Question 1

The adjusting entry to record interest that has accrued on a note payable to the bank will cause an immediate:

Accepted Answer

A) Increase in liabilities and reduction in net income. 
B) Decrease in liabilities and reduction in net income. 
C) Decrease in assets and reduction in net income. 
D) Increase in assets and increase in net income. 
A) Increase in liabilities and reduction in net income. 
B) Decrease in liabilities and reduction in net income. 
C) Decrease in assets and reduction in net income. 
D) Increase in assets and increase in net income.

Question 2

Hahn Corp.has three employees.Each earns $600 per week for a five-day workweek 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 3

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.

Question 4

Adjusting entries-effect on elements of financial statements
Whoop-It-Up,Inc.prepares monthly financial statements.On March 31,the company's accountant made adjusting entries to record:
(a)Depreciation for the month of March.
(b)Amount owed to Whoop-It-Up,Inc for March from the concessionaire operating a juice bar in the facility.The amount due will be remitted to Whoop-It-Up,Inc during the first week in April.
(c)Cost of supplies used in March.(When purchased,the cost of supplies is debited to an asset account. )
(d)Earning of a portion of annual membership fees which had been collected in advance.(When customers purchase annual memberships,an Unearned Revenue account is credited. )
(e)Accrued interest for March owed on a bank loan obtained March 1.No interest expense has yet been recorded.
Indicate the effect of each of these adjusting entries on the major elements of the company's financial statements-that is,on revenue,expenses,net income,assets,liabilities,and owner's equity.Organize your answer in tabular form,using the column headings shown below and the symbols + for increase,- for decrease,and NE for no effect.

Accepted Answer

The answer of Adjusting entries-effect on elements of financial statements
Whoop-It-Up,Inc.prepares...

Question 5

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 6

The concept of materiality:

Accepted Answer

A) Treats as material only those items that are greater than 2% or 3% of net income. 
B) Justifies ignoring the matching principle or the realization principle in certain circumstances. 
C) Affects only items reported in the income statement. 
D) Results in financial statements that are less useful to decision makers because many details have been omitted. 
A) Treats as material only those items that are greater than 2% or 3% of net income. 
B) Justifies ignoring the matching principle or the realization principle in certain circumstances. 
C) Affects only items reported in the income statement. 
D) Results in financial statements that are less useful to decision makers because many details have been omitted.

Question 7

The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers.The effect of this error is:

Accepted Answer

A) An overstatement of assets and of net income offset by an understatement of owners' equity. 
B) An overstatement of net income and an understatement of assets. 
C) An understatement of assets,net income,and owners' equity. 
D) An overstatement of liabilities offset by an understatement of owners' equity. 
A) An overstatement of assets and of net income offset by an understatement of owners' equity. 
B) An overstatement of net income and an understatement of assets. 
C) An understatement of assets,net income,and owners' equity. 
D) An overstatement of liabilities offset by an understatement of owners' equity.

Question 8

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 9

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 10

Which of the following is not a purpose of adjusting entries?

Accepted Answer

A) To prepare the revenue and expense accounts for recording transactions of the following period. 
B) To apportion the proper amounts of revenue and expense to the current accounting period. 
C) To establish the proper amounts of assets and liabilities in the balance sheet. 
D) To accomplish the objective of offsetting the revenue of the period with all the expenses incurred in generating that revenue. 
A) To prepare the revenue and expense accounts for recording transactions of the following period. 
B) To apportion the proper amounts of revenue and expense to the current accounting period. 
C) To establish the proper amounts of assets and liabilities in the balance sheet. 
D) To accomplish the objective of offsetting the revenue of the period with all the expenses incurred in generating that revenue.

Question 11

Which of the following is considered an adjusting entry?

Accepted Answer

A) The entry to record depreciation. 
B) The entry to pay salaries. 
C) The entry to pay outstanding bills. 
D) The entry to declare a dividend distribution. 
A) The entry to record depreciation. 
B) The entry to pay salaries. 
C) The entry to pay outstanding bills. 
D) The entry to declare a dividend distribution.

Question 12

By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?

Accepted Answer

A) $1,560 
B) $130 
C) $0 
D) $1,430 
A) $1,560 
B) $130 
C) $0 
D) $1,430

Question 13

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 14

On the adjusted trial balance,retained earnings is:

Accepted Answer

A) Stated at the period-end amount. 
B) Stated at the period-beginning amount. 
C) Adjusted for all revenues and expenses for the period. 
D) Adjusted for the period's dividends. 
A) Stated at the period-end amount. 
B) Stated at the period-beginning amount. 
C) Adjusted for all revenues and expenses for the period. 
D) Adjusted for the period's dividends.

Question 15

Paddle,Inc.purchased equipment for $14,760 on February 1,2018.The equipment has a useful life of 3 years.How much depreciation expense should Paddle recognize on its income statement for 2018?

Accepted Answer

A) $4,510 
B) $410 
C) $4,920 
D) $14,760 
A) $4,510 
B) $410 
C) $4,920 
D) $14,760

Question 16

Dolphin Co.received $1,500 in fees during 2017,1/3 of which will be earned in 2018.The rest was earned when the amount was received.The company should report which of the following amounts as income in 2017?

Accepted Answer

A) $1,500 
B) $500 
C) $1,000 
D) $0 
A) $1,500 
B) $500 
C) $1,000 
D) $0

Question 17

Which of the following is not considered a basic type of adjusting entry?

Accepted Answer

A) An entry to convert a liability to a revenue. 
B) An entry to accrue unpaid expenses. 
C) An entry to convert an asset to an expense. 
D) An entry to convert an asset to a liability. 
A) An entry to convert a liability to a revenue. 
B) An entry to accrue unpaid expenses. 
C) An entry to convert an asset to an expense. 
D) An entry to convert an asset to a liability.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

When a company receives cash in advance and is obligated to provide a service or a product in the future,the entry would be a debit to a revenue account and a credit to a liability account.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would not be considered an adjusting entry?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Exam 4: The Accounting Cycle: Accruals and Deferrals

The adjusting entry to record interest that has accrued on a note payable to the bank will cause an immediate:

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

Shop supplies are expensed when:

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

The concept of materiality:

The accountant for the Grassroots Company failed to make an adjusting entry to record revenue earned but not yet billed to customers.The effect of this error is:

Unearned revenue may also be called:

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:

Which of the following is not a purpose of adjusting entries?

Which of the following is considered an adjusting entry?

By what amount will the book value of the office equipment decline after the appropriate December adjustment is recorded?

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

On the adjusted trial balance,retained earnings is:

Paddle,Inc.purchased equipment for $14,760 on February 1,2018.The equipment has a useful life of 3 years.How much depreciation expense should Paddle recognize on its income statement for 2018?

Dolphin Co.received $1,500 in fees during 2017,1/3 of which will be earned in 2018.The rest was earned when the amount was received.The company should report which of the following amounts as income in 2017?

Which of the following is not considered a basic type of adjusting entry?

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

When a company receives cash in advance and is obligated to provide a service or a product in the future,the entry would be a debit to a revenue account and a credit to a liability account.

Which of the following would not be considered an adjusting entry?

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters