed when:

Accepted Answer

A) Consumed. 
B) Purchased. 
C) Paid for. 
D) Ordered. 
A) Consumed. 
B) Purchased. 
C) Paid for. 
D) Ordered.

Exam 4: The Accounting Cycle: Accruals and Deferrals

The realization principle underlies the accounting practices of depreciating plant assets and amortizing the cost of unexpired insurance policies.

Recording depreciation expense is an example of an adjusting entry to accrue unpaid expenses resulting from expenses being incurred before cash is paid.

An example of a contra-asset account is:

An adjusting entry to recognize revenue that has been earned but not yet billed or collected will cause an increase in total liabilities.

During the last month of its fiscal year,Echo Lake Resort provided catering services for local business.Echo Lake Resort has not yet received payment from the local business.The entry to record this event is an example of an adjusting entry:

The adjusting entry to record estimated income taxes in a profitable period consists of a debit to Income Tax Payable and a credit to Income Tax Expense.

Which statement is true about an adjusted trial balance?

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.

The accrual of interest on a note payable will:

The adjusted trial balance may be used in place of the income statement.

Adjusting entries

One of the purposes of adjusting entries is to convert assets to expenses.

Materiality is determined by the Financial Accounting Standards Board.

Every adjusting entry involves the recognition of either revenue or an expense.

If a depreciable asset's market value increases during the year,no depreciation expense should be recorded.

Colonial Systems prepares monthly financial statements.Colonial would record a prepaid expense in each of the following situations except:

Adjusting Entries Identify four types of timing differences between cash flows and the recognition of expenses or revenues that may require adjusting entries.

Hahn Corp.has three employees.Each earns $600 per week for a five day work week ending on Friday.This month the last day of the month falls on a Wednesday.The company should make an adjusting entry:

In which of the following situations would an adjusting entry be made at the end of January to record an accrued expense?

Shop supplies are expensed when:

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

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