Question 1

Which account would normally not require an adjusting entry?

Accepted Answer

A)  Wages Expense 
B)  Accounts Receivable 
C)  Accumulated Depreciation 
D)  Cash

Question 2

Using the following account balances for Garry's Tree Service, prepare a trial balance. $\begin{array}{|l|l|}
\hline \text { Cash } & \$ 25000 \
\hline \text { Supplies } & 1,000 \
\hline \text { Accounts Payable } & 7,000 \
\hline \text { Common Stock } & 32,910 \
\hline \text { Wage Expense } & 2,000 \
\hline \text { Machinery } & 18,350 \
\hline \text { Wages Payable } & 3,600 \
\hline \text { Service Revenue } & 21,000 \
\hline \text { Rent Expense } & 11,500 \
\hline \text { Unearned Revenue } & 1,500 \
\hline \text { Accumulated Depreciation-Machinery } & 7,340 \
\hline \text { Prepaid Rent } & 12,200 \
\hline \text { Dividends } & 3,300 \
\hline
\end{array}$

Accepted Answer

The answer of Using the following account balances for Garry's...

Question 3

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

Accepted Answer

A) True 
 B)False

Question 4

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Accepted Answer

The answer of Ski Master Company pays weekly salaries of...

Question 5

The balance in the accumulated depreciation account is the sum of the depreciation expense recorded in past periods.

Accepted Answer

A) True 
 B)False

Question 6

DogMart Company records depreciation for equipment. Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment. Prepare the two entries to record the depreciation.
ِ

Accepted Answer

The answer of DogMart Company records depreciation for equipment. Depreciation...

Question 7

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

Accepted Answer

A) True 
 B)False

Question 8

A one-year insurance policy was purchased on June 1 for $2,400. The adjusting entry on December 31 would be: $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Date } & \text { Description } & \text { Post. Ref. } & \text { Debit } & \text { Credit } \
\hline & & & & \
\hline & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of A one-year insurance policy was purchased on...

Question 9

Unearned revenue is a liability.

Accepted Answer

A) True 
 B)False

Question 10

Listed below are accounts to use for transactions a) through j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account numbers) in the appropriate box.

Accepted Answer

The answer of Listed below are accounts to use for...

Question 11

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

Accepted Answer

A)  debit Rent Expense, $8,000; credit Prepaid Rent, $8,000 
B)  debit Prepaid Rent, $24,000; credit Rent Expense, $8,000 
C)  debit Rent Expense, $24,000; credit Prepaid Rent, $8,000 
D)  debit Prepaid Rent, $8,000; credit Rent Expense, $8,000

Question 12

For the year ending December 31, Beard Clinical Supplies Co. mistakenly omitted adjusting entries for 1) $9,800 of unearned revenue that was earned, 2) earned revenue that was not billed of $10,200, and 3) accrued wages of $7,000. Indicate the combined effect of the errors on a) revenues, b) expenses, and c) net income.

Accepted Answer

The answer of For the year ending December 31, Beard...

Question 13

The systematic allocation of land's cost to expense is called depreciation.

Accepted Answer

A) True 
 B)False

Question 14

For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.

Accepted Answer

A) True 
 B)False

Question 15

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Accepted Answer

A) True 
 B)False

Question 16

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

Accepted Answer

A)  depreciation 
B)  deferral 
C)  accrual 
D)  inventory

Question 17

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 30 were $2,000. The amount to be used for the appropriate adjusting entry is

Accepted Answer

A)  $4,300 
B)  $12,000 
C)  $5,000 
D)  $8,000

Question 18

The revenue recognition concept

Accepted Answer

A)  is not in conflict with the cash method of accounting 
B)  determines when revenue is credited to a revenue account 
C)  states that revenue is not recorded until the cash is received 
D)  controls all revenue reporting for the cash basis of accounting

Question 19

What effect will this adjustment have on the accounting records? $$\begin{array} { | c | c | c | } 
\hline \text { Unearned Revenue } & 6,375 & \
\hline \text { Fees Earned } & & 6,375 \
\hline
\end{array}$$

Accepted Answer

A)  increase net income 
B)  increase revenues reported for the period 
C)  decrease liabilities 
D)  all of these are true

Question 20

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry. $$\begin{array} { | c | c | c | } 
\hline \text { Unearned Revenue } & 7,500 & \
\hline \text { Fees Earned } & & 7,500 \
\hline ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? & & \
\hline
\end{array}$$

Accepted Answer

A)  Record payment of fees earned. 
B)  Record fees earned at the end of the month. 
C)  Record fees that have not been earned at the end of the month. 
D)  Record payment of fees to be earned.

Exam 3: The Adjusting Process

Which account would normally not require an adjusting entry?

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

The balance in the accumulated depreciation account is the sum of the depreciation expense recorded in past periods.

DogMart Company records depreciation for equipment. Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment. Prepare the two entries to record the depreciation. ِ

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

Unearned revenue is a liability.

Listed below are accounts to use for transactions a) through j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account numbers) in the appropriate box.

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

The systematic allocation of land's cost to expense is called depreciation.

For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 30 were $2,000. The amount to be used for the appropriate adjusting entry is

The revenue recognition concept

What effect will this adjustment have on the accounting records? $\begin{array} { | c | c | c | } \hline \text { Unearned Revenue } & 6,375 & \\\hline \text { Fees Earned } & & 6,375 \\\hline\end{array}$

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry. $\begin{array} { | c | c | c | } \hline \text { Unearned Revenue } & 7,500 & \\\hline \text { Fees Earned } & & 7,500 \\\hline ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? & & \\\hline\end{array}$

Exam 3: The Adjusting Process

Which account would normally not require an adjusting entry?

The difference between the balance of a fixed asset account and the balance of its related accumulated depreciation account is termed the book value of the asset.

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

The balance in the accumulated depreciation account is the sum of the depreciation expense recorded in past periods.

DogMart Company records depreciation for equipment. Depreciation for the period ending December 31 is $1,400 for office equipment and $2,650 for production equipment. Prepare the two entries to record the depreciation. ِ

By ignoring and not posting the adjusting journal entries to the appropriate accounts, net income will always be overstated.

Unearned revenue is a liability.

Listed below are accounts to use for transactions a) through j), each identified by a number. Following this list are the transactions. You are to indicate for each transaction the accounts that should be debited and credited by placing the account numbers) in the appropriate box.

The balance in the prepaid rent account before adjustment at the end of the year is $32,000, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is

The systematic allocation of land's cost to expense is called depreciation.

For most large businesses, the cash basis of accounting will provide accurate financial statements for user needs.

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

The general term used to indicate delaying the recognition of an expense already paid or of a revenue already received is

The balance in the office supplies account on January 1 was $7,000, supplies purchased during January were $3,000, and the supplies on hand at January 30 were $2,000. The amount to be used for the appropriate adjusting entry is

The revenue recognition concept

What effect will this adjustment have on the accounting records? Unearned Revenue 6,375 Fees Earned 6,375\begin{array} { | c | c | c | } \hline \text { Unearned Revenue } & 6,375 & \\\hline \text { Fees Earned } & & 6,375 \\\hline\end{array} Unearned Revenue Fees Earned ​6,375​6,375​​

What effect will this adjustment have on the accounting records? $\begin{array} { | c | c | c | } \hline \text { Unearned Revenue } & 6,375 & \\\hline \text { Fees Earned } & & 6,375 \\\hline\end{array}$