Question 1

The adjusting entry to record an accrued expense 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) B) and E)
G) A) and B)

Question 2

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Accepted Answer

A)   Both U.S. GAAP and IFRS include guidance for adjusting entries.
B)   Both U.S. GAAP and IFRS prepare the same four financial statements.
C)   U.S. GAAP does not require items to be separated by current and noncurrent classifications on the balance sheet.
D)   U.S. GAAP balance sheets report current items first.
E)   IFRS balance sheets normally present noncurrent items first.F) C) and E)
G) A) and B) C

Question 4

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) All of the above
G) B) and C)

Question 5

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Accepted Answer

A) True 
 B)False

Question 6

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Accepted Answer

A) True 
 B)False

Question 7

The Dividends account is normally closed by debiting it.

Accepted Answer

A) True 
 B)False

Question 8

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.Assuming the company does not prepare reversing entries,the January 31 and February 9 journal entries are:

Accepted Answer

A)   1/31 Salaries Expense .................... 1,400 Salaries Payable ...................... 1,4002/9 Salaries Payable ....................... 7,000 Salaries Expense .................... 1,400Cash......................................8,400\begin{array}{lll}1/31&	ext { Salaries Expense .................... } & 1,400\&	ext { Salaries Payable ...................... } &&1,400 \2/9&	ext { Salaries Payable ....................... } & 7,000 \&	ext { Salaries Expense .................... } & 1,400 \&	ext{Cash......................................}&&8,400\end{array}1/312/9​ Salaries Expense ....................  Salaries Payable ......................  Salaries Payable .......................  Salaries Expense .................... Cash......................................​1,4007,0001,400​1,4008,400​ 
B)   1/31 Salaries Payable .................... 1,400 Salaries Expense...................... 1,4002/9 Salaries Expense ....................... 5,600 Salaries Payable.................... 1,400Cash.....................................7,000\begin{array}{lll}1/31&	ext { Salaries Payable .................... } & 1,400\&	ext { Salaries  Expense...................... } &&1,400 \2/9&	ext { Salaries Expense ....................... } & 5,600 \&	ext { Salaries Payable.................... } & 1,400 \&	ext{Cash.....................................}&&7,000\end{array}1/312/9​ Salaries Payable ....................  Salaries Expense......................  Salaries Expense .......................  Salaries Payable.................... Cash.....................................​1,4005,6001,400​1,4007,000​ 
C)   1/31 Salaries Expense .................... 1,400Cash......................................1,4002/9 Salaries Expense .................... 7,000Cash......................................7,000\begin{array}{lll}1/31&	ext { Salaries Expense .................... } & 1,400\&	ext{Cash......................................}&&1,400 \2/9&	ext { Salaries Expense .................... } & 7,000 \&	ext{Cash......................................}&&7,000\end{array}1/312/9​ Salaries Expense .................... Cash...................................... Salaries Expense .................... Cash......................................​1,4007,000​1,4007,000​ 
D)   1/31 Salaries Expense .................... 1,400 Salaries Payable ...................... 1,4002/9 Salaries Expense .................... 7,000Cash......................................7,000\begin{array}{lll}1/31&	ext { Salaries Expense .................... } & 1,400\&	ext { Salaries Payable ...................... } &&1,400 \2/9&	ext { Salaries Expense .................... } & 7,000 \&	ext{Cash......................................}&&7,000\end{array}1/312/9​ Salaries Expense ....................  Salaries Payable ......................  Salaries Expense .................... Cash......................................​1,4007,000​1,4007,000​ 
E)   1/31 Salaries Expense .................... 1,400 Salaries Payable ...................... 1,4002/9 Salaries Expense....................... 5,600 Salaries Payable .................... 1,400Cash......................................7,000\begin{array}{lll}1/31&	ext { Salaries Expense .................... } & 1,400\&	ext { Salaries Payable ...................... } &&1,400 \2/9&	ext { Salaries Expense....................... } & 5,600 \&	ext { Salaries Payable  .................... } & 1,400 \&	ext{Cash......................................}&&7,000\end{array}1/312/9​ Salaries Expense ....................  Salaries Payable ......................  Salaries Expense.......................  Salaries Payable .................... Cash......................................​1,4005,6001,400​1,4007,000​   F) A) and D)
G) A) and C)

Question 9

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi...

