Question 1

When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?

Accepted Answer

A)   Accumulated Depreciation and Depreciation Expense
B)   Equipment and Depreciation Expense
C)   Accumulated Depreciation and Equipment
D)   Revenue and Equipment

Question 2

Which of the following statements about adjustments is not correct?

Accepted Answer

A)   When making an adjustment to recognize supplies used in a period, total assets will not change.
B)   Accrued wages are wages owed, but not yet paid, to employees; the accrued wages will need to be recorded with an adjusting entry that increases expenses.
C)   Deferral adjustments are used to update amounts that have been previously deferred on the balance sheet.
D)   Depreciation is an example of a deferral adjustment.

Question 3

Which of the following statements about the statement of retained earnings is correct?

Accepted Answer

A)   Dividends increase net income and are added to calculate the ending balance of Retained Earnings.
B)   Dividends are subtracted to calculate the ending balance of Retained Earnings.
C)   Dividends are not used to calculate the ending balance of Retained Earnings.
D)   Dividends are not reported on the statement of retained earnings.

Question 4

Dividends:

Accepted Answer

A)   are an expense of doing business.
B)   are not a legal obligation that a company must pay.
C)   are reported only on the statement of retained earnings.
D)   are reported on the balance sheet.

Question 5

After the adjustments have been completed,the adjusted balance in the Supplies account represents the cost of supplies:

Accepted Answer

A)   on hand at the end of the accounting period
B)   purchased during the accounting period
C)   used during the accounting period
D)   purchased, but not yet paid for, at the end of the accounting period

Question 6

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

Accepted Answer

A)   value of the insurance prepayment that remains to benefit future periods
B)   cost of the insurance expired during the period
C)   amount owed for insurance at the end of the accounting period
D)   cash paid for insurance of current and future periods

Question 7

A prepayment is originally recorded as an asset.Later,at the end of the accounting period,an adjustment is recorded causing a(n) ______ in the asset account and a(n) ______ in the expense account.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; decrease
D)   decrease, increase

Question 8

Which of the following statements about the income statement is correct?

Accepted Answer

A)   Expenses are listed before revenues on the income statement.
B)   Revenues are listed before expenses on the income statement.
C)   The income statement is prepared after the balance sheet.
D)   Dividends are listed on the income statement.

Question 9

Which of the following statements about financial statements and the trial balance is correct?

Accepted Answer

A)   Financial statements are prepared only after the adjusted trial balance has shown that debits equal credits.
B)   A post-closing trial balance should be prepared before temporary accounts are closed.
C)   An adjusted trial balance reflects the amount of Retained Earnings to be shown on the Balance Sheet.
D)   A post-closing trial balance lists the account balances of the accounts that are reported the income statement.

Question 10

Yulan,Inc has beginning Retained Earnings of $22,000,ending Retained Earnings of $32,000,and net income of $15,000.What was the amount of dividends declared during the year?

Accepted Answer

A)   $5,000
B)   $7,000
C)   $10,000
D)   $15,000

Question 11

An adjusting journal entry that includes an increase to an asset contra-account would also include an increase in a(n) :

Accepted Answer

A)   related asset account.
B)   liability account.
C)   revenue account.
D)   expense account.

Question 12

The book value of equipment is equal to which of the following?

Accepted Answer

A)   Cost of equipment plus the related accumulated depreciation
B)   Accumulated depreciation less the related depreciation expense
C)   Cost of equipment less the related accumulated depreciation
D)   Its accumulated depreciation plus the related depreciation expense

Question 13

Baylor Service Corp.redeemed $1,000 of gift cards that customers used to pay for services that were performed by the company.The related adjusting entry would include a debit to:

Accepted Answer

A)   Accounts Receivable and a credit to Service Revenue.
B)   Unearned Revenue and a credit to Service Revenue.
C)   Cash and a credit to Unearned Revenue.
D)   Cash and a credit to Service Revenue.

Question 14

Closing entries:

Accepted Answer

A)   are prepared before financial statements are prepared.
B)   reduce the number of permanent accounts.
C)   cause the revenue and expense accounts to have zero balances.
D)   summarize the activity in every account.

