Question 1

One of the accounting concepts upon which deferrals and accruals are based is

Accepted Answer

A)  matching
B)  cost
C)  price-level adjustment
D)  conservatismE) A) and D)
F) C) and D)

Question 2

Accrued expenses are ordinarily reported on the balance sheet as

Accepted Answer

A)  assets
B)  liabilities
C)  fixed assets
D)  prepaid expensesE) A) and B)
F) A) and C)

Question 3

How will the following adjusting journal entry affect the accounting equation?

Accepted Answer

A)  increase assets,increase revenues
B)  increase liabilities,increase revenues
C)  decrease liabilities,increase revenues
D)  decrease liabilities,decrease revenuesE) A) and D)
F) C) and D)

Question 4

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Accepted Answer

A)  expense
B)  asset
C)  contra asset
D)  liabilityE) A) and D)
F) All of the above

Question 5

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 6

An example of deferred revenue is Unearned Rent.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of an accrued expense?

Accepted Answer

A)  Salary owed but not yet paid
B)  Fees received but not yet earned
C)  Supplies on hand
D)  A two-year premium paid on a fire insurance policyE) All of the above
F) A) and D)

Question 8

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

Accepted Answer

A)  debit Depreciation Expense;credit Equipment
B)  debit Depreciation Expense;credit Accumulated Depreciation
C)  debit Accumulated Depreciation;credit Depreciation Expense
D)  debit Equipment;credit Depreciation ExpenseE) All of the above
F) C) and D)

Question 9

Two income statements for PS Enterprises are shown below:

Prepare a vertical analysis of PS Enterprises' income statements.Has operating income increased or decreased as a percentage of revenue?

Accepted Answer

A)  Yes,increased by 5%
B)  Yes,increased by 111%
C)  No,decreased by 5%.
D)  None are correct.E) A) and D)
F) A) and B)

Question 10

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Accepted Answer

The answer of On January 1, DogMart Company purchased a...

Question 11

For the year ending December 31,2010,Nathan Clinical Supplies Co.mistakenly omitted adjusting entries for (1)$8,900 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 for 2010.

Accepted Answer

(a)Revenues were understated b...

Question 12

Given the following account balances for Garry's Tree Service,prepare a trial balance.

Accepted Answer

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

Question 13

Unearned revenue is a liability.

Accepted Answer

A) True 
 B)False

Question 14

The Supplies account had a beginning balance of $1,750.Supplies purchased during the period totaled $3,500.At the end of the period before adjustment,$350 of supplies were on hand.Prepare the adjusting entry for supplies.

Accepted Answer

$1,750 + $...

Question 15

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 B)
F) A) and D)

Question 16

A company purchases a one-year insurance policy on June 1 for $2,760.The adjusting entry on December 31 is

Accepted Answer

A)  debit Insurance Expense,$1,380 and credit Prepaid Insurance,$1,380.
B)  debit Insurance Expense,$1,150 and credit Prepaid Insurance,$1,150.
C)  debit Insurance Expense,$1,610,and credit Prepaid Insurance,$1,610.
D)  debit Prepaid Insurance,$1,380,and credit Cash,$1,380.E) B) and D)
F) All of the above

Question 17

Which of the following pairs of accounts could not appear in the same adjusting entry?

Accepted Answer

A)  Service Revenue and Unearned Revenue
B)  Interest Income and Interest Expense
C)  Rent Expense and Prepaid Rent
D)  Salaries Payable and Salaries ExpenseE) A) and B)
F) None of the above

Question 18

Which of the following is not a characteristic of 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 in the income statement in the period in which they are earned
C)  Supports the matching concept
D)  All are correct.E) B) and C)
F) A) and C)

Question 19

Which of the following is considered to be unearned revenue?

Accepted Answer

A)  Concert tickets sold last month for yesterday's performance.
B)  Concert tickets sold yesterday on credit for yesterday's performance.
C)  Concert tickets that were not sold for the current performance.
D)  Concert tickets sold for next month's performance.E) A) and B)
F) C) and D)

Question 20

The type of account and normal balance of Unearned Rent is

Accepted Answer

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

Exam 3: The Adjusting Process

Which of the following is not true regarding depreciation?

Correct Answer
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Unearned revenue is a liability.

Correct Answer
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A company purchases a one-year insurance policy on June 1 for $2,760.The adjusting entry on December 31 is

Correct Answer
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Given the following account balances for Garry's Tree Service,prepare a trial balance.

Correct Answer
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Which of the following is considered to be unearned revenue?

Correct Answer
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An example of deferred revenue is Unearned Rent.

Correct Answer
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Two income statements for PS Enterprises are shown below: Prepare a vertical analysis of PS Enterprises' income statements.Has operating income increased or decreased as a percentage of revenue?

Correct Answer
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The Supplies account had a beginning balance of $1,750.Supplies purchased during the period totaled $3,500.At the end of the period before adjustment,$350 of supplies were on hand.Prepare the adjusting entry for supplies.

Correct Answer
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$1,750 + $...
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On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Correct Answer
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Correct Answer
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(a)Revenues were understated b...
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Which of the following pairs of accounts could not appear in the same adjusting entry?

Correct Answer
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The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Correct Answer
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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).

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

Correct Answer
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One of the accounting concepts upon which deferrals and accruals are based is

Correct Answer
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The adjusting entry to record the depreciation of equipment for the fiscal period is

Correct Answer
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Which of the following is an example of an accrued expense?

Correct Answer
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How will the following adjusting journal entry affect the accounting equation?

Correct Answer
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Accrued expenses are ordinarily reported on the balance sheet as

Correct Answer
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The type of account and normal balance of Unearned Rent is

Correct Answer
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Exam 3: The Adjusting Process

Which of the following is not true regarding depreciation?

Correct AnswerverifiedShow Answer

Unearned revenue is a liability.

Correct AnswerverifiedShow Answer

A company purchases a one-year insurance policy on June 1 for $2,760.The adjusting entry on December 31 is

Correct AnswerverifiedShow Answer

Given the following account balances for Garry's Tree Service,prepare a trial balance.

Correct AnswerverifiedShow Answer

Which of the following is considered to be unearned revenue?

Correct AnswerverifiedShow Answer

An example of deferred revenue is Unearned Rent.

Correct AnswerverifiedShow Answer

Two income statements for PS Enterprises are shown below: Prepare a vertical analysis of PS Enterprises' income statements.Has operating income increased or decreased as a percentage of revenue?

Correct AnswerverifiedShow Answer

The Supplies account had a beginning balance of $1,750.Supplies purchased during the period totaled $3,500.At the end of the period before adjustment,$350 of supplies were on hand.Prepare the adjusting entry for supplies.

Correct Answerverified$1,750 + $...View AnswerShow Answer

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Correct AnswerverifiedShow Answer

Correct Answerverified(a)Revenues were understated b...View AnswerShow Answer

Which of the following pairs of accounts could not appear in the same adjusting entry?

Correct AnswerverifiedShow Answer

The cost of office supplies to be used in future periods is ordinarily shown on the balance sheet as a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One of the accounting concepts upon which deferrals and accruals are based is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of an accrued expense?

Correct AnswerverifiedShow Answer

How will the following adjusting journal entry affect the accounting equation?

Correct AnswerverifiedShow Answer

Accrued expenses are ordinarily reported on the balance sheet as

Correct AnswerverifiedShow Answer

The type of account and normal balance of Unearned Rent is

Correct AnswerverifiedShow Answer

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$1,750 + $...
View Answer

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(a)Revenues were understated b...
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