Question 1

Y-B-2 Inc.pays its rent of $90,000 annually on January 1.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

Accepted Answer

A)  Failure to make the adjustment does not affect the February financial statements.
B)  Expenses will be overstated by $7,500 and net income and equity will be understated by $7,500.
C)  Assets will be overstated by $15,000 and net income and equity will be understated by $15,000.
D)  Assets will be overstated by $7,500 and net income and equity will be overstated by $7,500.

Question 2

Wave Inn is a resort located in Canada.During December 2011 Wave Inn collects $120,000 cash related to a conference booked by the Spin Jammers.The conference is scheduled for February 12 and 13, 2012.Which of the following is true regarding how this transaction is reported on the December 31, 2011 statement of financial position?

Accepted Answer

A)  Spin Jammers reports unearned revenue of $120,000.
B)  Wave Inn reports a prepaid asset of $120,000.
C)  Wave Inn reports unearned revenue of $120,000.
D)  All of the choices are correct regarding this transaction.

Question 3

A candy factory's employees work overtime to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime wages should be expensed in

Accepted Answer

A)  February.
B)  March.
C)  the period when the workers receive their checks.
D)  either in February or March depending on when the pay period ends.

Question 4

Action Real Estate received a check for $18,000 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client.Unearned Rent was credited for the full $18,000.Financial statements will be prepared on July 31.Action Real Estate should make the following adjusting entry on July 31:

Accepted Answer

A)  Debit Unearned Rent, $3,000; Credit Rental Revenue, $3,000.
B)  Debit Rental Revenue, $3,000; Credit Unearned Rent, $3,000.
C)  Debit Unearned Rent, $18,000; Credit Rental Revenue, $18,000.
D)  Debit Cash, $18,000; Credit Rental Revenue, $18,000.

Question 5

Hardwood Supplies Inc. purchased a 12-month insurance policy on March 1, 2011 for £900. At March 31, 2011, the adjusting journal entry to record expiration of this asset will include a

Accepted Answer

A)   debit to Prepaid Insurance and a credit to Cash for  £900£ 900£900 .
B)   debit to Prepaid Insurance and a credit to Insurance Expense for  £100£ 100£100 .
C)   debit to Insurance Expense and a credit to Prepaid Insurance for  £75£ 75£75 .
D)   debit to Insurance Expense and a credit to Cash for  £75£ 75£75 .

Question 6

The balance in the Prepaid Rent account before adjustment at the end of the year is  ¥12,000¥ 12,000¥12,000 , which represents three months' rent paid on December 1 . The adjusting entry required on December 31 is to

Accepted Answer

A)   debit Rent Expense,  ¥4,000 ¥ 4,000 ¥4,000 ; credit Prepaid Rent,  ¥4,000 ¥ 4,000 ¥4,000 .
B)   debit Rent Expense,  ¥8,000 ¥ 8,000 ¥8,000 ; credit Prepaid Rent  ¥8,000 ¥ 8,000 ¥8,000 .
C)   debit Prepaid Rent,  ¥4,000 ¥ 4,000 ¥4,000 ; credit Rent Expense,  ¥4,000 ¥ 4,000 ¥4,000 .
D)   debit Prepaid Rent  ¥8,000 ¥ 8,000 ¥8,000 ; credit Rent Expense,  ¥8,000 ¥ 8,000 ¥8,000 .

Question 7

At March 1, 2011, Jupiter Corp.had supplies on hand of $500.During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,500.The March 31 adjusting journal entry should include a

Accepted Answer

A)  debit to the supplies account for $1,500.
B)  credit to the supplies account for $500.
C)  debit to the supplies account for $1,200.
D)  credit to the supplies account for $1,500.

Question 8

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

Accepted Answer

A)  A company uses $400 worth of supplies during the year.
B)  A company records $400 worth of depreciation on equipment.
C)  A company has earned $400 of revenue collected at the beginning of the year.
D)  A company records $400 of wages earned by employees that will be paid next year.

Question 9

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Accepted Answer

A) True 
 B)False

Question 10

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Accepted Answer

A) True 
 B)False

Question 11

For prepaid expense adjusting entries

Accepted Answer

A)  an expense-liability account relationship exists.
B)  prior to adjustment, expenses are overstated and assets are understated.
C)  the adjusting entry results in a debit to an expense account and a credit to an asset account.
D)  none of these.

Question 12

Southwestern City College sold season tickets for the 2011 football season for $180,000.A total of 8 games will be played during September, October and November.In September, three games were played.The adjusting journal entry at September 30

Accepted Answer

A)  is not required.No adjusting entries will be made until the end of the season in November.
B)  will include a debit to Cash and a credit to Ticket Revenue for $45,000.
C)  will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $67,500.
D)  will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for $60,000.

Question 13

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Accepted Answer

A)  annual, annual
B)  monthly, annual
C)  quarterly, monthly
D)  monthly, monthly

Question 14

A company usually determines the amount of supplies used during a period by

Accepted Answer

A)  adding the supplies on hand to the balance of the Supplies account.
B)  summing the amount of supplies purchased during the period.
C)  taking the difference between the supplies purchased and the supplies paid for during the period.
D)  taking the difference between the balance of the Supplies account and the cost of supplies on hand.

Question 15

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day.The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Accepted Answer

A)  debit Salaries Payable,  $20,000\$ 20,000$20,000 ; credit Cash,  $20,000\$ 20,000$20,000 .
B)   debit Salaries Expense,  $20,000\$ 20,000$20,000 ; credit Cash,  $20,000\$ 20,000$20,000 .
C)   debit Salaries Expense,  $20,000\$ 20,000$20,000 ; credit Salaries Payable,  $20,000\$ 20,000$20,000 .
D)   debit Salaries Expense,  $5,000\$ 5,000$5,000 ; credit Salaries Payable,  $5,000\$ 5,000$5,000 .

