Question 1

The accrual basis of accounting:

Accepted Answer

A) Is generally accepted for external reporting because it is more useful than cash basis for most business decisions. 
B) Is flawed because it gives complete information about cash flows. 
C) Recognizes revenues when received in cash. 
D) Recognizes expenses when paid in cash. 
E) Eliminates the need for adjusting entries at the end of each period.

Question 2

A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

Accepted Answer

A) Debit Income Summary and credit Cash for $35,000. 
B) Debit Dividends and credit Cash for $35,000. 
C) Debit Income Summary and credit Dividends for $35,000. 
D) Debit Retained earnings and credit Dividends for $35,000. 
E) Debit Dividends and credit Retained earnings for $35,000.

Question 3

The adjusted trial balance contains information pertaining to:

Accepted Answer

A) Asset accounts only. 
B) Balance sheet accounts only. 
C) Income statement accounts only. 
D) All general ledger accounts. 
E) Revenue accounts only.

Question 4

An annual reporting period consisting of any twelve consecutive months is known as:

Accepted Answer

A) Fiscal year. 
B) Calendar year. 
C) Interim financial period. 
D) Natural business year. 
E) Seasonal year.

Question 5

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 6

Match between columns
                        Premises: A method that allocates equal amounts of an asset's cost (less any salvage value)to depreciation expense during its useful life.
The accounting system that recognizes revenue when cash is received and records expenses when cash is paid.
Any 12 consecutive months or 52-week period that a company adopts for its annual reporting period.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.
Aims to record expenses in the same accounting period as the revenues that are earned as a result of those expenses.
A set of financial statements that covers less than one year,typically one,three,or six months of activity.
The process of allocating the costs of long-term assets to the income statement over their expected useful lives.
The accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred.

Accepted Answer

The Answer of Fiscal year and Interim financial statements and is...

Question 7

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

Accepted Answer

A) debit Salary Expense,$9,000; credit Cash,$9,000 
B) debit Salary Expense,$9,000; credit Fees Earned,$9,000 
C) debit Salary Expense,$9,000; credit Prepaid Salary,$9,000 
D) debit Salary Expense,$9,000; credit Salaries Payable,$9,000 
E) debit Salaries Payable,$9,000; credit Salary Expense $9,000

Question 8

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Accepted Answer

A) True 
 B)False

Question 9

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

Accepted Answer

A) True 
 B)False

Question 10

A company earned $3,000 in net income for October.Its net sales for October were $10,000.Its profit margin is:

Accepted Answer

A) 3%. 
B) 30%. 
C) 33%. 
D) 333%. 
E) 33.3%

Question 11

Profit margin measures the relation of debt to assets.

Accepted Answer

A) True 
 B)False

Question 12

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

Accepted Answer

A) Assets overstated and equity understated. 
B) Assets and equity both understated. 
C) Assets overstated,net income understated,and equity overstated. 
D) Assets,net income,and equity understated. 
E) Assets,net income,and equity overstated.

Question 13

After posting the entries to close all revenue and expense accounts,the Income Summary account of Cleaver Auto Services has a $4,000 debit balance.This result implies that Cleaver earned a net income of $4,000.

Accepted Answer

A) True 
 B)False

Question 14

Use the information in the adjusted trial balance presented below:

-To calculate the current ratio for Wicked Wicker Company:

Accepted Answer

A) 1.87. 
B) .54. 
C) 3.92. 
D) 1.77. 
E) 1.60.

Question 15

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 16

Truman had total assets of $149,501,000,net income of $6,276,090,and net sales of $209,203,000.Its profit margin was 3%.

Accepted Answer

A) True 
 B)False

Question 17

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

Accepted Answer

A) True 
 B)False

Question 18

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

Accepted Answer

A) $750. 
B) $5,270. 
C) $6,000. 
D) $6,750. 
E) $18,000.

Question 19

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

Accepted Answer

The answer of ________ is the process of allocating the...

Question 20

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.
-What is the correct closing entry for the expense accounts?

Accepted Answer

A) Debit Income Summary $39,800; credit Expense accounts $39,800. 
B) Debit Expense accounts $37,000; credit Retained earnings $37,000. 
C) Credit Expense accounts $39,800; debit Retained earnings $39,800. 
D) Debit Expense accounts $39,800; credit Income Summary $39,800. 
E) Debit Income Summary $39,800; credit Retained earnings $39,800.

Exam 3: Adjusting Accounts for Financial Statements

The accrual basis of accounting:

A company paid Jen Rogers,its sole stockholder,a total of $35,000 in dividends during the current year.The entry needed to close the dividends account is:

The adjusted trial balance contains information pertaining to:

An annual reporting period consisting of any twelve consecutive months is known as:

Accrued revenues:

Match the following terms with the appropriate definition.

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

Closing revenue and expense accounts at the end of the accounting period serves to make the revenue and expense accounts ready for use in the next period.

Prior to recording adjusting entries at the end of an accounting period,some accounts may not show correct balances even though all transactions were properly recorded.

A company earned $3,000 in net income for October.Its net sales for October were $10,000.Its profit margin is:

Profit margin measures the relation of debt to assets.

If a company mistakenly forgot to record depreciation on office equipment at the end of an accounting period,the financial statements prepared at that time would show:

After posting the entries to close all revenue and expense accounts,the Income Summary account of Cleaver Auto Services has a $4,000 debit balance.This result implies that Cleaver earned a net income of $4,000.

Use the information in the adjusted trial balance presented below: -To calculate the current ratio for Wicked Wicker Company:

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.

Truman had total assets of $149,501,000,net income of $6,276,090,and net sales of $209,203,000.Its profit margin was 3%.

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

On May 1,a two-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31?

________ is the process of allocating the cost of plant assets to the income statement over their expected useful lives.

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000. -What is the correct closing entry for the expense accounts?