Question 1

The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

Accepted Answer

A) True 
 B)False

Question 2

The annual depreciation taken on a vehicle totals $3,000.The vehicle has been in service for three full years and the adjusting entries have been completed for the year.At the end of the third year,the balance in the Depreciation Expense account is $______ and the balance in the Accumulated Depreciation account is $______.

Accepted Answer

A)   $3,000; $3,000
B)   $3,000; $9,000
C)   $9,000; $3,000
D)   $9,000; $9,000E) A) and B)
F) A) and C)

Question 3

One major difference between deferral and accrual adjustments is that:

Accepted Answer

A)   accrual adjustments affect income statement accounts and deferral adjustments affect balance sheet accounts.
B)   deferral adjustments increase net income and accrual adjustments decrease net income.
C)   deferral adjustments are made under the cash basis of accounting and accrual adjustments are made under the accrual basis of accounting..
D)   accounts affected by an accrual adjustment always go in the same direction (i.e., both accounts are increased or both accounts are decreased)  and accounts affected by a deferral adjustment always go in opposite directions (one account is increased and one account is decreased) .E) B) and D)
F) A) and D)

Question 4

The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

Accepted Answer

A)   have a debit balance of $367,200.
B)   have a zero balance.
C)   still have a credit balance of $367,200.
D)   be removed entirely from the general ledger.E) B) and D)
F) None of the above

Question 5

When a deferral adjustment is made to an asset account,that asset becomes a(n) :

Accepted Answer

A)   liability.
B)   other asset.
C)   revenue.
D)   expense.E) B) and D)
F) All of the above

Question 6

Temporary accounts are closed at what stage of the accounting process?

Accepted Answer

A)   At the time that adjustments are made.
B)   After adjustments are made and before the income statement is prepared.
C)   After the income statement and the statement of retained earnings are prepared, but before the balance sheet is prepared.
D)   As the last journal entries at the end of each accounting year.E) A) and B)
F) B) and C)

Question 7

On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Accepted Answer

A)   Debit Interest Expense and credit Cash for $500
B)   Debit Interest Expense and credit Interest Payable for $500
C)   Debit Interest Payable and credit Interest Expense for $500
D)   Debit Interest Receivable and credit Interest Revenue for $500E) B) and C)
F) A) and C)

Question 8

On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

Accepted Answer

A)   credit to Prepaid Insurance $4,500.
B)   credit to Insurance Expense $4,500.
C)   credit to Prepaid Insurance $9,000.
D)   debit to Insurance expense $9,000.E) None of the above
F) B) and D)

Question 9

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Accepted Answer

A)   Revenue earned, but not yet collected, on investments
B)   Revenue earned during the period from an amount that was previously recorded as a liability when the cash was received
C)   Wages incurred, but not yet paid to employees, at the end of the accounting period
D)   Interest owed, but not yet paid, on a note payableE) A) and B)
F) All of the above

Question 10

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

Accepted Answer

A)   Accrual adjustments can increase assets and increase revenues.
B)   Accrual adjustments can increase liabilities and decrease expenses.
C)   Accrual adjustments can decrease assets and decrease expenses.
D)   Accrual adjustments can increase assets and increase expenses.E) All of the above
F) B) and C)

Question 11

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

Accepted Answer

A)   total depreciation that has accrued on the long-lived assets since their purchase
B)   decline in the market value of the long-lived assets
C)   cash paid for the long-lived assets in the accounting period
D)   depreciation for the current periodE) B) and D)
F) A) and D)

Question 12

The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

Accepted Answer

A) True 
 B)False

Question 13

The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following best describes when an accrual adjustment is required?

Accepted Answer

A)   An expense has been incurred and paid in cash.
B)   An expense has been incurred but not yet paid in cash.
C)   An expense has not been incurred, but cash has been paid.
D)   An expense has not been incurred nor has it been paid in cash.E) A) and D)
F) B) and C)

Question 15

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

Accepted Answer

A)   Dividends
B)   Unearned Revenue
C)   Wages Expense
D)   Accounts ReceivableE) B) and D)
F) A) and B)

Question 16

Which of the following statements about revenues and expenses is correct?

Accepted Answer

A)   If revenues are less than expenses, the company has a net loss and Retained Earnings decreases.
B)   If revenues are greater than expenses, the company has net income and Common Stock increases.
C)   If revenues are less than expenses, the company has a net loss and Common Stock increases to balance off the loss.
D)   If revenues are greater than expenses, the company has net income and Retained Earnings decreases.E) All of the above
F) C) and D)

Question 17

Supplies should be ______ and Supplies Expense should be ______ for supplies used up during the period.

