Question 1

The expense recognition (matching)principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 2

On December 1,Casualty Insurance Company borrowed $50,000 at a 6.0% interest rate from One Mutual Bank.The note payable plus interest will not be paid until April 1 of the following year.The company's annual accounting period ends on December 31 and adjustments are only made at year-end.The adjusting entry needed on December 31 is:

Accepted Answer

A)  No entry required.
B)  Debit Interest Expense,$250; credit Interest Payable,$250.
C)  Debit Interest Expense,$250; credit Note Payable,$250.
D)  Debit Interest Payable,$1,000; credit Interest Expense,$1,000.
E)  Debit Interest Expense,$1,000; credit Interest Payable,$1,000.F) All of the above
G) A) and C)

Question 3

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Accepted Answer

A)  Accounting period.
B)  Operating cycle.
C)  Accounting cycle.
D)  Closing cycle.
E)  Natural business year.F) None of the above
G) A) and C)

Question 4

The following unadjusted and adjusted trial balances are from the current year's accounting system for Excelsior.
Excelsior
Trial Balances
For Year Ended December 31
  Present the six adjusting entries in general journal form that explain the changes in the account balances from the unadjusted to the adjusted trial balance.

Accepted Answer

The answer of The following unadjusted and adjusted trial balances...

Question 5

Karl Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Karl uses reversing entries,which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Accepted Answer

A)  Debit Wages Expense $7,350; credit Cash $7,350.
B)  Debit Wages Expense $7,350; credit Wages Payable $7,350.
C)  Debit Wages Payable $7,350; credit Cash $7,350.
D)  Debit Cash $7,350; credit Wages Expense $7,350.
E)  Debit Wages Payable $7,350; credit Wages Expense $7,350.F) A) and B)
G) D) and E)

Question 6

For the year ended December 31,a company has revenues of $317,000 and expenses of $196,000.The company paid $50,000 in dividends during the year.The balance in the Retained earnings account before closing is $81,000.Which of the following entries would be used to close the dividends account?

Accepted Answer

A)  Debit Income Summary $50,000; credit Retained earnings $50,000.
B)  Debit Retained earnings $50,000; credit Dividends $50,000.
C)  Debit Retained earnings $81,000; credit Income Summary $81,000.
D)  Debit Income Summary $81,000,credit Dividends $81,000.
E)  Debit Dividends $50,000; credit Retained earnings $50,000.F) A) and B)
G) D) and E)

Question 7

Harrod Company paid $4,800 for a 4-month insurance premium in advance on November 1,with coverage beginning on that date.The balance in the prepaid insurance account before adjustment at the end of the year is $4,800 and no adjustments had been made previously.The adjusting entry required on December 31 is:

Accepted Answer

A)  Debit Insurance Expense,$2,400; credit Prepaid Insurance,$2,400.
B)  Debit Prepaid Insurance,$2,400; credit Insurance Expense,$2,400.
C)  Debit Insurance Expense,$1,200; credit Prepaid Insurance,$1,200.
D)  Debit Prepaid Insurance,$1,200; credit Insurance Expense,$1,200.
E)  Debit Cash,$4,800; Credit Prepaid Insurance,$4,800.F) B) and C)
G) B) and D)

Question 8

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.F) B) and E)
G) C) and D)

Question 9

How is the current ratio calculated? How is it used to evaluate a company?

Accepted Answer

The current ratio is current assets divi...

Question 10

All of the following statements regarding a work sheet are true except:

Accepted Answer

A)  A worksheet aids in the preparation of financial statements.
B)  A worksheet reduces possible errors when working with many accounts and adjustments.
C)  A worksheet is not useful in planning and organizing an audit of financial statements.
D)  A worksheet helps in preparing interim financial statements.
E)  A worksheet shows the effects of proposed or "what-if" transactions.F) A) and C)
G) A) and B)

Question 11

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Accepted Answer

A)  Depreciation Expense.
B)  Unearned Depreciation.
C)  Prepaid Depreciation.
D)  Depreciation Value.
E)  Book Value.F) D) and E)
G) A) and C)

Question 12

Which of the following statements is incorrect?

Accepted Answer

A)  An income statement reports revenues earned less expenses incurred.
B)  An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.
C)  Interim financial reports can be based on one-month or three-month accounting periods.
D)  The fiscal year is any 12 consecutive months (or 52 weeks) used by a business as its annual accounting period.
E)  Property,plant,and equipment are referred to as plant assets.F) C) and D)
G) A) and B)

Question 13

a)Prepare a classified balance sheet for Martin Air Freight based on the adjusted trial balance shown below.b)Prepare the required closing entries.
  * $2,000 of the long-term note payable is due during the next year.

Accepted Answer

The answer of a)Prepare a classified balance sheet for Martin...

Question 14

Closing entries are required:

Accepted Answer

A)  If management has decided to cease operating the business.
B)  Only if the company adheres to the accrual method of accounting.
C)  If a company's bookkeeper does not choose to prepare reversing entries.
D)  So that Revenue,expense,and dividends accounts must begin each period with zero balances.
E)  In order to satisfy the Internal Revenue Service guidelines.F) D) and E)
G) A) and D)

Question 15

Chase Company rents space to a tenant for $2,200 per month.The tenant currently owes rent for November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Rent Receivable,$6,600; credit Rent Earned,$6,600.
B)  Debit Unearned Rent,$4,400; credit Rent Earned,$4,400.
C)  Debit Unearned Rent,$2,200; credit Rent Earned,$2,200.
D)  Debit Rent Receivable,$4,400; credit Rent Earned,$4,400.
E)  Debit Rent Receivable,$2,200; credit Rent Earned,$2,200.F) All of the above
G) A) and C)

