Question 1

For most large businesses,the cash basis of accounting will provide accurate financial statements for user needs.

Accepted Answer

A) True 
 B)False

Question 2

For the year ending December 31,Orion,Inc.mistakenly omitted adjusting entries for $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned,and
(3) insurance of $5,000 that expired.For the year ending December 31,what is the effect of these errors on revenues,expenses,and net income?

Accepted Answer

A)  Revenues are overstated by $4,200.
B)  Net income is overstated by $2,300.
C)  Expenses are overstated by $6,500.
D)  Expenses are understated by $3,500.

Question 3

What effect will the following adjusting journal entry have on the accounting records?

Accepted Answer

A)  increase net income
B)  increase revenues
C)  decrease expenses
D)  decrease net book value

Question 4

Identify the effect (a through h)  that omitting each of the following items would have on the balance sheet.
-No adjustment was made for supplies used up during the month.

Accepted Answer

A)  Assets and owner's equity overstated
B)  Assets and owner's equity understated
C)  Assets overstated and owner's equity understated
D)  Assets understated and owner's equity overstated
E)  Liabilities and owner's equity overstatedF) Liabilities and owner's equity understatedG) Liabilities overstated and owner's equity understatedH) Liabilities understated and owner's equity overstated

Question 5

The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

Accepted Answer

A)  prepaid
B)  deferred
C)  accrued
D)  matched

Question 6

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Accepted Answer

A)  Fees Earned
B)  Accounts Receivable
C)  Unearned Fees
D)  Depreciation Expense

Question 7

For each of the following errors,considered individually,indicate whether the error would cause the adjusted trial balance totals to be unequal.If the error would cause the adjusted trial balance total to be unequal,indicate whether the debit or credit total is higher and by how much.

Accepted Answer

The answer of For each of the following errors,considered individually,indicate...

Question 8

Accrued revenues would affect _______ on the balance sheet.

Accepted Answer

A)  assets
B)  liabilities
C)  owner's capital
D)  prepaid expenses A

Question 9

A fixed asset's market value is reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Identify the effect (a through h)  that omitting each of the following items would have on the balance sheet.
-Depreciation on equipment was not recorded.

Accepted Answer

A)  Assets and owner's equity overstated
B)  Assets and owner's equity understated
C)  Assets overstated and owner's equity understated
D)  Assets understated and owner's equity overstated
E)  Liabilities and owner's equity overstatedF) Liabilities and owner's equity understatedG) Liabilities overstated and owner's equity understatedH) Liabilities understated and owner's equity overstated

Question 11

Gracie Company made a prepaid rent payment of $2,800 on January 1.The company's monthly rent is $700.The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

Accepted Answer

A)  $2,100
B)  $700
C)  $2,800
D)  $1,400

Question 12

If the debit portion of an adjusting entry is to an asset account,then the credit portion must be to a liability account.

Accepted Answer

A) True 
 B)False  False

Question 13

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Accepted Answer

A) True 
 B)False

Question 14

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Accepted Answer

A) True 
 B)False

Question 15

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Accepted Answer

A) True 
 B)False

Question 16

Accumulated depreciation accounts are liability accounts.

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the following is an example of accrued revenue?

Accepted Answer

A)  snow removal services that have been paid for three months in advance
B)  snow removal services that have been provided but have not been billed or paid
C)  an agreement that has been signed for snow removal services for the next three months
D)  snow removal services that have been provided and paid on the same day

Question 18

For the year ending December 31,Beard Clinical Supplies Co.mistakenly omitted adjusting entries for 
(1)$9,800 of unearned revenue that was earned,
(2)earned revenue that was not billed of $10,200,and 
(3)accrued wages of $7,000.Indicate the combined effect of the errors on 
(a)revenues,
(b)expenses,and 
(c)net income.

Accepted Answer

(a) Revenues were understated ...

Question 19

Which of the following is considered to be an accrued expense?

