Question 1

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Accepted Answer

A) True 
 B)False

Question 2

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

Accepted Answer

An unclassified balance sheet broadly gr...

Question 3

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Accepted Answer

A)   Debit Depreciation Expense, $15,000; credit Equipment, $15,000.
B)   Debit Equipment, $15,000; credit Accumulated Depreciation, $15,000.
C)   Debit Depreciation Expense, $10,000; credit Accumulated Depreciation, $10,000.
D)   Debit Depreciation Expense, $10,000; credit Equipment, $10,000.
E)   Debit Depreciation Expense, $15,000; credit Accumulated Depreciation, $15,000.F) A) and E)
G) B) and C)

Question 4

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Accepted Answer

A)   Debit Prepaid Insurance, $1,800; credit Cash, $1,800.
B)   Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440.
C)   Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
D)   Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
E)   Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.F) B) and C)
G) None of the above

Question 5

Abdulla,Co.collected 6-months' rent in advance from a tenant on October 1 of the current year.When it collected the cash,it recorded the following entry:
 $$\begin{array} { l l l } 
\text { Oct. } 01& \mathrm { Cash } & 15,000 \
& \text { Rent Revenue Earned }&&15,000
\end{array}$$ 
Assuming Abdulla only prepares adjustments at year-end,prepare the required adjusting entry at December 31 of the current year.

Accepted Answer

($15,000/6 mo.= $2,5...

Question 6

Two common subgroups for liabilities on a classified balance sheet are:

Accepted Answer

A)   Current liabilities and intangible liabilities.
B)   Present liabilities and operating liabilities.
C)   General liabilities and specific liabilities.
D)   Intangible liabilities and long-term liabilities.
E)   Current liabilities and long-term liabilities.F) None of the above
G) B) and C)

Question 7

Which of the following statements is incorrect?

Accepted Answer

A)   An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.
B)   An adjusted trial balance is a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger.
C)   Each trial balance amount is used in preparing the financial statements.
D)   Financial statements should be prepared directly from information in the unadjusted trial balance.
E)   Financial statements can be prepared directly from information in the adjusted trial balance.F) B) and D)
G) C) and D)

Question 8

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Accepted Answer

A)   Increase an expense; increase a liability.
B)   Increase an asset; increase revenue.
C)   Decrease a liability; increase revenue.
D)   Increase an expense; decrease an asset.
E)   Increase an expense; decrease a liability.F) A) and B)
G) A) and C)

Question 9

Two main accounting principles used in accrual accounting are expense recognition and full closure.

Accepted Answer

A) True 
 B)False

Question 10

Flagg records adjusting entries at its December 31 year-end.At December 31,employees had earned $12,000 of unpaid and unrecorded salaries.The next payday is January 3,at which time $30,000 will be paid.Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

Accepted Answer

A)   Debit Salaries expense $12,000; debit Salaries payable $18,000; credit Cash $30,000.
B)   Debit Salaries expense $30,000; credit Cash $30,000.
C)   Debit Salaries payable $30,000; credit Cash $30,000.
D)   Debit Salaries expense $18,000, debit Salaries payable $12,000; credit Cash $30,000.
E)   Debit Salaries expense $18,000; credit Cash $18,000.F) B) and E)
G) C) and D)

Question 11

Cash and office supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 12

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

Accepted Answer

receipts (...

Question 13

Adjusting entries always affect the cash account.

Accepted Answer

A) True 
 B)False

Question 14

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Profit margin reflects the percent of profit in each dollar of revenue.

Accepted Answer

A) True 
 B)False

Question 16

Match the following terms with the appropriate definition.
-A balance sheet that broadly groups items into assets,liabilities and equity.

Accepted Answer

A)  Stockholders' equity
B)  Unclassified balance sheet
C)  Long-term investments
D)  Current liabilities
E)  Closing entriesF) Current ratioG) Plant assetsH) Current assetsI) Intangible assetsJ) Classified balance sheetK) A) and F)
L) D) and F)

Question 17

Reversing entries are optional.

