Question 1

Before an adjusting entry for accrued salaries is made, the amount in Salaries Expense is understated and the amount in Salaries Payable is also understated.

Accepted Answer

A) True 
 B)False

Question 2

On January 1, 2015, Peach Company purchased a five-year insurance policy for $5,000.If the cost was debited to Prepaid Insurance, the adjusting entry at the end of 2015 is:

Accepted Answer

A)  Debit Prepaid Insurance, $1,000; credit Insurance Expense, $1,000.
B)  Debit Prepaid Insurance, $1,800; credit Cash, $1,800.
C)  Debit Insurance Expense, $1,000, credit Prepaid Insurance $1,000.
D)  Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
E)  Debit Insurance Expense, $360; credit Prepaid Insurance, $360.F) C) and D)
G) All of the above

Question 3

The natural business year can only be used when the seasonal variation in sales does not match the calendar year.

Accepted Answer

A) True 
 B)False

Question 4

Adjusting entries are used to record the effects of internal economic events

Accepted Answer

A) True 
 B)False

Question 5

Before making adjusting entries at the end of an accounting period, some accounts may 3)not show proper financial statement amounts even though all transactions were correctly recorded.

Accepted Answer

A) True 
 B)False

Question 6

Both the accrual basis and the cash basis of accounting increase the comparability of financial statement information from period to period.

Accepted Answer

A) True 
 B)False  False

Question 7

The 12-month period that ends when a company's activities are at their lowest point iscalled the:

Accepted Answer

A)  Natural business year.
B)  Calendar year.
C)  Fiscal year.
D)  Accounting period.
E)  Interim period.F) B) and C)
G) None of the above

Question 8

Earned but uncollected revenues that are recorded during the adjusting process, with a credit to a revenue account and a debit to an expense account, are referred to as accrued expenses.

Accepted Answer

A) True 
 B)False

Question 9

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Accepted Answer

A)  Classified balance sheet accounts.
B)  Income statement accounts.
C)  Assets.
D)  Items that require adjusting entries.
E)  Items that require contra accounts.F) B) and E)
G) A) and D)

Question 10

Which of the following is not considered a basic type of adjusting entry? 124)

Accepted Answer

A)  An entry to convert an asset to a liability.
B)  An entry to accrue unpaid expenses.
C)  An entry to accrue uncollected revenue.
D)  An entry to convert a liability to a revenue.
E)  An entry to convert an asset to an expense.F) C) and D)
G) A) and B)

Question 11

How much did Grow pay for insurance during 2018?

Accepted Answer

A)  $8,700.
B)  $4,500.
C)  $17,700.
D)  $18,000.
E)  $18,300.F) B) and D)
G) B) and E) D

Question 12

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are called

Accepted Answer

A)  Operating expenses.
B)  Unearned expenses.
C)  Accounts payable.
D)  Prepaid expenses.
E)  Accrued expenses.F) B) and E)
G) A) and B)

Question 13

Correcting an error always requires two entries

Accepted Answer

A) True 
 B)False

Question 14

Due to an oversight, the company bookkeeper made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would:

Accepted Answer

A)  Have no effect on profit
B)  Understate profit by $24,000.
C)  Have no effect on the balance sheet.
D)  Overstate profit by $24,000.
E)  Overstate liabilities.F) A) and B)
G) A) and E)

Question 15

BioVert Company had $2,500 of store supplies on hand at the beginning of2015. During 2015 BioVert purchased $250 worth of store supplies. On December 31, 2015, $1,125 worth of store supplies remained. What is the amount of BioVert Company's store supplies expense for 2015?

Accepted Answer

$2,500 + $...