Accepted Answer

A)   increased; increased
B)   increased; decreased
C)   decreased; decreased
D)   decreased; increasedE) B) and C)
F) None of the above

Question 18

What is the purpose of the closing process?

Accepted Answer

A)   To record transactions for the period
B)   To set all account balances to zero
C)   To prepare the accounting records so they are ready to track results for the following year
D)   To adjust for accrual and deferral transactionsE) None of the above
F) A) and B)

Question 19

Which of the following entries records the adjustment for revenue earned,but not yet collected?

Accepted Answer

A)   Debit Accounts Receivable and credit Sales Revenue
B)   Debit Sales Revenue and credit Accounts Receivable
C)   Debit Unearned Revenue and credit Sales Revenue
D)   Debit Accounts ReceivableE) B) and D)
F) B) and C)

Question 20

The adjusting entry to record the amount earned that previously had been collected in advance will:

Accepted Answer

A)   increase liabilities and increase revenues
B)   increase liabilities and decrease revenues
C)   decrease liabilities and increase revenue
D)   decrease liabilities and decrease revenuesE) None of the above
F) All of the above

Exam 4: Adjustments,financial Statements,and Financial Results

One major difference between deferral and accrual adjustments is that:

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

Correct Answer
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Supplies should be and Supplies Expense should be for supplies used up during the period.

Correct Answer
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How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

Correct Answer
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What is the purpose of the closing process?

Correct Answer
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Temporary accounts are closed at what stage of the accounting process?

Correct Answer
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Correct Answer
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After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

Correct Answer
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The adjusting entry to record the amount earned that previously had been collected in advance will:

Correct Answer
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On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

Correct Answer
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The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

Correct Answer
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On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Correct Answer
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Which of the following entries records the adjustment for revenue earned,but not yet collected?

Correct Answer
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When a deferral adjustment is made to an asset account,that asset becomes a(n) :

Correct Answer
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The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

Correct Answer
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Which of the following best describes when an accrual adjustment is required?

Correct Answer
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Which of the following statements about revenues and expenses is correct?

Correct Answer
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The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

Correct Answer
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Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Correct Answer
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The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

Correct Answer
verified

Exam 4: Adjustments,financial Statements,and Financial Results

One major difference between deferral and accrual adjustments is that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Supplies should be ______ and Supplies Expense should be ______ for supplies used up during the period.

Correct AnswerverifiedShow Answer

How can accrual adjustments for interest earned but not yet collected affect the balance sheet and the income statement?

Correct AnswerverifiedShow Answer

What is the purpose of the closing process?

Correct AnswerverifiedShow Answer

Temporary accounts are closed at what stage of the accounting process?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

After the adjustments have been completed,the adjusted balance in the Depreciation Expense account represents the:

Correct AnswerverifiedShow Answer

The adjusting entry to record the amount earned that previously had been collected in advance will:

Correct AnswerverifiedShow Answer

On June,30,2015,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2015 includes a:

Correct AnswerverifiedShow Answer

The amount charged for a good or service provided to a customer on account is recorded only after the payment is received.

Correct AnswerverifiedShow Answer

On December 31,2015,interest of $500 is owed on a bank loan that will not be paid until June 30,2016.What is the necessary adjusting journal entry on December 31,2015?

Correct AnswerverifiedShow Answer

Which of the following entries records the adjustment for revenue earned,but not yet collected?

Correct AnswerverifiedShow Answer

When a deferral adjustment is made to an asset account,that asset becomes a(n) :

Correct AnswerverifiedShow Answer

The asset,liability,and stockholders' equity accounts are referred to as permanent accounts.

Correct AnswerverifiedShow Answer

Which of the following best describes when an accrual adjustment is required?

Correct AnswerverifiedShow Answer

Which of the following statements about revenues and expenses is correct?

Correct AnswerverifiedShow Answer

The Sales Revenue account has a credit balance of $367,200 at year end.After the closing entries have been posted,the account will:

Correct AnswerverifiedShow Answer

Which of the following transactions constitutes an accrual adjustment involving a revenue account?

Correct AnswerverifiedShow Answer

The closing process includes a transfer of the Dividends account balance to the Retained Earnings account.

Correct AnswerverifiedShow Answer

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Supplies should be and Supplies Expense should be for supplies used up during the period.

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