Question 1

The matching rule is applied

Accepted Answer

A) because it is required by the Internal Revenue Code. 
B) by expensing certain items immediately and in their entirety. 
C) to help make the bookkeeper's job easier. 
D) to help produce an accurate measurement of a company's performance. 
A) because it is required by the Internal Revenue Code. 
B) by expensing certain items immediately and in their entirety. 
C) to help make the bookkeeper's job easier. 
D) to help produce an accurate measurement of a company's performance.

Question 2

The carrying value of a depreciable asset purchased 3 years ago equals

Accepted Answer

A) original cost minus depreciation expense for the current period. 
B) original cost minus accumulated depreciation. 
C) the estimated cost to replace the asset at today's price. 
D) the estimated amount that the asset could be sold for in today's market. 
A) original cost minus depreciation expense for the current period. 
B) original cost minus accumulated depreciation. 
C) the estimated cost to replace the asset at today's price. 
D) the estimated amount that the asset could be sold for in today's market.

Question 3

When an adjusting entry is made debiting an expense account,the credit can be made to any of the following accounts except

Accepted Answer

A) a liability. 
B) a contra-asset account. 
C) an asset. 
D) a revenue. 
A) a liability. 
B) a contra-asset account. 
C) an asset. 
D) a revenue.

Question 4

The matching rule relates the least to

Accepted Answer

A) income measurement. 
B) the cash basis of accounting. 
C) revenues and expenses. 
D) a direct relationship between expenses and revenues. 
A) income measurement. 
B) the cash basis of accounting. 
C) revenues and expenses. 
D) a direct relationship between expenses and revenues.

Question 5

When expenses exceed revenues,

Accepted Answer

A) a liability is created. 
B) a net loss occurs. 
C) owner's equity increases. 
D) All of these choices. 
A) a liability is created. 
B) a net loss occurs. 
C) owner's equity increases. 
D) All of these choices.

Question 6

In the space below,state whether each situation is a deferral or an accrual.
______a.Depreciation on machinery is $7,200 for the accounting period.
______b.Interest that has been incurred on a loan but that has not yet been paid or recorded is $675.
______c.Office supplies of $965 were on hand at the beginning of the period.Purchases of office supplies during the period totaled $640.At the end of the period,$120 in office supplies remained.
______d.Commissions amounting to $975 were earned but not yet collected by year end.
______e.Prepaid Rent had a $2,500 balance prior to adjustment.By year end,50 percent had expired.

Accepted Answer

a.Deferral b.Accrual

Question 7

An adjusting entry can include a debit to a(n)

Accepted Answer

A) expense and a credit to an asset. 
B) cash and a credit to a revenue. 
C) liability and a credit to cash. 
D) liability and a credit to an asset. 
A) expense and a credit to an asset. 
B) cash and a credit to a revenue. 
C) liability and a credit to cash. 
D) liability and a credit to an asset.

Question 8

Failure to record depreciation at year end will result in all of the following except

Accepted Answer

A) understatement of total liabilities. 
B) overstatement of total assets. 
C) overstatement of net income. 
D) overstatement of owner's equity. 
A) understatement of total liabilities. 
B) overstatement of total assets. 
C) overstatement of net income. 
D) overstatement of owner's equity.

Question 9

Adjusting entries affect cash flows in the current period.

Accepted Answer

A) True 
 B)False

Question 10

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

Accepted Answer

A) True 
 B)False

Question 11

When the estimates involved in earnings management begin moving outside a reasonable range,the financial statements can become misleading.

Accepted Answer

A) True 
 B)False

Question 12

A contra account is an account whose balance is subtracted from an associated account in the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

The following amounts are taken from the balance sheets of Baltic Company:
   During 20x5,expenses related to accrued liabilities were $15,250,and expenses related to prepaid expenses were $10,500.
a.Compute cash payments related to accrued liabilities.
b.Compute cash payments related to prepaid expenses.

Accepted Answer

a.$12,000 ($18,750 +

Question 14

Which of the following transactions does not result in an increase in expenses?

