Question 1

Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a.Estimated depreciation on equipment for the year,$4,500.
b.The Prepaid Insurance account has a $3,680 debit balance before adjustment.An examination of insurance policies shows $600 of insurance expired.
c.The Prepaid Insurance account has a $2,400 debit balance before adjustment.An examination of insurance policies shows $950 of unexpired insurance.
d.The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.The employees were paid on Friday,December 26,and have worked full days on Monday,Tuesday,and Wednesday,December 29,30,and 31.
e.On November 1,the company received 6 months' rent in advance from a tenant whose rent is $700 per month.The $4,200 was credited to the Unearned Rent account.
f.The company collects rent monthly from its tenants.One tenant whose rent is $1,000 per month has not paid his rent for December.

Accepted Answer

The answer of Prepare general journal entries on December 31...

Question 2

__________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid._____________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

The answer of __________ basis accounting means that revenues are...

Question 3

Which of the following does not require an adjusting entry at year-end?

Accepted Answer

A) Accrued interest on notes payable. 
B) Supplies used during the period. 
C) Cash invested by owner. 
D) Accrued wages. 
E) Expired portion of prepaid insurance.

Question 4

Depreciation measures the decline in market value of an asset.

Accepted Answer

A) True 
 B)False

Question 5

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

Accepted Answer

The answer of Accrued revenues at the end of one...

Question 6

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

Accepted Answer

The answer of The _______________ depreciation method allocates equal amounts...

Question 7

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Accepted Answer

A) $75. 
B) $125. 
C) $175. 
D) $250. 
E) $325.

Question 8

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 9

Accrued revenues:

Accepted Answer

A) At the end of one accounting period result in cash receipts in a future period. 
B) At the end of one accounting period often result in cash payments in the next period. 
C) Are also called unearned revenues. 
D) Are listed on the balance sheet as liabilities. 
E) Are recorded at the end of an accounting period because cash has already been received for revenues earned.

Question 10

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

Accepted Answer

A) Items that require contra accounts. 
B) Items that require adjusting entries. 
C) Asset and equity. 
D) Asset accounts. 
E) Income statement accounts.

Question 11

A company purchased new furniture at a cost of $16,000 on January 1.The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

Accepted Answer

A) $16,000 
B) $15,000 
C) $2,500 
D) $13,500 
E) $13,333

Question 12

A _____________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

Accepted Answer

The answer of A _____________ account is an account linked...

Question 13

The adjusted trial balance must be prepared before the adjusting entries are made.

Accepted Answer

A) True 
 B)False

Question 14

A balance sheet that places the liabilities and equity to the right of the assets is a(n):

Accepted Answer

A) Account form balance sheet. 
B) Report form balance sheet. 
C) Interim balance sheet. 
D) Classified balance sheet. 
E) Unclassified balance sheet.

Question 15

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Accepted Answer

A) Depreciation Expense. 
B) Unearned Depreciation. 
C) Prepaid Depreciation. 
D) Depreciation Value. 
E) Book Value.

Question 16

The adjusting entry to record an accrued expense is:

Accepted Answer

A) Increase an expense;increase a liability. 
B) Increase an asset;increase revenue. 
C) Decrease a liability;increase revenue. 
D) Increase an expense;decrease an asset. 
E) Increase an expense;decrease a liability.

Question 17

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Accepted Answer

A) It will have no effect on income. 
B) It will overstate assets and liabilities by $9,000. 
C) It will understate net income by $9,000. 
D) It will understate assets by $9,000. 
E) It will understate expenses and overstate net income by $9,000.

Question 18

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Accepted Answer

A) Debit Office Supplies $105 and credit Office Supplies Expense $105. 
B) Debit Office Supplies Expense $105 and credit Office Supplies $105. 
C) Debit Office Supplies Expense $254 and credit Office Supplies $254. 
D) Debit Office Supplies $254 and credit Office Supplies Expense $254. 
E) Debit Office Supplies $105 and credit Supplies Expense $254.

Question 19

Given the table below,indicate the impact of the following errors made during the adjusting entry process.Use a "+" followed by the amount for overstatements,a "-" followed by the amount for understatements,and a "0" for no effect.The first one is done as an example.
Ex.Failed to recognize that $600 of unearned revenues,previously recorded as liabilities,had been earned by year-end.
1.Failed to accrue interest expense of $200.
2.Forgot to record $7,700 of depreciation on machinery.
3.Failed to accrue $1,300 of revenue earned but not collected.

Accepted Answer

The answer of Given the table below,indicate the impact of...

Question 20

A broad principle that requires identifying the activities of a business with specific time periods such as months,quarters,or years is the:

Accepted Answer

A) Operating cycle of a business. 
B) Time period assumption. 
C) Going-concern assumption. 
D) Matching principle. 
E) Accrual basis of accounting.

Exam 3: Adjusting Accounts and Preparing Financial Statements

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid.___ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Which of the following does not require an adjusting entry at year-end?

Depreciation measures the decline in market value of an asset.

Accrued revenues at the end of one accounting period often result in cash _______________________ in the next period.

The _______________ depreciation method allocates equal amounts of an asset's cost to depreciation during its useful life.

A company had no office supplies available at the beginning of the year.During the year,the company purchased $250 worth of office supplies.On December 31,$75 worth of office supplies remained.How much should the company report as office supplies expense for the year?

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Accrued revenues:

Prepaid expenses,depreciation,accrued expenses,unearned revenues,and accrued revenues are all examples of:

A company purchased new furniture at a cost of $16,000 on January 1.The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value.The company uses the straight-line method of depreciation.What is the book value of the furniture on December 31 of the first year?

A _____________ account is an account linked with another account,having an opposite normal balance,and reported as a subtraction from that other account's balance.

The adjusted trial balance must be prepared before the adjusting entries are made.

A balance sheet that places the liabilities and equity to the right of the assets is a(n) :

The difference between the cost of an asset and the accumulated depreciation for that asset is called

The adjusting entry to record an accrued expense is:

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.Which of the following statements is true?

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

A broad principle that requires identifying the activities of a business with specific time periods such as months,quarters,or years is the: