Question 1

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) None of the above
F) A) and B)

Question 2

At January 31,the end of the first month of the year,the usual adjusting entry transferring expired insurance to an expense account is omitted.Which items will be incorrectly stated,because of the error,on a the income statement for January and b the balance sheet as of January 31? Also indicate whether the items in error will be overstated or understated.

Accepted Answer

a. Insurance expense or expens...

Question 3

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

None...

Question 4

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) A) and D)
F) B) and D)

Question 5

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?

Accepted Answer

A)  increases the balance of a contra asset account
B)  increases the balance of an asset account
C)  decreases the balance of an stockholders' equity account
D)  increases the balance of an expense accountE) A) and D)
F) All of the above

Question 6

Zoey Bella Corp.has a payroll of $10,000 for a five-day workweek.Its employees are paid each Friday for the five-day workweek.Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

Accepted Answer

$10,000/5 = $2,000 per day × 4 days = $8...

Question 7

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Accepted Answer

A) True 
 B)False

Question 8

The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.

Accepted Answer

None...

Question 9

A contra asset account for Land will normally appear on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Adjusting entries are

Accepted Answer

A)  the same as correcting entries
B)  needed to bring accounts up to date and match revenue and expense
C)  optional under generally accepted accounting principles
D)  rarely needed in large companiesE) None of the above
F) A) and B)

Question 11

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 12

What effect will the following adjusting journal entry have on the accounting records?

Accepted Answer

A)  increase net income
B)  increase revenues
C)  decrease expenses
D)  decrease net book valueE) A) and D)
F) All of the above

Question 13

Which of the following is considered to be an accrued expense?

Accepted Answer

A)  a computer technician has installed the latest software updates and was paid on the same day
B)  a computer technician has been paid in advance to install software updates as they become available
C)  a computer technician has just signed an agreement with you regarding pricing for future work
D)  a computer technician has installed the latest software updates,but you have not received an invoice or made paymentE) A) and B)
F) B) and C)

Question 14

Supplies are recorded as assets when purchased.Therefore,the credit to Supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A)  still on hand
B)  purchased
C)  used
D)  required for the next accounting periodE) B) and D)
F) C) and D)

Exam 3: The Adjusting Process

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

Correct Answer
verified

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?

Correct Answer
verified

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Correct Answer
verified

What effect will the following adjusting journal entry have on the accounting records?

Correct Answer
verified

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Correct Answer
verified

Supplies are recorded as assets when purchased.Therefore,the credit to Supplies in the adjusting entry is for the amount of supplies

Correct Answer
verified

The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.

Correct Answer
verified
None...
View Answer

Zoey Bella Corp.has a payroll of $10,000 for a five-day workweek.Its employees are paid each Friday for the five-day workweek.Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

Correct Answer
verified
$10,000/5 = $2,000 per day × 4 days = $8...
View Answer

A contra asset account for Land will normally appear on the balance sheet.

Correct Answer
verified

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.

Correct Answer
verified
None...
View Answer

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

Correct Answer
verified

Adjusting entries are

Correct Answer
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Correct Answer
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a. Insurance expense or expens...
View Answer

Which of the following is considered to be an accrued expense?

Correct Answer
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Exam 3: The Adjusting Process

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

Correct AnswerverifiedShow Answer

If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?

Correct AnswerverifiedShow Answer

Reporting of revenues and expenses in the proper period is due to the accounting period concept.

Correct AnswerverifiedShow Answer

What effect will the following adjusting journal entry have on the accounting records?

Correct AnswerverifiedShow Answer

Even though GAAP requires the accrual basis of accounting,some businesses prefer using the cash basis of accounting.

Correct AnswerverifiedShow Answer

Supplies are recorded as assets when purchased.Therefore,the credit to Supplies in the adjusting entry is for the amount of supplies

Correct AnswerverifiedShow Answer

The estimated amount of depreciation on equipment for the current year is $5,300.Journalize the adjusting entry to record the depreciation.

Correct AnswerverifiedNone...View AnswerShow Answer

Zoey Bella Corp.has a payroll of $10,000 for a five-day workweek.Its employees are paid each Friday for the five-day workweek.Prepare the adjusting entry on December 31 assuming the year ends on Thursday.

Correct Answerverified$10,000/5 = $2,000 per day × 4 days = $8...View AnswerShow Answer

A contra asset account for Land will normally appear on the balance sheet.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedNone...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Adjusting entries are

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Insurance expense or expens...View AnswerShow Answer

Which of the following is considered to be an accrued expense?

Correct AnswerverifiedShow Answer

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None...
View Answer

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$10,000/5 = $2,000 per day × 4 days = $8...
View Answer

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None...
View Answer

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a. Insurance expense or expens...
View Answer

Correct Answer
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