Question 1

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 2

Adjusting entries are needed every time financial statements are prepared.

Accepted Answer

A) True 
 B)False

Question 3

The accrual basis of accounting is more complex than the cash basis of accounting as it involves such decisions as determining when to record revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 4

Complan Harness Shop received $2,000 cash for harness services to be provided in the future. The full amount was credited to the liability account Unearned Harness Fees. If the Harness services have been provided at the end of the accounting period and no adjusting entry is made, this would cause

Accepted Answer

A)   expenses to be overstated.
B)   profit to be overstated.
C)   liabilities to be understated.
D)   revenues to be understated.

Question 5

Lars Richards, CPA, has performed $2,000 of accounting services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Lars make?

Accepted Answer

A)   debit Cash and credit Unearned Revenue
B)   debit Accounts Receivable and credit Unearned Revenue
C)   debit Accounts Receivable and credit Service Revenue
D)   debit Unearned Revenue and credit Service Revenue

Question 6

Why do salary expenses need to be accrued at the financial reporting date?

Accepted Answer

A)   Salaries incurred are an actual expense for the time period in which they are accrued.
B)   If not accrued the company will not have to pay the amounts in the future.
C)   The liability account will be overstated if not accrued.
D)   The expense account will be overstated if not accrued.

Question 7

If a business has several types of long-lived assets such as equipment, buildings, and trucks,

Accepted Answer

A)   there should be only one accumulated depreciation account.
B)   there should be separate accumulated depreciation accounts for each type of long-lived asset.
C)   all the long-lived asset accounts will be recorded in one general ledger account.
D)   there is no need for an accumulated depreciation account.

Question 8

Unearned revenues are

Accepted Answer

A)   received and recorded as liabilities before they are earned.
B)   earned and recorded as liabilities before they are received.
C)   earned but not yet received or recorded.
D)   earned and already received and recorded.

Question 9

Which of the following accounting periods would NOT be referred to as an interim period?

Accepted Answer

A)   monthly
B)   quarterly
C)   semi-annually
D)   annually

Question 10

Mohawk Company employs 10 employees and pays each employee $100 per day. Assuming March 31 falls on a Wednesday and all employees are paid each Friday, how much Salaries Expense should be accrued for the March 31 year end?

Accepted Answer

A)   $1,000
B)   $400
C)   $3,000
D)   $0

Question 11

At December 31, 2017, before any year-end adjustments, Doris Knitting Company's Insurance Expense account had a balance of $725 and its Prepaid Insurance account had a balance of $2,900. It was determined that $1,500 of the Prepaid Insurance had not expired. The adjusted balance for Insurance Expense for the year would be

Accepted Answer

A)   $1,500.
B)   $2,125.
C)   $2,225.
D)   $1,125.

Question 12

Accrued expenses are expenses that have been incurred but have not been recorded yet in the records.

Accepted Answer

A) True 
 B)False

Question 13

Accounting time periods that are more than one year in length are referred to as interim periods.

Accepted Answer

A) True 
 B)False

Question 14

A furniture 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. According to the expense recognition criteria the overtime wages should be expensed in

Accepted Answer

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

Question 15

Prepayments must always be debited to an asset account and credited to a liability account.

Accepted Answer

A) True 
 B)False

Question 16

A business will divide the life of its business into specific accounting periods because

Accepted Answer

A)   a transaction can only affect one period of time.
B)   the number of transactions will be more evenly divided between periods.
C)   adjustments to the enterprise's accounts can only be made in the time period when the business terminates its operations.
D)   it will provide useful information to the business's users.

Question 17

A company needs to divide the life of its business into accounting periods in order to provide useful and relevant information to the people who use its financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would NOT appear on a company's adjusted trial balance?

Accepted Answer

A)   ending owner's capital
B)   beginning owner's capital
C)   the company's assets
D)   the company's liabilities

Question 19

A 52 week period is called a(n)

Accepted Answer

A)   fiscal year.
B)   interim period.
C)   quarter.
D)   business period.

Question 20

The difference between the cost of a long-lived asset and its related accumulated depreciation is referred to as the

Accepted Answer

A)   fair value of the long-lived asset.
B)   blue book value of the long-lived asset.
C)   carrying amount of the long-lived asset.
D)   depreciated difference of the long-lived asset.

