Question 1

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets,is called:

Accepted Answer

A)  Accumulated depreciation.
B)  A contra account.
C)  The expense recognition (matching) principle.
D)  Depreciation expense.
E)  An accrued account.F) All of the above
G) A) and B)

Question 2

Which of the following does not require an adjusting entry at year-end?

Accepted Answer

A)  Accrued interest on notes payable.
B)  Supplies used during the period.
C)  Cash invested by stockholders.
D)  Accrued wages.
E)  Expired portion of prepaid insurance.F) B) and C)
G) B) and E)

Question 3

All of the following are true regarding prepaid expenses except:

Accepted Answer

A)  They are paid for in advance of receiving their benefits.
B)  They are assets.
C)  When they are used,their costs become expenses.
D)  The adjusting entry for prepaid expenses increases expenses and decreases liabilities.
E)  The adjusting entry for prepaid expenses increases expenses and decreases assets.F) All of the above
G) A) and D)

Question 4

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.

Accepted Answer

The answer of Gracio Co.had the following transactions in the...

Question 5

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

Accepted Answer

A)  Office Equipment.
B)  Accumulated Depreciation-Office Equipment.
C)  Depreciation Expense-Office Equipment.
D)  Retained earnings.
E)  Salaries Payable.F) A) and D)
G) None of the above

Question 6

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.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 E)
G) A) and E)

Question 7

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Accepted Answer

A) True 
 B)False

Question 8

Depreciation measures the decline in market value of an asset.

Accepted Answer

A) True 
 B)False

Question 9

Discuss the importance of periodic reporting and the time period assumption.

Accepted Answer

For information to be valuable to decisi...

Question 10

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Accepted Answer

A) True 
 B)False

Question 11

A company entered into a 2-month contract for $50,000 on April 1.It earned $25,000 of the contract services in April and billed the customer.The company should recognize the revenue when it receives the customer's check.

Accepted Answer

A) True 
 B)False

Question 12

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Accepted Answer

A) True 
 B)False

Question 13

From the information provided,calculate Giuseppe's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Analysis comment: The profit margin has...

Question 14

The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account?

Accepted Answer

A)  $75,500.
B)  $184,500.
C)  $99,500.
D)  $160,500.
E)  $130,000.F) None of the above
G) B) and D)

Question 15

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Accepted Answer

A) True 
 B)False

Question 16

On December 31,Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage,with coverage beginning on that date.The adjusting entry needed on December 31 is:

Accepted Answer

A)  Debit Prepaid Insurance $6,000; credit Cash $6,000.
B)  Debit Insurance Expense $3,000; credit Accounts Payable $3,000.
C)  Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000.
D)  Debit Cash $6,000; credit Prepaid Insurance $6,000.
E)  Debit Insurance Expense $6,000; credit Accounts Payable $6,000.F) C) and E)
G) B) and E)

Question 17

A balance sheet that places the assets above the liabilities and equity is called a(n) :

Accepted Answer

A)  Report form balance sheet.
B)  Account form balance sheet.
C)  Classified balance sheet.
D)  Unadjusted balance sheet.
E)  Unclassified balance sheet.F) B) and D)
G) D) and E)

Question 18

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

Accepted Answer

A) True 
 B)False

Question 19

Depreciation expense is an example of an accrued expense.

Accepted Answer

A) True 
 B)False

Question 20

________ refer to costs incurred in a period that are both unpaid and unrecorded.________ refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

Accepted Answer

Accrued expenses; ac...

Exam 3: Adjusting Accounts for Financial Statements

Which of the following does not require an adjusting entry at year-end?

Correct AnswerverifiedShow Answer

Gracio Co.had the following transactions in the last two months of its year ended December 31.Prepare entries for these transactions under the method that records prepaid expenses as expenses and records unearned revenues as revenues.Also prepare adjusting entries at the end of the year.

Correct AnswerverifiedShow Answer

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Correct AnswerverifiedShow Answer

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Correct AnswerverifiedShow Answer

High Step Shoes,had annual revenues of $185,000,expenses of $103,700,and paid dividends of $18,000 during the current year.The retained earnings account before closing had a balance of $297,000.The Net Income for the year is:

Correct AnswerverifiedShow Answer

Depreciation measures the decline in market value of an asset.

Correct AnswerverifiedShow Answer

________ refer to costs incurred in a period that are both unpaid and unrecorded.________ refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

Correct AnswerverifiedAccrued expenses; ac...View AnswerShow Answer

Depreciation expense is an example of an accrued expense.

Correct AnswerverifiedShow Answer

All of the following are true regarding prepaid expenses except:

Correct AnswerverifiedShow Answer

A company entered into a 2-month contract for $50,000 on April 1.It earned $25,000 of the contract services in April and billed the customer.The company should recognize the revenue when it receives the customer's check.

Correct AnswerverifiedShow Answer

Which of the following accounts showing a balance on the post-closing trial balance indicate an error?

Correct AnswerverifiedShow Answer

From the information provided,calculate Giuseppe's profit margin ratio for each of the three years.Comment on the results,assuming that the industry average for the profit margin ratio is 6% for each of the three years.

Correct Answerverified Analysis comment: The profit margin has...View AnswerShow Answer

The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used,representing the expense of using the assets,is called:

Correct AnswerverifiedShow Answer

Current liabilities include accounts receivable,unearned revenues,and salaries payable.

Correct AnswerverifiedShow Answer

Discuss the importance of periodic reporting and the time period assumption.

Correct AnswerverifiedFor information to be valuable to decisi...View AnswerShow Answer

On December 31,Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000.The insurance was purchased on July 1 of the same year for one year of insurance coverage,with coverage beginning on that date.The adjusting entry needed on December 31 is:

Correct AnswerverifiedShow Answer

A balance sheet that places the assets above the liabilities and equity is called a(n) :

Correct AnswerverifiedShow Answer

An unadjusted trial balance is a list of accounts and balances prepared before adjustments are recorded.

Correct AnswerverifiedShow Answer

The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account?

Correct AnswerverifiedShow Answer

Current assets and current liabilities are expected to be used up or come due within one year or the company's operating cycle whichever is longer.

Correct AnswerverifiedShow Answer

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refer to costs incurred in a period that are both unpaid and unrecorded. refer to revenues earned in a period that are both unrecorded and not yet received in cash (or other assets).

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Accrued expenses; ac...
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Analysis comment: The profit margin has...
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For information to be valuable to decisi...
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