Question 1

If total debits are not equal to total credits in an adjusted trial balance,which of the following errors may have occurred?

Accepted Answer

A)   Posting an entry to Salaries and Wage Expense to Administrative Expenses
B)   Debiting Interest Payable instead of debiting Interest Expense
C)   Recording a transaction twice
D)   Posting a credit to Salaries and Wages Payable as a debit to that accountE) A) and D)
F) B) and C)

Question 2

An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero?

Accepted Answer

A)   Equipment
B)   Common Stock
C)   Accumulated Depreciation
D)   Depreciation ExpenseE) A) and B)
F) A) and C)

Question 3

Which of the following statements about the Retained Earnings account is correct?

Accepted Answer

A)   Retained Earnings is a permanent account; income statement accounts are temporary.
B)   Retained Earnings and income statement accounts are all temporary accounts.
C)   Retained Earnings and income statement accounts are all permanent accounts.
D)   Retained Earnings is a temporary account, while income statement accounts are permanent accounts.E) B) and C)
F) A) and C)

Question 4

Closing journal entries:

Accepted Answer

A)   transfer revenues and expenses to Retained Earnings.
B)   transfer assets and liabilities to Retained Earnings.
C)   transfer net income (or loss)  and Dividends to Retained Earnings.
D)   close permanent and temporary accounts.E) All of the above
F) A) and D)

Question 5

Which of the following statements about net income and net losses is not correct?

Accepted Answer

A)   Net income implies that revenues are greater than expenses.
B)   A net loss causes Retained Earnings to decrease.
C)   Net income causes stockholders' equity to increase.
D)   A net loss increases the balance in Retained Earnings.E) All of the above
F) B) and D)

Question 6

Which of the following statements about the need to make accrual adjustments at the end of the accounting period is not correct?

Accepted Answer

A)   Certain events occur over time that would be too tedious and time-consuming to record on a daily basis.
B)   Since financial statements are prepared at the end of the period, the asset and liability account balances should be brought up to date.
C)   The Cash account should be adjusted for the effects of accrued revenues and expenses during the accounting period.
D)   Revenues and expenses should be recorded in the period in which they occur, even though the cash will be paid or received in a future period.E) C) and D)
F) None of the above

Question 7

In the closing process,______ are zeroed out by crediting each account and ______ are zeroed out by debiting each account.

Accepted Answer

A)   expenses and dividends; revenues
B)   revenues; expenses and dividends
C)   dividends; revenues and expenses
D)   assets; liabilitiesE) All of the above
F) A) and C)

Question 8

At the end of the accounting period:

Accepted Answer

A)   all accounts are closed.
B)   temporary accounts are closed; permanent accounts are not.
C)   permanent accounts are closed; temporary accounts are not.
D)   only accounts with a credit balance are closed.E) C) and D)
F) All of the above

Question 9

How does the adjustment for depreciation differ from other deferral adjustments?

Accepted Answer

A)   The depreciation adjustment results in an increase to a long-lived asset account while the other deferral adjustments reduce asset accounts.
B)   The depreciation adjustment uses a contra-asset account rather than reducing the asset accounts directly.
C)   The depreciation adjustment increases a liability account rather than reducing an asset account directly.
D)   The depreciation adjustment is not a deferral adjustment, but rather an accrual adjustment.E) A) and C)
F) A) and B)

Question 10

A contra account is added to the account it offsets.

Accepted Answer

A) True 
 B)False

Question 11

At the end of the month,the adjusting journal entry to record the use of supplies would include a debit to:

Accepted Answer

A)   Supplies and a credit to Supplies Expense.
B)   Supplies Expense and a credit to Supplies.
C)   Supplies and a credit to Service Revenue.
D)   Supplies and a credit to Cash.E) A) and C)
F) B) and C)

Question 12

A deferral adjusting entry that adjusts assets (such as prepaids and supplies) :