Question 15

Which of the following statements about the adjusted and post-closing trial balances is correct?

Accepted Answer

A)   The adjusted trial balance is prepared after the financial statements to verify that the numbers are accurate.
B)   The primary purpose of the post-closing trial balance is to see whether revenues are greater than expenses.
C)   The post-closing trial balance is a check that the accounting records are still in balance after posting all closing entries to the accounts.
D)   The post-closing trial balance debit column total is the amount to be shown as Total Assets on the Balance Sheet.

Question 16

Which of the following accounts would be classified as a current liability on a classified balance sheet?

Accepted Answer

A)   Service Revenue
B)   Salaries and Wages Expense
C)   Accumulated Depreciation
D)   Interest Payable

Question 17

A company pays its workforce on Fridays for a five-day workweek ending on that day.The payroll for a week is $100,000.If the accounting year-end falls on a Tuesday,the adjusting journal entry to record this will include a

Accepted Answer

A)   debit to Salaries and Wages Expense $100,000.
B)   debit to Salaries and Wages Expense $40,000.
C)   credit to Salaries and Wages Payable $60,000.
D)   credit to Salaries and Wages Payable $100,000.

Question 18

Which of the following is incorrect regarding the Income Tax Payable account?

Accepted Answer

A)   The account represents income tax incurred, but not yet paid by the company.
B)   This is a liability account.
C)   The adjusting entry involving this account also requires an entry to Income Tax Expense.
D)   The account represents tax refunds due to the company.

Question 19

When existing assets are used up in the ordinary course of business:

Accepted Answer

A)   an expense is recorded.
B)   unearned revenue is recorded.
C)   an accrual is recorded.
D)   a prepaid expense is recorded.

Question 20

A company has a loan that accrues interest at a rate of $20 a day.The company pays the interest once a quarter.Which of the following adjustments would be made at the end of a month in which no payment for interest was made?

Accepted Answer

A)   Debit Interest Payable and credit Interest Expense
B)   Debit Notes Payable and credit Cash
C)   Debit Interest Expense and credit Interest Payable
D)   Debit Cash and credit Notes Payable

Exam 4: Adjustments,financial Statements,and Financial Results

Which of the following accounts would be classified as a current liability on a classified balance sheet?

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Which of the following is incorrect regarding the Income Tax Payable account?

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The book value of equipment is equal to which of the following?

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After the adjustments have been completed,the adjusted balance in the Supplies account represents the cost of supplies:

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An adjusting journal entry that includes an increase to an asset contra-account would also include an increase in a(n) :

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Yulan,Inc has beginning Retained Earnings of $22,000,ending Retained Earnings of $32,000,and net income of $15,000.What was the amount of dividends declared during the year?

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Which of the following statements about financial statements and the trial balance is correct?

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Closing entries:

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Which of the following statements about adjustments is not correct?

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A company has a loan that accrues interest at a rate of $20 a day.The company pays the interest once a quarter.Which of the following adjustments would be made at the end of a month in which no payment for interest was made?

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Which of the following statements about the statement of retained earnings is correct?

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A company pays its workforce on Fridays for a five-day workweek ending on that day.The payroll for a week is $100,000.If the accounting year-end falls on a Tuesday,the adjusting journal entry to record this will include a

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The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

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Dividends:

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A prepayment is originally recorded as an asset.Later,at the end of the accounting period,an adjustment is recorded causing a(n) ______ in the asset account and a(n) ______ in the expense account.

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Which of the following statements about the income statement is correct?

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Which of the following statements about the adjusted and post-closing trial balances is correct?

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Baylor Service Corp.redeemed $1,000 of gift cards that customers used to pay for services that were performed by the company.The related adjusting entry would include a debit to:

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When existing assets are used up in the ordinary course of business:

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When recording an adjustment for the use of equipment during the current accounting period,which two accounts are affected?

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A prepayment is originally recorded as an asset.Later,at the end of the accounting period,an adjustment is recorded causing a(n) in the asset account and a(n) in the expense account.

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