Question 1

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 2

Each adjusting entry can only affect a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

All plant assets, including land, eventually wear out or decline in usefulness.

Accepted Answer

A) True 
 B)False

Question 5

Explain how accounting adjustments affect financial statements.

Accepted Answer

Without accounting adjustments many acco...

Question 6

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.

Question 7

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

Accepted Answer

A) True 
 B)False

Question 8

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

Accepted Answer

The answer of On December 14 Bench Company received $3,700...

Question 9

The main purpose of adjusting entries is to:

Accepted Answer

A)   Record external transactions and events.
B)   Record internal transactions and events.
C)   Recognize assets purchased during the period.
D)   Recognize debts paid during the period.
E)   Correct errors.

Question 10

On May 1, Giltus Advertising Company received $1,500 from Julie Bee for advertising services to be completed April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. The adjusting entry on December 31 would include:

Accepted Answer

A)   A debit to Unearned Fees for $500.
B)   A credit to Unearned Fees for $500.
C)   A credit to Earned Fees for $1,000.
D)   A debit to Earned Fees for $1,000.
E)   A debit to Earned Fees for $500.

Question 11

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Accepted Answer

A)   Debit Office Supplies $105 and credit Office Supplies Expense $105.
B)   Debit Office Supplies Expense $105 and credit Office Supplies $105.
C)   Debit Office Supplies Expense $254 and credit Office Supplies $254.
D)   Debit Office Supplies $254 and credit Office Supplies Expense $254.
E)   Debit Office Supplies $105 and credit Supplies Expense $254.

Question 12

Describe the types of entries required in later periods that result from accruals.

Accepted Answer

Accrued revenues in one period result in...

Question 13

Depreciation expense is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 14

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 15

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Accepted Answer

Unadjusted...

Question 16

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Accepted Answer

A) True 
 B)False

Question 17

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Accepted Answer

A)   2%.
B)   20%.
C)   200%.
D)   500%.
E)   $8,000.

Question 18

A company has 20 employees who each earn $500 per week for a 5-day week that begins on Monday. December 31 of Year 1 is a Monday, and all 20 employees worked that day.
a) Prepare the required adjusting journal entry to record accrued salaries on December 31, Year 1.
b) Prepare the journal entry to record the payment of salaries on January 4, Year 2.

Accepted Answer

The answer of A company has 20 employees who each...

Question 19

The accrual basis of accounting recognizes expenses when cash is paid.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 3: Adjusting Accounts and Preparing Financial Statements

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Correct Answer
verified
Unadjusted...
View Answer

Explain how accounting adjustments affect financial statements.

Correct Answer
verified
Without accounting adjustments many acco...
View Answer

The main purpose of adjusting entries is to:

Correct Answer
verified

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Correct Answer
verified

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Correct Answer
verified

All plant assets, including land, eventually wear out or decline in usefulness.

Correct Answer
verified

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

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

Describe the types of entries required in later periods that result from accruals.

Correct Answer
verified
Accrued revenues in one period result in...
View Answer

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

Correct Answer
verified

Correct Answer
verified

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Correct Answer
verified

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

Correct Answer
verified

Correct Answer
verified

Each adjusting entry can only affect a balance sheet account.

Correct Answer
verified

Depreciation expense is an example of an accrued expense.

Correct Answer
verified

Interim financial statements refer to financial reports:

Correct Answer
verified

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Correct Answer
verified

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

Correct Answer
verified

The accrual basis of accounting recognizes expenses when cash is paid.

Correct Answer
verified

Exam 3: Adjusting Accounts and Preparing Financial Statements

An _______________________ is a listing of all of the accounts in the ledger with their account balances before adjustments are made.

Correct AnswerverifiedUnadjusted...View AnswerShow Answer

Explain how accounting adjustments affect financial statements.

Correct AnswerverifiedWithout accounting adjustments many acco...View AnswerShow Answer

The main purpose of adjusting entries is to:

Correct AnswerverifiedShow Answer

Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is:

Correct AnswerverifiedShow Answer

A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:

Correct AnswerverifiedShow Answer

All plant assets, including land, eventually wear out or decline in usefulness.

Correct AnswerverifiedShow Answer

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

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

Describe the types of entries required in later periods that result from accruals.

Correct AnswerverifiedAccrued revenues in one period result in...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cash basis of accounting recognizes revenues when cash payments from customers are received.

Correct AnswerverifiedShow Answer

It is acceptable to record cash received in advance of providing products or services to revenue accounts.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each adjusting entry can only affect a balance sheet account.

Correct AnswerverifiedShow Answer

Depreciation expense is an example of an accrued expense.

Correct AnswerverifiedShow Answer

Interim financial statements refer to financial reports:

Correct AnswerverifiedShow Answer

A company recorded 2 days of accrued salaries of $1,400 for its employees on January 31. On February 9, it paid its employees $7,000 for these accrued salaries and for other salaries earned through February 9. The January 31 and February 9 journal entries are:

Correct AnswerverifiedShow Answer

Asset and liability balances are transferred from the adjusted trial balance to the income statement.

Correct AnswerverifiedShow Answer

The accrual basis of accounting recognizes expenses when cash is paid.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Unadjusted...
View Answer

Correct Answer
verified
Without accounting adjustments many acco...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Accrued revenues in one period result in...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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