Question 1

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Accepted Answer

A)  $16,780 debit.
B)  $7,180 credit.
C)  $16,780 credit.
D)  $18,280 credit.
E)  $23,780 credit.

Question 2

All of the following regarding reversing entries are true except:

Accepted Answer

A)  Reversing entries are optional.
B)  Reversing entries are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of the previous accounting period.
C)  Reversing entries are used to simplify a company's record keeping.
D)  Reversing entries are dated the first day of the new accounting period.
E)  Reversing entries should not be the exact opposite of previous period adjusting entries.

Question 3

A broad principle that requires identifying the activities of a business with specific time periods such as months,quarters,or years is the:

Accepted Answer

A)  Operating cycle of a business.
B)  Time period assumption.
C)  Going-concern assumption.
D)  Expense recognition (matching) principle.
E)  Accrual basis of accounting.

Question 4

Interim financial statements report a company's business activities for a one-year period.

Accepted Answer

A) True 
 B)False

Question 5

Each adjusting entry will affect a balance sheet account.

Accepted Answer

A) True 
 B)False

Question 6

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Accepted Answer

A) True 
 B)False

Question 7

Match between columns
                        Premises: A balance sheet that lists items vertically in the order of assets,liabilities and equity.
Costs that are incurred in a period but are both unpaid and unrecorded,requiring an adjustment at the end of the period.
An account linked with another account and having an opposite normal balance.
A useful measure of a company's operating results determined by dividing net income by net sales.
A 12-month period,used by companies with seasonal variation that ends when a company's sales activities are at their lowest point.
Items paid for in advance of receiving their benefits; recorded as an asset when purchased and expensed when used.
A listing of accounts and balances prepared after external transactions are recorded but before adjustments are recorded.
A journal entry made at the end of an accounting period to reflect a transaction or event that is not yet recorded; affects one or more income statement account and one or more balance sheet account,but never cash.
A listing of accounts and balances prepared after adjustments are recorded and posted to the ledger.
Any length of time that an organization's activities are divided into and reported by financial statements.

Accepted Answer

The Answer of Adjusted trial balance and Unadjusted trial balance is...

Question 8

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

Accepted Answer

A)  Items that require contra accounts.
B)  Items that require adjusting entries.
C)  Asset and equity accounts.
D)  Asset accounts.
E)  Income statement accounts.

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 in the accounting records.

Question 10

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Accepted Answer

A)  Adjusted trial balance.
B)  Work sheet.
C)  Post-closing trial balance.
D)  Unadjusted trial balance.
E)  General ledger.

Question 11

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Accepted Answer

A)  Debit Cash and credit Legal Fees Earned.
B)  Debit Cash and credit Unearned Legal Fees.
C)  Debit Unearned Legal Fees and credit Legal Fees Earned.
D)  Debit Legal Fees Earned and credit Unearned Legal Fees.
E)  Debit Unearned Legal Fees and credit Accounts Receivable.

Question 12

Which of the following statements about a company's operating cycle is not true:

Accepted Answer

A)  Non-current items are those expected to come due within one year or the company's operating cycle.
B)  The operating cycle is the time span from when cash is used to acquire goods and services until cash is received from the sale of goods and services.
C)  The length of a company's operating cycle depends on its activities.
D)  For a merchandiser selling products,the operating cycle is the time span between paying suppliers for merchandise and receiving cash from customers.
E)  Most operating cycles are less than one year.

Question 13

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Accepted Answer

A) True 
 B)False

Question 14

The following information is available for Brendon Company before closing the accounts.What will be the amount in the Income Summary account that should be closed to Retained earnings?

Accepted Answer

A)  $80,000.
B)  $64,400.
C)  $43,000.
D)  $32,400.
E)  $42,400.

Question 15

A salary owed to employees is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 16

The accounting principle that requires revenue to be recorded when earned is the:

Accepted Answer

A)  Expense recognition (matching) principle.
B)  Revenue recognition principle.
C)  Time period assumption.
D)  Accrual reporting principle.
E)  Going-concern assumption.

Question 17

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

Accepted Answer

The financial statements are prepared in...

Question 18

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Accepted Answer

A) True 
 B)False

Question 19

Accrued revenues at the end of one accounting period are expected to result in cash receipts in a future period.