Accepted Answer

A) True 
 B)False

Question 18

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 19

Depreciation expense is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 20

A trial balance prepared after adjustments have been recorded is called a(n) :

Accepted Answer

A)   Balance sheet.
B)   Adjusted trial balance.
C)   Unadjusted trial balance.
D)   Classified balance sheet.
E)   Unclassified balance sheet.F) A) and C)
G) D) and E)

Exam 3: Adjusting Accounts for Financial Statements

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Correct Answer
verified

Two main accounting principles used in accrual accounting are expense recognition and full closure.

Correct Answer
verified

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Correct Answer
verified

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

Correct Answer
verified
receipts (...
View Answer

Cash and office supplies are both classified as current assets.

Correct Answer
verified

Correct Answer
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($15,000/6 mo.= $2,5...
View Answer

Correct Answer
verified

Reversing entries are optional.

Correct Answer
verified

A trial balance prepared after adjustments have been recorded is called a(n) :

Correct Answer
verified

Two common subgroups for liabilities on a classified balance sheet are:

Correct Answer
verified

Adjusting entries always affect the cash account.

Correct Answer
verified

Profit margin reflects the percent of profit in each dollar of revenue.

Correct Answer
verified

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

Correct Answer
verified
An unclassified balance sheet broadly gr...
View Answer

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Correct Answer
verified

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Correct Answer
verified

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Correct Answer
verified

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Correct Answer
verified

Which of the following statements is incorrect?

Correct Answer
verified

Match the following terms with the appropriate definition. -A balance sheet that broadly groups items into assets,liabilities and equity.

Correct Answer
verified

Depreciation expense is an example of an accrued expense.

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Before an adjusting entry is made to recognize the cost of expired insurance for the period,Prepaid Insurance and Insurance Expense are both overstated.

Correct AnswerverifiedShow Answer

Two main accounting principles used in accrual accounting are expense recognition and full closure.

Correct AnswerverifiedShow Answer

On January 1,a company purchased a five-year insurance policy for $1,800 with coverage starting immediately.If the purchase was recorded in the Prepaid Insurance account,and the company records adjustments only at year-end,the adjusting entry at the end of the first year is:

Correct AnswerverifiedShow Answer

Accrued revenues at the end of one accounting period often result in cash ________ in the next period.

Correct Answerverifiedreceipts (...View AnswerShow Answer

Cash and office supplies are both classified as current assets.

Correct AnswerverifiedShow Answer

Correct Answerverified($15,000/6 mo.= $2,5...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Reversing entries are optional.

Correct AnswerverifiedShow Answer

A trial balance prepared after adjustments have been recorded is called a(n) :

Correct AnswerverifiedShow Answer

Two common subgroups for liabilities on a classified balance sheet are:

Correct AnswerverifiedShow Answer

Adjusting entries always affect the cash account.

Correct AnswerverifiedShow Answer

Profit margin reflects the percent of profit in each dollar of revenue.

Correct AnswerverifiedShow Answer

How is a classified balance sheet different from an unclassified balance sheet? List the usual order of the categories on a classified balance sheet.

Correct AnswerverifiedAn unclassified balance sheet broadly gr...View AnswerShow Answer

Costs incurred during an accounting period but unpaid and unrecorded are accrued expenses.

Correct AnswerverifiedShow Answer

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Correct AnswerverifiedShow Answer

Assuming unearned revenues are originally recorded in balance sheet accounts,the adjusting entry to record earning of unearned revenue is:

Correct AnswerverifiedShow Answer

A benefit of using a work sheet is that it aids in the preparation of the financial statements.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition. -A balance sheet that broadly groups items into assets,liabilities and equity.

Correct AnswerverifiedShow Answer

Depreciation expense is an example of an accrued expense.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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receipts (...
View Answer

Correct Answer
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Correct Answer
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($15,000/6 mo.= $2,5...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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An unclassified balance sheet broadly gr...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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