Question 1

An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?

Accepted Answer

A) Midwood Consultants received payment in February for consulting services rendered in March. 
B) Midwood Consultants began working for a client on March 15; bills will be sent monthly beginning April 15. 
C) Midwood Consultants made payment in January for office rent for the first three months of the year. 
D) On March 31,a major customer paid his bill for a consulting job completed in February. 
A) Midwood Consultants received payment in February for consulting services rendered in March. 
B) Midwood Consultants began working for a client on March 15; bills will be sent monthly beginning April 15. 
C) Midwood Consultants made payment in January for office rent for the first three months of the year. 
D) On March 31,a major customer paid his bill for a consulting job completed in February.

Question 2

Unpaid expenses may be included as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Murphy's Auto Co.purchased a large piece of equipment on January 1,2004.The equipment is being depreciated,using the straight-line method,at the rate of $16,000 per year.On January 5,2015 the book value of the machine was $190,000.
(a)What was the original cost of the machine?
(b)What will the book value be on December 31,2016?

Accepted Answer

(a)$366,00

Question 4

Adjusting entries are usually made on a daily basis.

Accepted Answer

A) True 
 B)False

Question 5

Adjusting entries are needed:

Accepted Answer

A) Whenever revenue is not received in cash. 
B) Whenever expenses are not paid in cash. 
C) Only to correct errors in the initial recording of business transactions. 
D) Whenever transactions affect the revenue or expenses of more than one accounting period. 
A) Whenever revenue is not received in cash. 
B) Whenever expenses are not paid in cash. 
C) Only to correct errors in the initial recording of business transactions. 
D) Whenever transactions affect the revenue or expenses of more than one accounting period.

Question 6

Unearned revenue is a liability and should be reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Adjusting entries are needed whenever transactions affect the revenue or expenses of more than one accounting period.

Accepted Answer

A) True 
 B)False

Question 9

Before making month-end adjustments,net income of Bobwhite Company was $232,000 for March.Adjusting entries are necessary for the following items: -Depreciation for the month of March: $4,300.
-Rental income accrued during March,tenant to pay in April: $900.
-Supplies used in March: $300.
-Fees earned in March that had been collected in advance: $3,600.
After recording these adjustments,net income for March is:

Accepted Answer

A) $222,900. 
B) $227,700. 
C) $231,900. 
D) $235,600. 
A) $222,900. 
B) $227,700. 
C) $231,900. 
D) $235,600.

Question 10

Purpose of adjusting entries
The president of Crown Construction was informed that the first quarter financial statements would be available "as soon as the adjusting entries are made." Being a non-accountant,the president feels adjustments should not be necessary if the accounting department is operating in a competent manner.Does the need for adjusting entries at the end of the quarter imply that transactions are not being recorded properly? Explain.

Accepted Answer

No,the need for adjusting entries does n

Question 11

Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue?

Accepted Answer

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

Question 12

The Blue Chip Co.prepared the following income statement for December 31,2015 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 1,2015 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 2016.
(4.)In November 2015,the company had received $3,600 of advance payments which were originally recorded as Unearned Revenue.One-third of this was earned in December,2015.

Accepted Answer

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

Question 13

If an asset was purchased on January 1,2012 for $140,000 with an estimated life of 5 years,what is the accumulated depreciation at December 31,2015?

Accepted Answer

A) $28,000. 
B) $112,000. 
C) $56,000. 
D) $84,000. 
A) $28,000. 
B) $112,000. 
C) $56,000. 
D) $84,000.

Question 14

Wages are an expense to the employer when earned,rather than when paid.

Accepted Answer

A) True 
 B)False

Question 15

Depreciation expense on equipment is considered a cash expense since the company must pay cash for the equipment.

Accepted Answer

A) True 
 B)False

Question 16

An asset purchased on January 1,2012 for $60,000 that has an estimated life of 10 years will have a book value on December 31,2015 of:

Accepted Answer

A) $60,000. 
B) $24,000. 
C) $36,000. 
D) $42,000. 
A) $60,000. 
B) $24,000. 
C) $36,000. 
D) $42,000.

Question 17

The cost of insurance is considered an expense:

Accepted Answer

A) Only when the entire policy period has passed. 
B) Only when the policy is purchased. 
C) Only when the premium is paid. 
D) Evenly over the term of the policy. 
A) Only when the entire policy period has passed. 
B) Only when the policy is purchased. 
C) Only when the premium is paid. 
D) Evenly over the term of the policy.

Question 18

Unearned revenue is:

Accepted Answer

A) An asset. 
B) Income. 
C) A liability. 
D) An expense. 
A) An asset. 
B) Income. 
C) A liability. 
D) An expense.

Question 19

On December 31,Louis Jeweler's made an adjusting entry to record $4,200 accrued interest payable on its mortgage.On January 10,the mortgage payment was made.This payment included interest charges of $6,300,$2,100 of which were applicable to the period from January 1 through January 10.When recording this mortgage payment,the accountant should:

Accepted Answer

A) Debit Interest Expense $2,100 and debit Accrued Interest Payable $4,200. 
B) Debit Interest Expense $6,300. 
C) Debit Accrued Interest Payable $6,300. 
D) Debit Interest Expense $2,100 and credit Accrued Interest Payable $4,200. 
A) Debit Interest Expense $2,100 and debit Accrued Interest Payable $4,200. 
B) Debit Interest Expense $6,300. 
C) Debit Accrued Interest Payable $6,300. 
D) Debit Interest Expense $2,100 and credit Accrued Interest Payable $4,200.

Question 20

Prepaid expenses are:

Accepted Answer

A) Assets. 
B) Income. 
C) Liabilities. 
D) Expenses. 
A) Assets. 
B) Income. 
C) Liabilities. 
D) Expenses.

Exam 4: The Accounting Cycle: Accruals and Deferrals

An adjusting entry involving recognition of accrued revenue is necessary at the end of March in which of the following situations?

Unpaid expenses may be included as an expense on the income statement.

Adjusting entries are usually made on a daily basis.

Adjusting entries are needed:

Unearned revenue is a liability and should be reported on the income statement.

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

Adjusting entries are needed whenever transactions affect the revenue or expenses of more than one accounting period.

Which of the following accounting principles is concerned with offsetting revenue with the expenses incurred in producing that revenue?

If an asset was purchased on January 1,2012 for $140,000 with an estimated life of 5 years,what is the accumulated depreciation at December 31,2015?

Wages are an expense to the employer when earned,rather than when paid.

Depreciation expense on equipment is considered a cash expense since the company must pay cash for the equipment.

An asset purchased on January 1,2012 for $60,000 that has an estimated life of 10 years will have a book value on December 31,2015 of:

The cost of insurance is considered an expense:

Unearned revenue is:

Prepaid expenses are:

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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