Accepted Answer

A) True 
 B)False

Question 20

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Accepted Answer

A)  Debit Depreciation Expense,$15,000; credit Equipment,$15,000.
B)  Debit Equipment,$15,000; credit Accumulated Depreciation,$15,000.
C)  Debit Depreciation Expense,$10,000; credit Accumulated Depreciation,$10,000.
D)  Debit Depreciation Expense,$10,000; credit Equipment,$10,000.
E)  Debit Depreciation Expense,$15,000; credit Accumulated Depreciation,$15,000.

Exam 3: Adjusting Accounts for Financial Statements

Accrued revenues at the end of one accounting period are expected to result in cash receipts in a future period.

Correct Answer
verified

A broad principle that requires identifying the activities of a business with specific time periods such as months,quarters,or years is the:

Correct Answer
verified

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Correct Answer
verified

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

Correct Answer
verified
The financial statements are prepared in...
View Answer

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Correct Answer
verified

The main purpose of adjusting entries is to:

Correct Answer
verified

Which of the following statements about a company's operating cycle is not true:

Correct Answer
verified

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct Answer
verified

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

Correct Answer
verified

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Correct Answer
verified

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Correct Answer
verified

All of the following regarding reversing entries are true except:

Correct Answer
verified

Match the following terms with the appropriate definition.

The following information is available for Brendon Company before closing the accounts.What will be the amount in the Income Summary account that should be closed to Retained earnings?

Correct Answer
verified

The accounting principle that requires revenue to be recorded when earned is the:

Correct Answer
verified

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Correct Answer
verified

Interim financial statements report a company's business activities for a one-year period.

Correct Answer
verified

Each adjusting entry will affect a balance sheet account.

Correct Answer
verified

A salary owed to employees is an example of an accrued expense.

Correct Answer
verified

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Accrued revenues at the end of one accounting period are expected to result in cash receipts in a future period.

Correct AnswerverifiedShow Answer

A broad principle that requires identifying the activities of a business with specific time periods such as months,quarters,or years is the:

Correct AnswerverifiedShow Answer

An expense account is normally closed by debiting Income Summary and crediting the expense account.

Correct AnswerverifiedShow Answer

Why are financial statements prepared in a specific order?What is the usual order in which financial statements are prepared from the adjusted trial balance?

Correct AnswerverifiedThe financial statements are prepared in...View AnswerShow Answer

Under the accrual basis of accounting,adjustments are often made for prepaid expenses and unearned revenues.

Correct AnswerverifiedShow Answer

The main purpose of adjusting entries is to:

Correct AnswerverifiedShow Answer

Which of the following statements about a company's operating cycle is not true:

Correct AnswerverifiedShow Answer

If throughout an accounting period the fees for legal services paid in advance by clients are recorded in an account called Unearned Legal Fees,the end-of-period adjusting entry to record the portion of those fees that has been earned is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An optional columnar working paper used to prepare a company's unadjusted trial balance,adjusting entries,adjusted trial balance,and financial statements is a(n) :

Correct AnswerverifiedShow Answer

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.)

Correct AnswerverifiedShow Answer

All of the following regarding reversing entries are true except:

Correct AnswerverifiedShow Answer

Match the following terms with the appropriate definition.

The following information is available for Brendon Company before closing the accounts.What will be the amount in the Income Summary account that should be closed to Retained earnings?

Correct AnswerverifiedShow Answer

The accounting principle that requires revenue to be recorded when earned is the:

Correct AnswerverifiedShow Answer

Holman Company owns equipment with an original cost of $95,000 and an estimated salvage value of $5,000 that is being depreciated at $15,000 per year using the straight-line depreciation method,and only prepares adjustments at year-end.The adjusting entry needed to record annual depreciation is:

Correct AnswerverifiedShow Answer

Interim financial statements report a company's business activities for a one-year period.

Correct AnswerverifiedShow Answer

Each adjusting entry will affect a balance sheet account.

Correct AnswerverifiedShow Answer

A salary owed to employees is an example of an accrued expense.

Correct AnswerverifiedShow Answer

The cash basis of accounting is a system in which revenues are recorded when earned and expenses are recorded when incurred.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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verified
The financial statements are prepared in...
View Answer

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