Question 16

Depreciation expense for a period is computed by taking the

Accepted Answer

A)  original cost of an asset - accumulated depreciation.
B)  depreciable cost ÷ depreciation rate.
C)  cost of the asset ÷ useful life.
D)  market value of the asset ÷ useful life.

Question 17

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Accepted Answer

A)  debit to an asset account and a credit to an expense account.
B)  debit to an expense account and a credit to an asset account.
C)  debit to an asset account and a credit to an asset account.
D)  debit to an expense account and a credit to an expense account.

Question 18

The expense recognition principle requires that efforts be matched with accomplishments.

Accepted Answer

A) True 
 B)False

Question 19

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

Accepted Answer

A)  a fiscal year.
B)  an interim period.
C)  the time period assumption.
D)  a reporting period.

Question 20

A document prepared to prove the equality of debits and credits after all adjustments have been prepared is the

Accepted Answer

A)  Adjusted statement of financial position.
B)  Adjusted trial balance.
C)  Adjusted financial statements.
D)  Post-closing trial balance.

Exam 3: Adjusting the Accounts

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.

Correct Answer
verified

Y-B-2 Inc.pays its rent of $90,000 annually on January 1.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

Correct Answer
verified

Hardwood Supplies Inc. purchased a 12-month insurance policy on March 1, 2011 for £900. At March 31, 2011, the adjusting journal entry to record expiration of this asset will include a

Correct Answer
verified

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

Correct Answer
verified

For prepaid expense adjusting entries

Correct Answer
verified

Correct Answer
verified

Depreciation expense for a period is computed by taking the

Correct Answer
verified

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Correct Answer
verified

The balance in the Prepaid Rent account before adjustment at the end of the year is $¥ 12,000$ , which represents three months' rent paid on December 1 . The adjusting entry required on December 31 is to

Correct Answer
verified

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Correct Answer
verified

The expense recognition principle requires that efforts be matched with accomplishments.

Correct Answer
verified

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Correct Answer
verified

At March 1, 2011, Jupiter Corp.had supplies on hand of $500.During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,500.The March 31 adjusting journal entry should include a

Correct Answer
verified

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day.The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Correct Answer
verified

Southwestern City College sold season tickets for the 2011 football season for $180,000.A total of 8 games will be played during September, October and November.In September, three games were played.The adjusting journal entry at September 30

Correct Answer
verified

A company usually determines the amount of supplies used during a period by

Correct Answer
verified

Correct Answer
verified

A document prepared to prove the equality of debits and credits after all adjustments have been prepared is the

Correct Answer
verified

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

Correct Answer
verified

A candy factory's employees work overtime to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime wages should be expensed in

Correct Answer
verified

Exam 3: Adjusting the Accounts

Management usually desires ________ financial statements and the IRS requires all businesses to file _________ tax returns.

Correct AnswerverifiedShow Answer

Y-B-2 Inc.pays its rent of $90,000 annually on January 1.If the February 28 monthly adjusting entry for prepaid rent is omitted, which of the following will be true?

Correct AnswerverifiedShow Answer

Hardwood Supplies Inc. purchased a 12-month insurance policy on March 1, 2011 for £900. At March 31, 2011, the adjusting journal entry to record expiration of this asset will include a

Correct AnswerverifiedShow Answer

Which of the following adjustments would require decreasing the liabilities reported on the statement of financial position?

Correct AnswerverifiedShow Answer

For prepaid expense adjusting entries

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Depreciation expense for a period is computed by taking the

Correct AnswerverifiedShow Answer

As prepaid expenses expire with the passage of time, the correct adjusting entry will be a

Correct AnswerverifiedShow Answer

The balance in the Prepaid Rent account before adjustment at the end of the year is ¥12,000¥ 12,000¥12,000 , which represents three months' rent paid on December 1 . The adjusting entry required on December 31 is to

Correct AnswerverifiedShow Answer

When a prepaid expense is initially debited to an expense account, expenses and assets are both overstated prior to adjustment.

Correct AnswerverifiedShow Answer

The expense recognition principle requires that efforts be matched with accomplishments.

Correct AnswerverifiedShow Answer

The time period assumption states that the economic life of a business entity can be divided into artificial time periods.

Correct AnswerverifiedShow Answer

At March 1, 2011, Jupiter Corp.had supplies on hand of $500.During the month, Jupiter purchased supplies of $1,200 and used supplies of $1,500.The March 31 adjusting journal entry should include a

Correct AnswerverifiedShow Answer

A business pays weekly salaries of $25,000 on Friday for a five-day week ending on that day.The adjusting entry necessary at the end of the fiscal period ending on a Thursday is

Correct AnswerverifiedShow Answer

Southwestern City College sold season tickets for the 2011 football season for $180,000.A total of 8 games will be played during September, October and November.In September, three games were played.The adjusting journal entry at September 30

Correct AnswerverifiedShow Answer

A company usually determines the amount of supplies used during a period by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A document prepared to prove the equality of debits and credits after all adjustments have been prepared is the

Correct AnswerverifiedShow Answer

An accounting time period that is one year in length, but does not begin on January 1, is referred to as

Correct AnswerverifiedShow Answer

A candy factory's employees work overtime to finish an order that is sold on February 28.The office sends a statement to the customer in early March and payment is received by mid-March.The overtime wages should be expensed in

Correct AnswerverifiedShow Answer

Management usually desires financial statements and the IRS requires all businesses to file _ tax returns.

Correct Answer
verified

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verified

The balance in the Prepaid Rent account before adjustment at the end of the year is $¥ 12,000$ , which represents three months' rent paid on December 1 . The adjusting entry required on December 31 is to

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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