Question 1

Match the type of account a-e)  with the business transactions that follow.
-Services provided that have not been recorded.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of theseF) A) and E)
G) A) and B)

Question 2

The account type and normal balance of Unearned Revenue is

Accepted Answer

A)   revenue, credit
B)   expense, debit
C)   liability, credit
D)   asset, debitE) B) and C)
F) None of the above

Question 3

Identify the effect a-h)  that omitting each of the following items would have on the balance sheet.
-Interest earned on a note receivable was not recorded.

Accepted Answer

A)  Assets and stockholders' equity overstated
B)  Assets and stockholders' equity understated
C)  Assets overstated and stockholders' equity understated
D)  Assets understated and stockholders' equity overstated
E)  Liabilities and stockholders' equity overstatedF) Liabilities and stockholders' equity understatedG) Liabilities overstated and stockholders' equity understatedH) Liabilities understated and stockholders' equity overstatedI) A) and B)
J) B) and C)

Question 4

Match the type of account a-e)  with the business transactions that follow.
-Received payment covering a 6-month magazine subscription.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of theseF) C) and D)
G) A) and D)

Question 5

At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?

Accepted Answer

A)   total assets will be understated at the end of the current year
B)   the balance sheet and income statement will be misstated but the statement of stockholders' equity will be correct for the current year
C)   net income will be overstated for the current year
D)   total liabilities and total assets will be understatedE) A) and B)
F) A) and C)

Question 6

Which of the following is considered to be unearned revenue?

Accepted Answer

A)   theater tickets sold last month for yesterday's performance
B)   theater tickets sold yesterday on credit for yesterday's performance
C)   theater tickets that were not sold for the current performance
D)   theater tickets sold for next month's performanceE) All of the above
F) B) and C)

Question 7

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

Accepted Answer

Salaries Expense [$6...

Question 8

Journalize the six entries to adjust the accounts at December 31. Hint: One of the accounts was affected by two different adjusting entries).

Accepted Answer

The answer of Journalize the six entries to adjust the...

Question 9

A fixed asset's market value is reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Prior to the adjusting process, accrued expenses have

Accepted Answer

A)   not yet been incurred, paid, or recorded
B)   been incurred, not paid, but have been recorded
C)   been incurred, not paid, and not recorded
D)   been paid but have not yet been incurredE) A) and B)
F) A) and C)

Question 11

Adjusting entries affect only expense and asset accounts.

Accepted Answer

A) True 
 B)False

Question 12

The type of account and normal balance of Unearned Consulting Fees is

Accepted Answer

A)   revenue, credit
B)   expense, debit
C)   liability, credit
D)   liability, debitE) A) and D)
F) A) and C)

Question 13

The adjusting entry to record the depreciation of a building for the fiscal period is

Accepted Answer

A)   debit Depreciation Expense; credit Building.
B)   debit Depreciation Expense; credit Accumulated Depreciation.
C)   debit Accumulated Depreciation; credit Depreciation Expense.
D)   debit Building; credit Depreciation Expense.E) A) and C)
F) C) and D)

Question 14

Which of the following is not true regarding depreciation?

Accepted Answer

A)   depreciation allocates the cost of a fixed asset over its estimated life.
B)   depreciation expense reflects the decrease in market value each year.
C)   depreciation is an allocation not a valuation method.
D)   depreciation expense does not measure changes in market value.E) A) and D)
F) B) and C)

Question 15

Match the type of account a-e)  with the business transactions that follow.
-Paid for a 6-month magazine subscription.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of theseF) A) and E)
G) B) and E)

Question 16

The accounting concept upon which deferrals and accruals are based is

Accepted Answer

A)   matching
B)   cost
C)   price-level adjustment
D)   conservatismE) All of the above
F) B) and C)

Question 17

Under the accrual basis, some accounts in the ledger require updating at the end of the period. Discuss the three main reasons for this updating and give an example of each.

Accepted Answer

1. Some expenses are not recorded daily....

Question 18

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Accepted Answer

A)   debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800
B)   debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500
C)   debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100
D)   debit Prepaid Insurance, $1,800; credit Cash, $1,800E) None of the above
F) B) and C)

Question 19

Which of the following is not a characteristic of the accrual basis of accounting?

Accepted Answer

A)   revenues and expenses are reported in the period in which cash is received or paid
B)   revenues are reported on the income statement in the period in which they are earned
C)   accrual basis of accounting supports the matching concept
D)   expenses are reported in the same period as the revenues to which they relateE) B) and D)
F) B) and C)

Question 20

Identify the effect a-h)  that omitting each of the following items would have on the balance sheet.
-Services provided to customers on the last day of the month were not billed.

Accepted Answer

A)  Assets and stockholders' equity overstated
B)  Assets and stockholders' equity understated
C)  Assets overstated and stockholders' equity understated
D)  Assets understated and stockholders' equity overstated
E)  Liabilities and stockholders' equity overstatedF) Liabilities and stockholders' equity understatedG) Liabilities overstated and stockholders' equity understatedH) Liabilities understated and stockholders' equity overstatedI) B) and C)
J) C) and D)

Exam 3: The Adjusting Process

Which of the following is considered to be unearned revenue?

Correct AnswerverifiedShow Answer

The type of account and normal balance of Unearned Consulting Fees is

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At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following is true?

Correct AnswerverifiedShow Answer

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

Correct AnswerverifiedSalaries Expense [$6...View AnswerShow Answer

The account type and normal balance of Unearned Revenue is

Correct AnswerverifiedShow Answer

Identify the effect a-h) that omitting each of the following items would have on the balance sheet. -Services provided to customers on the last day of the month were not billed.

Correct AnswerverifiedShow Answer

Prior to the adjusting process, accrued expenses have

Correct AnswerverifiedShow Answer

Match the type of account a-e) with the business transactions that follow. -Paid for a 6-month magazine subscription.

Correct AnswerverifiedShow Answer

A fixed asset's market value is reflected on the balance sheet.

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Journalize the six entries to adjust the accounts at December 31. Hint: One of the accounts was affected by two different adjusting entries).

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Identify the effect a-h) that omitting each of the following items would have on the balance sheet. -Interest earned on a note receivable was not recorded.

Correct AnswerverifiedShow Answer

Under the accrual basis, some accounts in the ledger require updating at the end of the period. Discuss the three main reasons for this updating and give an example of each.

Correct Answerverified1. Some expenses are not recorded daily....View AnswerShow Answer

Which of the following is not true regarding depreciation?

Correct AnswerverifiedShow Answer

The adjusting entry to record the depreciation of a building for the fiscal period is

Correct AnswerverifiedShow Answer

Match the type of account a-e) with the business transactions that follow. -Received payment covering a 6-month magazine subscription.

Correct AnswerverifiedShow Answer

Match the type of account a-e) with the business transactions that follow. -Services provided that have not been recorded.

Correct AnswerverifiedShow Answer

Adjusting entries affect only expense and asset accounts.

Correct AnswerverifiedShow Answer

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Correct AnswerverifiedShow Answer

The accounting concept upon which deferrals and accruals are based is

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of the accrual basis of accounting?

Correct AnswerverifiedShow Answer

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Salaries Expense [$6...
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1. Some expenses are not recorded daily....
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