Accepted Answer

A)  A computer technician installed the latest software updates and was paid on the same day.
B)  A computer technician has been paid in advance to install software updates as they become available.
C)  A computer technician has just signed an agreement with you regarding pricing for future work.
D)  A computer technician has installed the latest software updates, but you have not received an invoice or made payment.

Question 20

Accumulated depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

For most large businesses,the cash basis of accounting will provide accurate financial statements for user needs.

Correct Answer
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Correct Answer
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What effect will the following adjusting journal entry have on the accounting records?

Correct Answer
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Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -No adjustment was made for supplies used up during the month.

Correct Answer
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The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

Correct Answer
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Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Correct Answer
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For each of the following errors,considered individually,indicate whether the error would cause the adjusted trial balance totals to be unequal.If the error would cause the adjusted trial balance total to be unequal,indicate whether the debit or credit total is higher and by how much.

Correct Answer
verified

Accrued revenues would affect _______ on the balance sheet.

Correct Answer
verified
A

A fixed asset's market value is reflected on the balance sheet.

Correct Answer
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Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Depreciation on equipment was not recorded.

Correct Answer
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Gracie Company made a prepaid rent payment of $2,800 on January 1.The company's monthly rent is $700.The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

Correct Answer
verified

If the debit portion of an adjusting entry is to an asset account,then the credit portion must be to a liability account.

Correct Answer
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False

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Correct Answer
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Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Correct Answer
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Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Correct Answer
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Accumulated depreciation accounts are liability accounts.

Correct Answer
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False

Which of the following is an example of accrued revenue?

Correct Answer
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Correct Answer
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(a) Revenues were understated ...
View Answer

Which of the following is considered to be an accrued expense?

Correct Answer
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Accumulated depreciation is reported on the income statement.

Correct Answer
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Exam 3: The Adjusting Process

For most large businesses,the cash basis of accounting will provide accurate financial statements for user needs.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What effect will the following adjusting journal entry have on the accounting records?

Correct AnswerverifiedShow Answer

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -No adjustment was made for supplies used up during the month.

Correct AnswerverifiedShow Answer

The term used to describe an expense that has not been paid and has not yet been recognized in the accounts by a routine entry is

Correct AnswerverifiedShow Answer

Which of the accounts below would most likely appear on an adjusted trial balance but probably would not appear on the unadjusted trial balance?

Correct AnswerverifiedShow Answer

For each of the following errors,considered individually,indicate whether the error would cause the adjusted trial balance totals to be unequal.If the error would cause the adjusted trial balance total to be unequal,indicate whether the debit or credit total is higher and by how much.

Correct AnswerverifiedShow Answer

Accrued revenues would affect _______ on the balance sheet.

Correct AnswerverifiedA

A fixed asset's market value is reflected on the balance sheet.

Correct AnswerverifiedShow Answer

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Depreciation on equipment was not recorded.

Correct AnswerverifiedShow Answer

Gracie Company made a prepaid rent payment of $2,800 on January 1.The company's monthly rent is $700.The amount of prepaid rent that would appear on the January 31 balance sheet after adjustment is

Correct AnswerverifiedShow Answer

If the debit portion of an adjusting entry is to an asset account,then the credit portion must be to a liability account.

Correct AnswerverifiedFalse

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Correct AnswerverifiedShow Answer

Adjustments for accruals are needed to record a revenue that has been earned or an expense that has been incurred but not recorded.

Correct AnswerverifiedShow Answer

Deferrals are recorded transactions that delay the recognition of an expense or revenue.

Correct AnswerverifiedShow Answer

Accumulated depreciation accounts are liability accounts.

Correct AnswerverifiedFalse

Which of the following is an example of accrued revenue?

Correct AnswerverifiedShow Answer

Correct Answerverified(a) Revenues were understated ...View AnswerShow Answer

Which of the following is considered to be an accrued expense?

Correct AnswerverifiedShow Answer

Accumulated depreciation is reported on the income statement.

Correct AnswerverifiedShow Answer

Correct Answer
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A

Correct Answer
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False

Correct Answer
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False

Correct Answer
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Correct Answer
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(a) Revenues were understated ...
View Answer

Correct Answer
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Correct Answer
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