Question 10

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

Accepted Answer

A)   A debit to Cash and a credit to Salaries Payable.
B)   A debit to Cash and a credit to Prepaid Salaries.
C)   A debit to Salaries Payable and a credit to Cash.
D)   A debit to Salaries Payable and a credit to Salaries Expense.
E)   No entry would be necessary on January 5.F) A) and D)
G) B) and E)

Question 11

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

Accepted Answer

A) True 
 B)False

Question 12

Match the following terms with the appropriate definition.
-Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Accepted Answer

A)  Accrued revenues
B)  Expense recognition (matching)  principle
C)  Cash basis accounting
D)  Depreciation
E)  Accrual basis accountingF) Interim financial statementsG) Straight-line depreciationH) Time period assumptionI) Fiscal yearJ) B) and D)
K) E) and H)

Question 13

Match the following terms with the appropriate definition.
-Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Accepted Answer

A)  Adjusting entry
B)  Unadjusted trial balance
C)  Prepaid expenses
D)  Natural business year
E)  Accrued expensesF) Adjusted trial balanceG) Report form balance sheetH) Accounting periodI) Profit marginJ) Contra accountK) A) and H)
L) All of the above E

Question 14

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Accepted Answer

A) True 
 B)False

Question 15

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Accepted Answer

A) True 
 B)False

Question 16

Match the following terms with the appropriate definition.
-A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

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) G) and J)
L) A) and G)

Question 17

Permanent accounts include all of the following except:

Accepted Answer

A)   Accumulated Depreciation-Equipment.
B)   Prepaid Insurance.
C)   Unearned Revenue.
D)   Accounts Receivable.
E)   Depreciation Expense-Equipment.F) A) and D)
G) C) and D) E

Question 18

On July 1 of the current calendar year,Plum Co.paid $7,500 cash for management services to be performed over a two-year period beginning July 1.Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.The adjusting entry on December 31 of the current year for Plum would include:

Accepted Answer

A)   A debit to an expense and a credit to a prepaid expense for $5,625.
B)   A debit to a prepaid expense and a credit to Cash for $5,625.
C)   A debit to an expense and a credit to a prepaid expense for $1,875.
D)   A debit to a prepaid expense and a credit to an expense for $1,875.
E)   A credit to a liability and a debit to a prepaid expense for $1,875.F) B) and D)
G) A) and B)

Question 19

On April 1,Griffith Publishing Company received $1,548 from Santa Fe,Inc.for 36-month subscriptions to several different magazines.The subscriptions started immediately.What is the amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?

Accepted Answer

A)   $0.
B)   $516.
C)   $387.
D)   $129.
E)   $430.F) A) and D)
G) A) and C)

Question 20

Which of the following is classified as a current asset?

Accepted Answer

A)   Office equipment.
B)   Patent.
C)   Unearned revenue.
D)   Office supplies.
E)   Land.F) None of the above
G) B) and D)

Exam 3: Adjusting Accounts for Financial Statements

The adjusting entry to record an accrued expense is:

Correct Answer
verified

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Correct Answer
verified

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct Answer
verified
C

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

Correct Answer
verified

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Correct Answer
verified

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Correct Answer
verified

The Dividends account is normally closed by debiting it.

Correct Answer
verified

Correct Answer
verified

Discuss the importance of periodic reporting and the time period assumption.

Correct Answer
verified
For information to be valuable to decisi...
View Answer

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

Correct Answer
verified

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

Correct Answer
verified

Match the following terms with the appropriate definition. -Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Correct Answer
verified

Match the following terms with the appropriate definition. -Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Correct Answer
verified
E

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Correct Answer
verified

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Correct Answer
verified

Match the following terms with the appropriate definition. -A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

Correct Answer
verified

Permanent accounts include all of the following except:

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
verified

Which of the following is classified as a current asset?

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

The adjusting entry to record an accrued expense is:

Correct AnswerverifiedShow Answer

Adjustments are necessary to bring an asset or liability account to its proper amount and also update a related expense or revenue account.

Correct AnswerverifiedShow Answer

Which of the following statements related to U.S.GAAP and IFRS is incorrect?

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Correct AnswerverifiedShow Answer

Accrued expenses reflect transactions where cash is paid before a related expense is recognized.

Correct AnswerverifiedShow Answer

The Dividends account is normally closed by debiting it.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Discuss the importance of periodic reporting and the time period assumption.

Correct AnswerverifiedFor information to be valuable to decisi...View AnswerShow Answer

If accrued salaries were recorded on December 31 with a debit to Salaries Expense and a credit to Salaries Payable,and no reversing entries were made on January 1,the entry to record payment of these wages on the following January 5 would include:

Correct AnswerverifiedShow Answer

If all columns of a completed work sheet balance,you can be sure that no errors were made in its preparation.

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition. -Assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition. -Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.

Correct AnswerverifiedE

Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period.

Correct AnswerverifiedShow Answer

The time period assumption assumes that an organization's activities can be divided into specific time periods such as months,quarters,or years.

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition. -A balance sheet that organizes the assets and liabilities into important subgroups that provide more information to decision makers.

Correct AnswerverifiedShow Answer

Permanent accounts include all of the following except:

Correct AnswerverifiedE

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is classified as a current asset?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
For information to be valuable to decisi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified