Top of Form A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is Answer

Top of Form

A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting entry necessary at the end of the fiscal period ending on Tuesday is

Answer

debit Salaries Payable, $8,000; credit Cash, $8,000

debit Salary Expense, $8,000; credit Drawing, $8,000

debit Salary Expense, $8,000; credit Salaries Payable, $8,000

debit Drawing, $8,000; credit Cash, $8,000

2 points

Question 2

Accrued expenses are ordinarily reported on the balance sheet as

Answer

assets

liabilities

fixed assets

prepaid expenses

2 points

Question 3

Accrued revenues would appear on the balance sheet as

Answer

assets

liabilities

capital

prepaid expenses

2 points

Question 4

Adjusting entries affect at least one

Answer

income statement account and one balance sheet account

revenue and the drawing account

asset and one owner’s equity account

revenue and one capital account

2 points

Question 5

Adjusting entries are

Answer

the same as correcting entries

needed to bring accounts up to date and match revenue and expense

optional under generally accepted accounting principles

rarely needed in large companies

2 points

Question 6

As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called

Answer

equipment allocation

depreciation

accumulation

matching

2 points

Question 7

Austin, Inc. made a Prepaid Rent payment of $2,800 on January 1st. The company’s monthly rent is $700. The amount of Prepaid Rent that would appear on the January 31 balance sheet after adjustment is:

Answer

$2,100

$700

$3,500

$1,400

2 points

Question 8

By matching revenues and expenses in the same period in which they incur

Answer

net income or loss will always be underestimated.

net income or loss will always be overestimated.

net income or loss will be properly reported on the income statement

net income or loss will not be determined.

2 points

Question 9

Depreciation Expense and Accumulated Depreciation are classified, respectively, as

Answer

expense, contra asset

asset, contra liability

revenue, asset

contra asset, expense

2 points

Question 10

Generally accepted accounting principles requires that companies use the ____ of accounting.

Answer

cash basis

deferral basis

accrual basis

account basis

2 points

Question 11

Prepaid expenses are eventually expected to

Answer

become expenses when their future economic value expires.

become revenues when services are performed.

become expenses in the period when they are paid.

become revenues when the liability is no longer owed.

2 points

Question 12

The difference between the balance of a fixed asset account and the related accumulated depreciation account is termed

Answer

historical cost

contra asset

book value

market value

2 points

Question 13

The entry to adjust for the cost of supplies used during the accounting period is

Answer

debit Supplies Expense; credit Supplies

debit Owner Capital; credit Supplies

debit Accounts Payable; credit Supplies

debit Supplies; credit Owner Capital

2 points

Question 14

Which of the following is considered to be unearned revenue?

Answer

Concert tickets sold for tonight’s performance.

Concert tickets sold yesterday on credit.

Concert tickets that were not sold for the current performance.

Concert tickets sold for next month’s performance.

2 points

Question 15

Which of the following is an example of an accrued expense?

Answer

Salary owed but not yet paid

Fees received but not yet earned

Supplies on hand

A two-year premium paid on a fire insurance policy

2 points

Question 16

Which of the following is an example of accrued revenue?

Answer

Swimming pool cleaning that has been paid for three months in advance.

Swimming pool cleaning that has been provided but has not been billed or paid.

An agreement has been signed for swimming pool cleaning for the next three months.

Swimming pool cleaning that has been provided and paid on the same day.

2 points

Question 17

Which of the accounting steps in the accounting process below would be completed last?

Answer

preparing the adjusted trial balance

posting

preparing the financial statements

journalizing

2 points

Question 18

When is the adjusted trial balance prepared?

Answer

Before adjusting journal entries are posted

After adjusting journal entries are posted.

After the adjusting journal entries are journalized

Before the adjusting journal entries are journalized.

2 points

Question 19

What is the purpose of the adjusted trial balance?

Answer

to verify that all of the adjusting entries have been posted

to verify that the net income is correctly reported

to verify that no adjusting journal entry has been omitted.

to verify that the debits and credits balance

2 points

Question 20

What is the proper adjusting entry at April 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $16,000, and unexpired amounts per analysis of policies, $6,000?

Answer

debit Insurance Expense, $6,000; credit Prepaid Insurance, $6,000

debit Insurance Expense, $16,000; credit Prepaid Insurance, $16,000

debit Prepaid Insurance, $10,000; credit Insurance Expense, $10,000

debit Insurance Expense, $10,000; credit Prepaid Insurance, $10,000

2 points

Question 21

Using accrual accounting, revenue is recorded and reported only

Answer

when cash is received without regard to when the services are rendered

when the services are rendered without regard to when cash is received

when cash is received at the time services are rendered

if cash is received after the services are rendered

2 points

Question 22

Using accrual accounting, expenses are recorded and reported only

Answer

when they are incurred, whether or not cash is paid

when they are incurred and paid at the same time

if they are paid before they are incurred

if they are paid after they are incurred

2 points

Question 23

The net book value of a fixed asset is determined by

Answer

Original cost less accumulated depreciation

Original cost less depreciation expense

Original cost less accumulated depreciation plus depreciation expense

Original cost plus accumulated depreciation

2 points

Question 24

Which one of the following accounts below would likely be included in a deferral adjusting entry?

Answer

Interest Revenue

Unearned Revenue

Salaries Payable

Accounts Receivable

2 points

Question 25

The type of account and normal balance of Accumulated Depreciation is

Answer

asset, credit

asset, debit

contra asset, credit

contra asset, debit

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