Exam 3: Adjusting the Accounts

The accrual basis of accounting is more complex than the cash basis of accounting as it involves such decisions as determining when to record revenues and expenses.

Correct Answer
verified

A 52 week period is called a(n)

Correct Answer
verified

Lars Richards, CPA, has performed $2,000 of accounting services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Lars make?

Correct Answer
verified

Accounting time periods that are more than one year in length are referred to as interim periods.

Correct Answer
verified

A furniture 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. According to the expense recognition criteria the overtime wages should be expensed in

Correct Answer
verified

The difference between the cost of a long-lived asset and its related accumulated depreciation is referred to as the

Correct Answer
verified

Correct Answer
verified

Complan Harness Shop received $2,000 cash for harness services to be provided in the future. The full amount was credited to the liability account Unearned Harness Fees. If the Harness services have been provided at the end of the accounting period and no adjusting entry is made, this would cause

Correct Answer
verified

If a business has several types of long-lived assets such as equipment, buildings, and trucks,

Correct Answer
verified

Adjusting entries are needed every time financial statements are prepared.

Correct Answer
verified

A company needs to divide the life of its business into accounting periods in order to provide useful and relevant information to the people who use its financial statements.

Correct Answer
verified

Prepayments must always be debited to an asset account and credited to a liability account.

Correct Answer
verified

Why do salary expenses need to be accrued at the financial reporting date?

Correct Answer
verified

A business will divide the life of its business into specific accounting periods because

Correct Answer
verified

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

Correct Answer
verified

Mohawk Company employs 10 employees and pays each employee $100 per day. Assuming March 31 falls on a Wednesday and all employees are paid each Friday, how much Salaries Expense should be accrued for the March 31 year end?

Correct Answer
verified

Which of the following would NOT appear on a company's adjusted trial balance?

Correct Answer
verified

Accrued expenses are expenses that have been incurred but have not been recorded yet in the records.

Correct Answer
verified

Which of the following accounting periods would NOT be referred to as an interim period?

Correct Answer
verified

Unearned revenues are

Correct Answer
verified

Exam 3: Adjusting the Accounts

The accrual basis of accounting is more complex than the cash basis of accounting as it involves such decisions as determining when to record revenues and expenses.

Correct AnswerverifiedShow Answer

A 52 week period is called a(n)

Correct AnswerverifiedShow Answer

Lars Richards, CPA, has performed $2,000 of accounting services for a client but has not billed the client as of the end of the accounting period. What adjusting entry must Lars make?

Correct AnswerverifiedShow Answer

Accounting time periods that are more than one year in length are referred to as interim periods.

Correct AnswerverifiedShow Answer

A furniture 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. According to the expense recognition criteria the overtime wages should be expensed in

Correct AnswerverifiedShow Answer

The difference between the cost of a long-lived asset and its related accumulated depreciation is referred to as the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Complan Harness Shop received $2,000 cash for harness services to be provided in the future. The full amount was credited to the liability account Unearned Harness Fees. If the Harness services have been provided at the end of the accounting period and no adjusting entry is made, this would cause

Correct AnswerverifiedShow Answer

If a business has several types of long-lived assets such as equipment, buildings, and trucks,

Correct AnswerverifiedShow Answer

Adjusting entries are needed every time financial statements are prepared.

Correct AnswerverifiedShow Answer

A company needs to divide the life of its business into accounting periods in order to provide useful and relevant information to the people who use its financial statements.

Correct AnswerverifiedShow Answer

Prepayments must always be debited to an asset account and credited to a liability account.

Correct AnswerverifiedShow Answer

Why do salary expenses need to be accrued at the financial reporting date?

Correct AnswerverifiedShow Answer

A business will divide the life of its business into specific accounting periods because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Mohawk Company employs 10 employees and pays each employee $100 per day. Assuming March 31 falls on a Wednesday and all employees are paid each Friday, how much Salaries Expense should be accrued for the March 31 year end?

Correct AnswerverifiedShow Answer

Which of the following would NOT appear on a company's adjusted trial balance?

Correct AnswerverifiedShow Answer

Accrued expenses are expenses that have been incurred but have not been recorded yet in the records.

Correct AnswerverifiedShow Answer

Which of the following accounting periods would NOT be referred to as an interim period?

Correct AnswerverifiedShow Answer

Unearned revenues are

Correct AnswerverifiedShow Answer

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