Question 16

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.F) A) and B)
G) A) and C)

Question 17

On October 1,Vista View Company rented warehouse space to a tenant for $2,500 per month.The tenant paid five months' rent in advance on that date,with the lease beginning immediately.The cash receipt was credited to the Unearned Rent account.The company's annual accounting period ends on December 31.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Rent Receivable,$12,500; credit Rent Earned,$12,500.
B)  Debit Rent Receivable,$7,500; credit Rent Earned,$7,500.
C)  Debit Unearned Rent,$7,500; credit Rent Earned,$7,500.
D)  Debit Unearned Rent,$5,000; credit Rent Earned,$5,000.
E)  Debit Unearned Rent,$12,500; credit Rent Earned,$12,500.F) B) and C)
G) B) and D)

Question 18

The Unadjusted Trial Balance columns of a work sheet total $84,000.The Adjustments columns contain entries for the following: 1.Office supplies used during the period,$1,200.
2.Expiration of prepaid rent,$700.
3.Accrued salaries expense,$500.
4.Depreciation expense,$800.
5.Accrued service fees receivable,$400.
The Adjusted Trial Balance columns total is:

Accepted Answer

A)  $80,400.
B)  $84,000.
C)  $85,700.
D)  $85,900.
E)  $87,600.F) C) and E)
G) D) and E)

Question 19

Interim financial statements refer to financial reports:

Accepted Answer

A)  That cover less than one year,usually spanning one,three,or six-month periods.
B)  That are prepared before any adjustments have been recorded.
C)  That show the assets above the liabilities and the liabilities above the equity.
D)  Where revenues are reported on the income statement when cash is received and expenses are reported when cash is paid.
E)  Where the adjustment process is used to assign revenues to the periods in which they are earned and to match expenses with revenues.F) A) and D)
G) B) and C)

Question 20

Palmer Company is at the end of its annual accounting period.The accountant has journalized and posted all external transactions and all adjusting entries,has prepared an adjusted trial balance,and completed the financial statements.The next step in the accounting cycle is:

Accepted Answer

A)  Prepare a work sheet.
B)  Prepare reversing entries.
C)  Close temporary accounts.
D)  Prepare a post-closing trial balance.
E)  Prepare an unadjusted trial balance.F) All of the above
G) B) and D)

Exam 3: Adjusting Accounts for Financial Statements

The expense recognition (matching)principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Correct Answer
verified

Interim financial statements refer to financial reports:

Correct Answer
verified

Palmer Company is at the end of its annual accounting period.The accountant has journalized and posted all external transactions and all adjusting entries,has prepared an adjusted trial balance,and completed the financial statements.The next step in the accounting cycle is:

Correct Answer
verified

Closing entries are required:

Correct Answer
verified

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?

Correct Answer
verified

Karl Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Karl uses reversing entries,which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Correct Answer
verified

Chase Company rents space to a tenant for $2,200 per month.The tenant currently owes rent for November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Correct Answer
verified

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

For the year ended December 31,a company has revenues of $317,000 and expenses of $196,000.The company paid $50,000 in dividends during the year.The balance in the Retained earnings account before closing is $81,000.Which of the following entries would be used to close the dividends account?

Correct Answer
verified

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Correct Answer
verified

All of the following statements regarding a work sheet are true except:

Correct Answer
verified

How is the current ratio calculated? How is it used to evaluate a company?

Correct Answer
verified
The current ratio is current assets divi...
View Answer

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?

Correct Answer
verified

a)Prepare a classified balance sheet for Martin Air Freight based on the adjusted trial balance shown below.b)Prepare the required closing entries. * $2,000 of the long-term note payable is due during the next year.

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

The expense recognition (matching)principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Correct AnswerverifiedShow Answer

Interim financial statements refer to financial reports:

Correct AnswerverifiedShow Answer

Palmer Company is at the end of its annual accounting period.The accountant has journalized and posted all external transactions and all adjusting entries,has prepared an adjusted trial balance,and completed the financial statements.The next step in the accounting cycle is:

Correct AnswerverifiedShow Answer

Closing entries are required:

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Karl Company accrued wages of $7,350 that were earned by employees unpaid at the year-end.Assuming Karl uses reversing entries,which of the following entries correctly reverses the accrued wages at the beginning of the following year?

Correct AnswerverifiedShow Answer

Chase Company rents space to a tenant for $2,200 per month.The tenant currently owes rent for November and December.The tenant has agreed to pay the November,December,and January rents in full on January 15 and has agreed not to fall behind again.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

The recurring steps performed each reporting period in preparing financial statements,starting with analyzing and recording transactions in the journal and continuing through the post-closing trial balance,is referred to as the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For the year ended December 31,a company has revenues of $317,000 and expenses of $196,000.The company paid $50,000 in dividends during the year.The balance in the Retained earnings account before closing is $81,000.Which of the following entries would be used to close the dividends account?

Correct AnswerverifiedShow Answer

The difference between the cost of an asset and the accumulated depreciation for that asset is called

Correct AnswerverifiedShow Answer

All of the following statements regarding a work sheet are true except:

Correct AnswerverifiedShow Answer

How is the current ratio calculated? How is it used to evaluate a company?

Correct AnswerverifiedThe current ratio is current assets divi...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

a)Prepare a classified balance sheet for Martin Air Freight based on the adjusted trial balance shown below.b)Prepare the required closing entries. * $2,000 of the long-term note payable is due during the next year.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The current ratio is current assets divi...
View Answer

Correct Answer
verified

Correct Answer
verified