Accepted Answer

A)   decreases total assets because cash is paid at the time of the adjustment
B)   expenses the amount used during the period
C)   increases total assets because costs are incurred
D)   increases total assets because cash will be received in the futureE) B) and C)
F) A) and D)

Question 13

To calculate the company's income tax expense for the current period,it is necessary to know the company's:

Accepted Answer

A)   operating revenue and tax bill from prior periods.
B)   adjusted income (before income taxes)  and the company's tax rate.
C)   operating expenses and revenue.
D)   revenues, expenses, and dividends.E) B) and D)
F) B) and C)

Question 14

If no errors have been made,when a company prepares its adjusted trial balance:

Accepted Answer

A)   assets will equal liabilities plus Retained Earnings.
B)   stockholders' equity will include the current period's net income.
C)   the debit column and the credit column will be equal.
D)   income statement accounts will have been closed.E) A) and D)
F) B) and C)

Question 15

Listed below are the account balances that appear on the company's adjusted trial balance as of December 31,2015.All accounts have normal balances.
  
Required:
Determine the ending balance in the Retained Earnings account.

Accepted Answer

Beginning Retained Earnings + ...

Question 16

Which of the following is performed first at the end of each accounting period?

Accepted Answer

A)   Prepare adjusting entries.
B)   Prepare a post-closing trial balance.
C)   Prepare closing journal entries.
D)   Prepare the statement of retained earnings.E) A) and C)
F) B) and C)

Question 17

How do temporary accounts differ from permanent accounts?

Accepted Answer

A)   Only temporary accounts are used in the adjustments at the end of the accounting period.
B)   Only permanent accounts are found on the financial statements.
C)   Only temporary accounts are closed at the end of the accounting period.
D)   Only permanent accounts are transferred to Retained Earnings during the closingE) B) and D)
F) C) and D)

Question 18

Which of the following is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

Accepted Answer

A)   Unadjusted trial balance
B)   Adjusted trial balance
C)   Closing entries
D)   Post-closing trial balanceE) None of the above
F) C) and D)

Question 19

Adjusting entries often involve cash.

Accepted Answer

A) True 
 B)False

Question 20

Long-lived assets,such as equipment,are reported at their ______ value on the balance sheet.

Accepted Answer

A)   fair market
B)   insurable
C)   carryingD) B) and C)
E) A) and C)

Exam 4: Adjustments,financial Statements,and Financial Results

An error must have been made if which of the following accounts appears on the post-closing trial balance with a balance other than zero?

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Long-lived assets,such as equipment,are reported at their ______ value on the balance sheet.

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If total debits are not equal to total credits in an adjusted trial balance,which of the following errors may have occurred?

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Which of the following is performed first at the end of each accounting period?

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How do temporary accounts differ from permanent accounts?

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At the end of the accounting period:

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Closing journal entries:

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Which of the following statements about net income and net losses is not correct?

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At the end of the month,the adjusting journal entry to record the use of supplies would include a debit to:

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Listed below are the account balances that appear on the company's adjusted trial balance as of December 31,2015.All accounts have normal balances. Required: Determine the ending balance in the Retained Earnings account.

Correct AnswerverifiedBeginning Retained Earnings + ...View AnswerShow Answer

Adjusting entries often involve cash.

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If no errors have been made,when a company prepares its adjusted trial balance:

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Which of the following statements about the Retained Earnings account is correct?

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To calculate the company's income tax expense for the current period,it is necessary to know the company's:

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A contra account is added to the account it offsets.

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How does the adjustment for depreciation differ from other deferral adjustments?

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In the closing process,______ are zeroed out by crediting each account and ______ are zeroed out by debiting each account.

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Which of the following statements about the need to make accrual adjustments at the end of the accounting period is not correct?

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Which of the following is constructed immediately prior to preparing the financial statements with the purpose of demonstrating that the accounts balance?

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A deferral adjusting entry that adjusts assets (such as prepaids and supplies) :

Correct AnswerverifiedShow Answer

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Beginning Retained Earnings + ...
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In the closing process, are zeroed out by crediting each account and are zeroed out by debiting each account.

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