Accepted Answer

A) Payment of accounts payable. 
B) Usage of utlities. 
C) Allocation of the cost of a building. 
D) Expiration of prepaid insurance. 
A) Payment of accounts payable. 
B) Usage of utlities. 
C) Allocation of the cost of a building. 
D) Expiration of prepaid insurance.

Question 15

When a credit sale takes place,

Accepted Answer

A) a revenue account will increase. 
B) liabilities will increase. 
C) one asset account will increase and another will decrease. 
D) assets will be unaffected. 
A) a revenue account will increase. 
B) liabilities will increase. 
C) one asset account will increase and another will decrease. 
D) assets will be unaffected.

Question 16

In order for revenue to be recognized,the seller's price to the buyer must be fixed or determinable.

Accepted Answer

A) True 
 B)False

Question 17

Net income results in a(n)

Accepted Answer

A) increase in owner's equity. 
B) increase in revenues. 
C) decrease in expenses. 
D) increase in assets. 
A) increase in owner's equity. 
B) increase in revenues. 
C) decrease in expenses. 
D) increase in assets.

Question 18

An adjusted trial balance is prepared to

Accepted Answer

A) test that the ledger is in balance after the accounts have been adjusted. 
B) facilitate preparation of the adjusting entries. 
C) both test that the ledger is in balance after the accounts have been adjusted and facilitate preparation of the financial statements. 
D) facilitate preparation of the financial statements. 
A) test that the ledger is in balance after the accounts have been adjusted. 
B) facilitate preparation of the adjusting entries. 
C) both test that the ledger is in balance after the accounts have been adjusted and facilitate preparation of the financial statements. 
D) facilitate preparation of the financial statements.

Question 19

What is the purpose of adjusting entries?

Accepted Answer

Adjusting entries result in financial st

Question 20

Gravel Manufacturing had supplies on hand costing $480 on December 31.During the same year,supplies costing $320 were purchased,and $640 in supplies were consumed during the year.What was the cost of supplies on hand on January 1 of that year?

Accepted Answer

($480 + $6

The matching rule is applied

The carrying value of a depreciable asset purchased 3 years ago equals

When an adjusting entry is made debiting an expense account,the credit can be made to any of the following accounts except

The matching rule relates the least to

When expenses exceed revenues,

An adjusting entry can include a debit to a(n)

Failure to record depreciation at year end will result in all of the following except

Adjusting entries affect cash flows in the current period.

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

When the estimates involved in earnings management begin moving outside a reasonable range,the financial statements can become misleading.

A contra account is an account whose balance is subtracted from an associated account in the financial statements.

Which of the following transactions does not result in an increase in expenses?

When a credit sale takes place,

In order for revenue to be recognized,the seller's price to the buyer must be fixed or determinable.

Net income results in a(n)

An adjusted trial balance is prepared to

What is the purpose of adjusting entries?

Gravel Manufacturing had supplies on hand costing $480 on December 31.During the same year,supplies costing $320 were purchased,and $640 in supplies were consumed during the year.What was the cost of supplies on hand on January 1 of that year?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 3: Adjusting the Accounts

The matching rule is applied

The carrying value of a depreciable asset purchased 3 years ago equals

When an adjusting entry is made debiting an expense account,the credit can be made to any of the following accounts except

The matching rule relates the least to

When expenses exceed revenues,

An adjusting entry can include a debit to a(n)

Failure to record depreciation at year end will result in all of the following except

Adjusting entries affect cash flows in the current period.

An adjusted trial balance must be prepared before the adjusting entries can be recorded.

When the estimates involved in earnings management begin moving outside a reasonable range,the financial statements can become misleading.

A contra account is an account whose balance is subtracted from an associated account in the financial statements.

Which of the following transactions does not result in an increase in expenses?

When a credit sale takes place,

In order for revenue to be recognized,the seller's price to the buyer must be fixed or determinable.

Net income results in a(n)

An adjusted trial balance is prepared to

What is the purpose of adjusting entries?

Gravel Manufacturing had supplies on hand costing $480 on December 31.During the same year,supplies costing $320 were purchased,and $640 in supplies were consumed during the year.What was the cost of supplies on hand on January 1 of that year?

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters