Question 1

The cash basis of accounting is an accounting system in which revenues are recorded when cash is received and expenses are recorded when cash is paid.

Accepted Answer

A) True 
 B)False

Question 2

Using the information given below,prepare a balance sheet for Martin Sky Taxi Services from the adjusted trial balance.Helena Martin did not make any additional investments in the company during the year.

Accepted Answer

Martin Sky Taxi Serv...

Question 3

The entry to record a cash receipt from a customer when the service to be provided has not yet been performed involves a debit to an unearned revenue account.

Accepted Answer

A) True 
 B)False

Question 4

Explain how accounting adjustments affect financial statements.

Accepted Answer

Without accounting adjustments many acco...

Question 5

Match between columns
                        Premises: Net income divided by net sales.
A principle that assumes that an organization's activities can be divided into specific time periods such as months, quarters, or years.
Revenues earned in a period that are both unrecorded and not yet received in cash or other assets.
Allocates equal amounts of an asset's cost (less any salvage value) to depreciation expense during its useful life.
The accounting system where revenues are recognized when cash is received and expenses are recorded when cash is paid.
Items paid for in advance of receiving their benefits.
The accounting system that recognizes revenues when earned and expenses when incurred.
The expense created by allocating the cost of plant and equipment to the periods in which they are used.
The principle that requires expenses to be reported in the same period as the revenues that were earned as a result of the expenses.

Accepted Answer

The Answer of Time period principle and Accrual basis accounting is...

Question 6

On April 30,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31?

Accepted Answer

A)  $500.
B)  $4,000.
C)  $6,000.
D)  $14,000.
E)  $18,000.F) A) and B)
G) D) and E)

Question 7

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.F) D) and E)
G) A) and E)

Question 8

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Accepted Answer

A)  Debit Office Supplies $105 and credit Office Supplies Expense $105.
B)  Debit Office Supplies Expense $105 and credit Office Supplies $105.
C)  Debit Office Supplies Expense $254 and credit Office Supplies $254.
D)  Debit Office Supplies $254 and credit Office Supplies Expense $254.
E)  Debit Office Supplies $105 and credit Supplies Expense $254.F) B) and E)
G) A) and D)

Question 9

Which of the following statements is incorrect?

Accepted Answer

A)  An income statement reports revenues earned less expenses incurred.
B)  An unadjusted trial balance shows the account balances after they have been revised to reflect the effects of end-of-period adjustments.
C)  Interim financial reports can be based on one-month or three-month accounting periods.
D)  The fiscal year is any 12 consecutive months (or 52 weeks)  used by a business as its annual accounting period.
E)  Property, plant, and equipment are referred to as plant assets.F) A) and E)
G) A) and C)

Question 10

Identify the types of adjusting entries and explain the purpose of each type.

Accepted Answer

Adjusting entries can be grouped into tw...

Question 11

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Accepted Answer

A) True 
 B)False

Question 12

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.The entry to record the adjusting entry should have been:

Accepted Answer

A)  debit Salary Expense, $9,000; credit Cash, $9,000
B)  debit Salary Expense, $9,000; credit Fees Earned, $9,000
C)  debit Salary Expense, $9,000; credit Prepaid Salary, $9,000
D)  debit Salary Expense, $9,000; credit Salaries Payable, $9,000
E)  debit Salaries Payable, $9,000; credit Salary ExpenseF) A) and E)
G) A) and B)

Question 13

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Accepted Answer

A) True 
 B)False

Question 14

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Accepted Answer

A) True 
 B)False

Question 15

Based on the unadjusted trial balance for Bella's Beauty Salon and the adjusting information given below,prepare the adjusting journal entries for Bella's Beauty Salon.
Bella Beauty Salon's unadjusted trial balance for the current year follows:
  Additional information:
a.An insurance policy examination showed $1,240 of expired insurance.
b.An inventory count showed $210 of unused shop supplies still available.
c.Depreciation expense on shop equipment,$350.
d.Depreciation expense on the building,$2,220.
e.A beautician is behind on space rental payments,and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared.
f.$800 of the Unearned Rent account balance was earned by year-end.
g.The one employee,a receptionist,works a five-day workweek at $50 per day.The employee was paid last week but has worked four days this week for which she has not been paid.
h.Three months' property taxes,totaling $450,have accrued.This additional amount of property taxes expense has not been recorded.
i.One month's interest on the note payable,$600,has accrued but is unrecorded.

Accepted Answer

The answer of Based on the unadjusted trial balance for...

Question 16

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

Accepted Answer

A)  $2,700.
B)  $2,900.
C)  $3,300.
D)  $3,500.
E)  $3,700.F) A) and C)
G) B) and E)

Question 17

Adjusting entries are made after the preparation of financial statements.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

An adjusting entry could be made for each of the following except:

Accepted Answer

A)  Prepaid expenses.
B)  Depreciation.
C)  Owner withdrawals.
D)  Unearned revenues.
E)  Accrued revenues.F) A) and D)
G) C) and D)

Question 20

Unearned revenue is reported in the financial statements as:

Accepted Answer

A)  A revenue on the balance sheet.
B)  A liability on the balance sheet.
C)  An unearned revenue on the income statement.
D)  An asset on the balance sheet.
E)  An operating activity on the statement of cash flows.F) A) and B)
G) B) and E)

Exam 3: Adjusting Accounts and Preparing Financial Statements

The entry to record a cash receipt from a customer when the service to be provided has not yet been performed involves a debit to an unearned revenue account.

Correct Answer
verified

Identify the types of adjusting entries and explain the purpose of each type.

Correct Answer
verified
Adjusting entries can be grouped into tw...
View Answer

Match the following terms the appropriate definition.

Which of the following statements is incorrect?

Correct Answer
verified

Unearned revenue is reported in the financial statements as:

Correct Answer
verified

Adjusting entries are made after the preparation of financial statements.

Correct Answer
verified

Correct Answer
verified

Using the information given below,prepare a balance sheet for Martin Sky Taxi Services from the adjusted trial balance.Helena Martin did not make any additional investments in the company during the year.

Correct Answer
verified
Martin Sky Taxi Serv...
View Answer

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Correct Answer
verified

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

Correct Answer
verified

The cash basis of accounting is an accounting system in which revenues are recorded when cash is received and expenses are recorded when cash is paid.

Correct Answer
verified

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Correct Answer
verified

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.The entry to record the adjusting entry should have been:

Correct Answer
verified

An adjusting entry could be made for each of the following except:

Correct Answer
verified

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

Explain how accounting adjustments affect financial statements.

Correct Answer
verified
Without accounting adjustments many acco...
View Answer

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Correct Answer
verified

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Correct Answer
verified

On April 30,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31?

Correct Answer
verified

Exam 3: Adjusting Accounts and Preparing Financial Statements

The entry to record a cash receipt from a customer when the service to be provided has not yet been performed involves a debit to an unearned revenue account.

Correct AnswerverifiedShow Answer

Identify the types of adjusting entries and explain the purpose of each type.

Correct AnswerverifiedAdjusting entries can be grouped into tw...View AnswerShow Answer

Match the following terms the appropriate definition.

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Unearned revenue is reported in the financial statements as:

Correct AnswerverifiedShow Answer

Adjusting entries are made after the preparation of financial statements.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the information given below,prepare a balance sheet for Martin Sky Taxi Services from the adjusted trial balance.Helena Martin did not make any additional investments in the company during the year.

Correct AnswerverifiedMartin Sky Taxi Serv...View AnswerShow Answer

Under the cash basis of accounting,no adjustments are made for prepaid,unearned,and accrued items.

Correct AnswerverifiedShow Answer

A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400.If office supplies expense for the year is $3,100,what amount of office supplies was purchased during the period?

Correct AnswerverifiedShow Answer

The cash basis of accounting is an accounting system in which revenues are recorded when cash is received and expenses are recorded when cash is paid.

Correct AnswerverifiedShow Answer

The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses,not when cash is paid.

Correct AnswerverifiedShow Answer

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31.The entry to record the adjusting entry should have been:

Correct AnswerverifiedShow Answer

An adjusting entry could be made for each of the following except:

Correct AnswerverifiedShow 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

Explain how accounting adjustments affect financial statements.

Correct AnswerverifiedWithout accounting adjustments many acco...View AnswerShow Answer

Prior to recording adjusting entries,the Office Supplies account had a $359 debit balance.A physical count of the supplies showed $105 of unused supplies available.The required adjusting entry is:

Correct AnswerverifiedShow Answer

Revenue and expense balances are transferred from the adjusted trial balance to the income statement.

Correct AnswerverifiedShow Answer

On April 30,a three-year insurance policy was purchased for $18,000 with coverage to begin immediately.What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Adjusting entries can be grouped into tw...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Martin Sky Taxi Serv...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Without accounting adjustments many acco...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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