Question 16

Which of the following accounts is most likely associated with an accrued expense? 104)

Accepted Answer

A)  Accounts Receivable.
B)  Service revenue.
C)  Salaries Payable.
D)  Depreciation expense.
E)  Unearned revenue.F) All of the above
G) C) and D) C

Question 17

The total amount of depreciation recorded for an asset during the entire time the asset has been owned:

Accepted Answer

A)  Is shown on the statement of changes in equity.
B)  Is referred to as accumulated depreciation.
C)  Is not shown on the balance sheet.
D)  Is shown on the income statement.
E)  Is recorded in a liability account.F) A) and C)
G) C) and E)

Question 18

Prepaid expenses may be recorded as debits to expense accounts

Accepted Answer

A) True 
 B)False

Question 19

If on January 1 of this year, a company paid $12,000 rent for one year and adjustingentries are made at the end of each month, the balance of Prepaid Rent at December 1 of this year should be $1,000.

Accepted Answer

A) True 
 B)False

Question 20

Unearned revenue is reported in the financial statements as

Accepted Answer

A)  An asset on the balance sheet.
B)  A revenue on the balance sheet.
C)  A liability on the balance sheet.
D)  An unearned revenue on the income statement.
E)  An operating activity on the statement of cash flows.F) B) and C)
G) All of the above

Exam 3: Adjusting Accounts for Financial Statements

Before an adjusting entry for accrued salaries is made, the amount in Salaries Expense is understated and the amount in Salaries Payable is also understated.

Correct AnswerverifiedShow Answer

On January 1, 2015, Peach Company purchased a five-year insurance policy for $5,000.If the cost was debited to Prepaid Insurance, the adjusting entry at the end of 2015 is:

Correct AnswerverifiedShow Answer

The natural business year can only be used when the seasonal variation in sales does not match the calendar year.

Correct AnswerverifiedShow Answer

Adjusting entries are used to record the effects of internal economic events

Correct AnswerverifiedShow Answer

Before making adjusting entries at the end of an accounting period, some accounts may 3)not show proper financial statement amounts even though all transactions were correctly recorded.

Correct AnswerverifiedShow Answer

Both the accrual basis and the cash basis of accounting increase the comparability of financial statement information from period to period.

Correct AnswerverifiedFalse

The 12-month period that ends when a company's activities are at their lowest point iscalled the:

Correct AnswerverifiedShow Answer

Earned but uncollected revenues that are recorded during the adjusting process, with a credit to a revenue account and a debit to an expense account, are referred to as accrued expenses.

Correct AnswerverifiedShow Answer

Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues are all examples of:

Correct AnswerverifiedShow Answer

Which of the following is not considered a basic type of adjusting entry? 124)

Correct AnswerverifiedShow Answer

How much did Grow pay for insurance during 2018?

Correct AnswerverifiedD

Incurred but unpaid expenses that are recorded during the adjusting process with a debit to an expense and a credit to a liability are called

Correct AnswerverifiedShow Answer

Correcting an error always requires two entries

Correct AnswerverifiedShow Answer

Due to an oversight, the company bookkeeper made no adjusting entry for accrued and unpaid employee wages of $24,000 on December 31. This oversight would:

Correct AnswerverifiedShow Answer

BioVert Company had $2,500 of store supplies on hand at the beginning of2015. During 2015 BioVert purchased $250 worth of store supplies. On December 31, 2015, $1,125 worth of store supplies remained. What is the amount of BioVert Company's store supplies expense for 2015?

Correct Answerverified$2,500 + $...View AnswerShow Answer

Which of the following accounts is most likely associated with an accrued expense? 104)

Correct AnswerverifiedC

The total amount of depreciation recorded for an asset during the entire time the asset has been owned:

Correct AnswerverifiedShow Answer

Prepaid expenses may be recorded as debits to expense accounts

Correct AnswerverifiedShow Answer

If on January 1 of this year, a company paid $12,000 rent for one year and adjustingentries are made at the end of each month, the balance of Prepaid Rent at December 1 of this year should be $1,000.

Correct AnswerverifiedShow Answer

Unearned revenue is reported in the financial statements as

Correct AnswerverifiedShow Answer

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False

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D

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$2,500 + $...
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C

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