Question 1

Classify the following items as: 
(1)prepaid expense,
(2)unearned revenue,
(3)accrued expense,or 
(4)accrued revenue.​a)Fees received but not yet earnedb)Fees earned but not yet receivedc)Paid premium on a one-year insurance policyd)Property tax owed to be paid beginning of next year

Accepted Answer

a.
(2)unearned reven...

Question 2

When preparing an income statement vertical analysis,each revenue and expense is expressed as a percent of net income.

Accepted Answer

A) True 
 B)False

Question 3

Adjusting entries always include

Accepted Answer

A)  only income statement accounts
B)  only balance sheet accounts
C)  the cash account
D)  at least one income statement account and one balance sheet account

Question 4

Accrued expenses affect ________ on the balance sheet.

Accepted Answer

A)  assets
B)  liabilities
C)  fixed assets
D)  prepaid expenses

Question 5

The revenue recognition principle

Accepted Answer

A)  is not in conflict with the cash method of accounting
B)  determines when revenue is credited to a revenue account
C)  states that revenue is not recorded until the cash is received
D)  controls all revenue reporting for the cash basis of accounting

Question 6

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

Accepted Answer

A)  increase income
B)  decrease net income
C)  decrease expenses
D)  increase assets

Question 7

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 8

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, $1,800

Question 9

At year-end,the balance in the prepaid insurance account,prior to any adjustments,is $6,000.The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Accepted Answer

A) True 
 B)False

Question 10

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Accepted Answer

A)  historical cost
B)  contra asset
C)  book value
D)  market value

Question 11

Prepare adjusting entries for the following transactions:

Accepted Answer

The answer of Prepare adjusting entries for the following transactions:...

Question 12

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

Accepted Answer

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

Question 13

A company pays $36,000 for 12 months' rent on October 1,recording the prepayment as an asset.The adjusting entry on December 31 is a debit to Rent Expense of $9,000,and a credit to Prepaid Rent of $9,000.

Accepted Answer

A) True 
 B)False

Question 14

Salaries of $6,400 are paid for a five-day week on Friday.Prepare the adjusting journal entry that is required if the month ends on Thursday.

Accepted Answer

The answer of Salaries of $6,400 are paid for a...

Question 15

An adjusting entry to accrue an incurred expense will affect total liabilities.

Accepted Answer

A) True 
 B)False

Question 16

Match the type of account (a through e)  with the business transactions that follow.
-Paid for a six-month magazine subscription.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of these choices

Question 17

Listed below are accounts to use for transactions 
(a)through 
(j),each identified by a number.Following this list are the transactions.You are to indicate for each transaction the accounts that should be debited and credited by placing the account number
(s)in the appropriate box.​  ​

Accepted Answer

The answer of Listed below are accounts to use for...

Question 18

Under the accrual basis,some accounts in the ledger require updating at the end of the period.Discuss the three main reasons for this updating and give an example of each.

Accepted Answer

Some expenses are not recorded daily.For...

Question 19

Gizmo Company purchased a one-year insurance policy on October 1 for $1,800.The adjusting entry on December 31 would be:​

Accepted Answer

$1,800/12 ...

Question 20

Match the type of account (a through e)  with the business transactions that follow.
-Paid six months of rental payments to the landlord.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of these choices

Exam 3: The Adjusting Process

Gizmo Company purchased a one-year insurance policy on October 1 for $1,800.The adjusting entry on December 31 would be:​

Correct Answerverified$1,800/12 ...View AnswerShow Answer

Prepare adjusting entries for the following transactions:

Correct AnswerverifiedShow Answer

Classify the following items as: (1)prepaid expense, (2)unearned revenue, (3)accrued expense,or (4)accrued revenue.​a)Fees received but not yet earnedb)Fees earned but not yet receivedc)Paid premium on a one-year insurance policyd)Property tax owed to be paid beginning of next year

Correct Answerverifieda.(2)unearned reven...View AnswerShow Answer

A company pays $36,000 for 12 months' rent on October 1,recording the prepayment as an asset.The adjusting entry on December 31 is a debit to Rent Expense of $9,000,and a credit to Prepaid Rent of $9,000.

Correct AnswerverifiedShow Answer

Salaries of $6,400 are paid for a five-day week on Friday.Prepare the adjusting journal entry that is required if the month ends on Thursday.

Correct AnswerverifiedShow Answer

Under the accrual basis,some accounts in the ledger require updating at the end of the period.Discuss the three main reasons for this updating and give an example of each.

Correct AnswerverifiedSome expenses are not recorded daily.For...View AnswerShow Answer

When preparing an income statement vertical analysis,each revenue and expense is expressed as a percent of net income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Adjusting entries always include

Correct AnswerverifiedShow Answer

An adjusting entry to accrue an incurred expense will affect total liabilities.

Correct AnswerverifiedShow Answer

Match the type of account (a through e) with the business transactions that follow. -Paid six months of rental payments to the landlord.

Correct AnswerverifiedShow Answer

At year-end,the balance in the prepaid insurance account,prior to any adjustments,is $6,000.The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Correct AnswerverifiedShow Answer

The revenue recognition principle

Correct AnswerverifiedShow Answer

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Correct AnswerverifiedShow Answer

Listed below are accounts to use for transactions (a)through (j),each identified by a number.Following this list are the transactions.You are to indicate for each transaction the accounts that should be debited and credited by placing the account number (s)in the appropriate box.​ ​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Accrued expenses affect ________ on the balance sheet.

Correct AnswerverifiedShow Answer

Match the type of account (a through e) with the business transactions that follow. -Paid for a six-month magazine subscription.

Correct AnswerverifiedShow Answer

Gizmo Company purchased a one-year insurance policy on October 1 for $1,800.The adjusting entry on December 31 would be:

Correct Answer
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$1,800/12 ...
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Classify the following items as: (1)prepaid expense, (2)unearned revenue, (3)accrued expense,or (4)accrued revenue.a)Fees received but not yet earnedb)Fees earned but not yet receivedc)Paid premium on a one-year insurance policyd)Property tax owed to be paid beginning of next year

Correct Answer
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a.
(2)unearned reven...
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Some expenses are not recorded daily.For...
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Using the following account balances for Garry's Tree Service,prepare a trial balance.

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Listed below are accounts to use for transactions (a)through (j),each identified by a number.Following this list are the transactions.You are to indicate for each transaction the accounts that should be debited and credited by placing the account number (s)in the appropriate box.

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