Question 1

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?

Accepted Answer

A)   total assets at the end of the year will be understated.
B)   stockholders' equity at the end of the year will be understated.
C)   net income for the year will be overstated.
D)   insurance expense will be overstated C

Question 2

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Accepted Answer

A) True 
 B)False

Question 3

The company determines that the interest expense on a note payable for the period ending December 31 is $775. This amount is payable on January 1. Prepare the journal entries required on December 31 and January 1.

Accepted Answer

The answer of The company determines that the interest expense...

Question 4

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).
​  ​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Accepted Answer

The answer of Journalize the six entries to adjust the...

Question 5

A company receives $360 for a 12-month trade magazine subscription on August 1. The adjusting entry on December 31 is a debit to Unearned Subscription Revenue, $150, and a credit to Subscription Revenue, $150.

Accepted Answer

A) True 
 B)False  True

Question 6

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Accepted Answer

A) True 
 B)False

Question 7

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

Accepted Answer

A)   Record payment of taxes.
B)   Record taxes expense incurred and to be paid in next period.
C)   Record taxes paid in advance.
D)   Record tax bill received from government. B

Question 8

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Accepted Answer

A) True 
 B)False

Question 9

At the end of April, the first month of the company's year, the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for April and (b) the balance sheet as of April 30. Also indicate whether the items in error will be overstated or understated.

Accepted Answer

The answer of At the end of April, the first...

Question 10

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Accepted Answer

A)   debit Salaries Payable; credit Cash
B)   debit Cash; credit Salaries Payable
C)   debit Salaries Payable; credit Salaries Expense
D)   debit Salaries Expense; credit Salaries Payable

Question 11

Using accrual accounting, revenues are recorded

Accepted Answer

A)   when cash is received without regard to when the services are performed or products have been delivered to customers
B)   when a service has been performed or products have been delivered to customers without regard to when cash is received
C)   when cash is received at the time services are performed or products have been delivered to customers
D)   only if cash is received after the services are performed or products have been delivered to customers

Question 12

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

Accepted Answer

A)   deferral
B)   accrual
C)   revenue
D)   liability

Question 13

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

Accepted Answer

A)   historical cost
B)   contra asset
C)   book value
D)   market value

Question 14

The matching principle

Accepted Answer

A)   addresses the relationship between the journal and the balance sheet
B)   determines whether the normal balance of an account is a debit or credit
C)   requires that the dollar amount of debits equal the dollar amount of credits on a trial balance
D)   states that the revenues and related expenses should be reported in the same period

Question 15

A business makes a loan payment on the 15th of each month. At the end of December, it has accrued 16 days worth of interest on the loan, which amounts to $450. The adjusting entry necessary at the end of the fiscal period ending December 31 would be recorded as a

Accepted Answer

A)   debit to Interest Payable and a credit to Interest Expense of $450
B)   debit to Prepaid Interest and a credit to Interest Expense of $450
C)   debit to Interest Expense and a credit to Interest Payable of $450
D)   debit to Interest Expense and a credit to Prepaid Interest of $450

Question 16

Adjusting entries always include

Accepted Answer

A)   only income statement accounts
B)   only balance sheet accounts
C)   the cash account
D)   at least one income statement account and one balance sheet account

Question 17

The matching principle supports matching expenses with the related revenues.

Accepted Answer

A) True 
 B)False

Question 18

Data for an adjusting entry described as "accrued taxes, $950" requires a

Accepted Answer

A)   debit to Taxes Expense and a credit to Unpaid Taxes Expense
B)   debit to Retained Earnings and a credit to Taxes Expense
C)   debit to Taxes Payable and a credit to Taxes Expense
D)   debit to Taxes Expense and a credit to Taxes Payable

Question 19

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 20

If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Accepted Answer

A)   deferral
B)   accrual
C)   dividend
D)   revenue

Exam 3: Adjustments: Accruals and Deferrals

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?

Correct Answer
verified
C

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Correct Answer
verified

The company determines that the interest expense on a note payable for the period ending December 31 is $775. This amount is payable on January 1. Prepare the journal entries required on December 31 and January 1.

Correct Answer
verified

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

Correct Answer
verified

A company receives $360 for a 12-month trade magazine subscription on August 1. The adjusting entry on December 31 is a debit to Unearned Subscription Revenue, $150, and a credit to Subscription Revenue, $150.

Correct Answer
verified
True

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Correct Answer
verified

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

Correct Answer
verified
B

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Correct Answer
verified

Correct Answer
verified

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Correct Answer
verified

Using accrual accounting, revenues are recorded

Correct Answer
verified

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

Correct Answer
verified

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

Correct Answer
verified

The matching principle

Correct Answer
verified

A business makes a loan payment on the 15^th of each month. At the end of December, it has accrued 16 days worth of interest on the loan, which amounts to $450. The adjusting entry necessary at the end of the fiscal period ending December 31 would be recorded as a

Correct Answer
verified

Adjusting entries always include

Correct Answer
verified

The matching principle supports matching expenses with the related revenues.

Correct Answer
verified

Data for an adjusting entry described as "accrued taxes, $950" requires a

Correct Answer
verified

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
verified

If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Correct Answer
verified

Exam 3: Adjustments: Accruals and Deferrals

At the end of the fiscal year, the usual adjusting entry to prepaid insurance to record expired insurance was omitted. Which of the following statements is true?

Correct AnswerverifiedC

At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

Correct AnswerverifiedShow Answer

The company determines that the interest expense on a note payable for the period ending December 31 is $775. This amount is payable on January 1. Prepare the journal entries required on December 31 and January 1.

Correct AnswerverifiedShow Answer

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Correct AnswerverifiedShow Answer

A company receives $360 for a 12-month trade magazine subscription on August 1. The adjusting entry on December 31 is a debit to Unearned Subscription Revenue, $150, and a credit to Subscription Revenue, $150.

Correct AnswerverifiedTrue

If the adjustment for accrued salaries at the end of the period is inadvertently omitted, both liabilities and stockholders' equity will be understated for the period.

Correct AnswerverifiedShow Answer

The following adjusting journal entry found in the journal is missing an explanation. Select the best explanation for the entry.

Correct AnswerverifiedB

Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The entry to adjust the accounts for salaries accrued at the end of the accounting period is

Correct AnswerverifiedShow Answer

Using accrual accounting, revenues are recorded

Correct AnswerverifiedShow Answer

If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The matching principle

Correct AnswerverifiedShow Answer

A business makes a loan payment on the 15th of each month. At the end of December, it has accrued 16 days worth of interest on the loan, which amounts to $450. The adjusting entry necessary at the end of the fiscal period ending December 31 would be recorded as a

Correct AnswerverifiedShow Answer

Adjusting entries always include

Correct AnswerverifiedShow Answer

The matching principle supports matching expenses with the related revenues.

Correct AnswerverifiedShow Answer

Data for an adjusting entry described as "accrued taxes, $950" requires a

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

If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)

Correct AnswerverifiedShow Answer

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Journalize the six entries to adjust the accounts at December 31. (Hint: One of the accounts was affected by two different adjusting entries).

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A business makes a loan payment on the 15^th of each month. At the end of December, it has accrued 16 days worth of interest on the loan, which amounts to $450. The adjusting entry necessary at the end of the fiscal period ending December 31 would be recorded as a

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified