Question 1

An adjusting entry often includes an entry to Cash.

Accepted Answer

A) True 
 B)False

Question 2

On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?

Accepted Answer

A)  debit Unearned Fees, $1,548; credit Fees Earned, $1,548.
B)  debit Unearned Fees, $516; credit Fees Earned, $516.
C)  debit Unearned Fees, $1,161; credit Fees Earned, $1,161.
D)  debit Unearned Fees, $129; credit Fees Earned, $129.
E)  debit Unearned Fees, $387; credit Fees Earned, $387.F) A) and C)
G) D) and E)

Question 3

__________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. _____________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

Cash; Accr...

Question 4

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

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 Expense $9,000F) C) and D)
G) A) and E)

Question 5

Identify the primary differences between accrual accounting and cash basis accounting.

Accepted Answer

Accrual accounting records revenues in t...

Question 6

A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

Accepted Answer

A)  $16,000
B)  $15,000
C)  $2,500
D)  $13,500
E)  $13,333$16,000 - $2,500 = $13,500F) All of the above
G) A) and C)

Question 7

The adjusting entry to record an accrued revenue is:

Accepted Answer

A)  Increase an expense; increase a liability.
B)  Increase an asset; increase revenue.
C)  Decrease a liability; increase revenue.
D)  Increase an expense; decrease an asset.
E)  Increase an expense; decrease a liability.F) A) and D)
G) A) and B)

Question 8

On May 1, a two-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 first year ended December 31?

Accepted Answer

A)  $750.
B)  $5,270.
C)  $6,000.
D)  $6,750.
E)  $18,000.F) D) and E)
G) B) and D)

Question 9

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, and the company paid $18,000 cash in dividends to the owner (sole shareholder) . The retained earnings account before closing had a balance of $297,000. The Net Income for the year is:

Accepted Answer

A)  $185,000
B)  $63,300
C)  $81,300
D)  $360,300
E)  $378,300F) B) and C)
G) B) and E)

Question 10

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Accepted Answer

A)  Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250.
B)  Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.
C)  Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500.
D)  Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750.
E)  Debit Cash, $7,750; Credit Prepaid Insurance, $7,750.F) A) and E)
G) B) and D)

Question 11

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Accepted Answer

A)  Prepare a work sheet.
B)  Prepare reversing entries.
C)  Close temporary accounts.
D)  Prepare a post-closing trial balance.
E)  Prepare an unadjusted trial balance.F) None of the above
G) B) and E)

Question 12

On January 1, Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000. Imlay uses the straight-line depreciation method to allocate costs. The adjusting entry needed on December 31 of the first year is:

Accepted Answer

A)  Debit Depreciation Expense, $9,000; credit Accumulated Depreciation, $9,000.
B)  Debit Depreciation Expense, $18,000; credit Accumulated Depreciation, $18,000.
C)  Debit Depreciation Expense, $90,000; credit Accumulated Depreciation, $90,000.
D)  Debit Depreciation Expense, $18,000; credit Equipment, $18,000.
E)  Debit Depreciation Expense, $9,000; credit Equipment, $9,000.F) C) and D)
G) B) and D)

Exam 3: Adjusting Accounts for Financial Statements

On May 1, a two-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 first year ended December 31?

Correct Answer
verified

A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

Correct Answer
verified

The adjusting entry to record an accrued revenue is:

Correct Answer
verified

Identify the primary differences between accrual accounting and cash basis accounting.

Correct Answer
verified
Accrual accounting records revenues in t...
View Answer

On January 1, Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000. Imlay uses the straight-line depreciation method to allocate costs. The adjusting entry needed on December 31 of the first year is:

Correct Answer
verified

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ___ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified
Cash; Accr...
View Answer

Correct Answer
verified

An adjusting entry often includes an entry to Cash.

Correct Answer
verified

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

Correct Answer
verified

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Correct Answer
verified

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Correct Answer
verified

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, and the company paid $18,000 cash in dividends to the owner (sole shareholder) . The retained earnings account before closing had a balance of $297,000. The Net Income for the year is:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

On May 1, a two-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 first year ended December 31?

Correct AnswerverifiedShow Answer

A company purchased new furniture at a cost of $16,000 on January 1. The furniture is estimated to have a useful life of 6 years and a $1,000 salvage value. The company uses the straight-line method of depreciation. What is the book value of the furniture on December 31 of the first year?

Correct AnswerverifiedShow Answer

The adjusting entry to record an accrued revenue is:

Correct AnswerverifiedShow Answer

Identify the primary differences between accrual accounting and cash basis accounting.

Correct AnswerverifiedAccrual accounting records revenues in t...View AnswerShow Answer

On January 1, Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000. Imlay uses the straight-line depreciation method to allocate costs. The adjusting entry needed on December 31 of the first year is:

Correct AnswerverifiedShow Answer

__________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. _____________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct AnswerverifiedCash; Accr...View AnswerShow Answer

Correct AnswerverifiedShow Answer

An adjusting entry often includes an entry to Cash.

Correct AnswerverifiedShow Answer

The correct adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31 is:

Correct AnswerverifiedShow Answer

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

Correct AnswerverifiedShow Answer

Palmer Company, Inc. is at the end of its annual accounting period. The accountant has journalized and posted all external transactions and all adjusting entries, had prepared an adjusted trial balance, and completed the financial statements. The next step in the accounting cycle is:

Correct AnswerverifiedShow Answer

Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, and the company paid $18,000 cash in dividends to the owner (sole shareholder) . The retained earnings account before closing had a balance of $297,000. The Net Income for the year is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Accrual accounting records revenues in t...
View Answer

Correct Answer
verified

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ___ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified
Cash; Accr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified