Question 1

As an asset's depreciation is recorded,its carrying value decreases.

Accepted Answer

A) True 
 B)False

Question 2

The heading of an adjusted trial balance might contain the line "For the Month Ended May 31,20xx."

Accepted Answer

A) True 
 B)False

Question 3

Failure to adjust for expired prepaid insurance at year end will result in an

Accepted Answer

A)  overstatement of liabilities.
B)  understatement of assets.
C)  understatement of owner's equity.
D)  overstatement of net income.E) A) and D)
F) All of the above

Question 4

Equipment might be depreciated over 15 years because

Accepted Answer

A)  it will lose most of its market value in 15 years.
B)  it will be paid for in 15 years.
C)  it will help to generate revenue for the company over 15 years.
D)  income tax provisions require depreciation over 15 years.E) B) and D)
F) All of the above

Question 5

Prepaid Rent was $800 at the end of May and $1,300 at the end of June.Rent Expense for June was $720.How much cash was paid for rent during June?

Accepted Answer

A)  $820
B)  $1,020
C)  $1,220
D)  $1,420E) A) and D)
F) A) and B)

Question 6

Which of the following is an application of accrual accounting?

Accepted Answer

A)  Depreciating a building as quickly as allowed by income tax regulations.
B)  Recording utilities expense in the accounting period covered by the monthly bill.
C)  Expensing a machine in its entirety when purchased.
D)  Recording revenue at the time payment is received.E) A) and B)
F) C) and D)

Question 7

An adjusting entry would not include which of the following accounts?

Accepted Answer

A)  Salaries Payable
B)  Unearned Revenue
C)  Interest Receivable
D)  CashE) A) and B)
F) All of the above

Question 8

Accrual accounting recognizes revenues and expenses at the point that cash changes hands.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following accounts most likely would be found on both a trial balance and an adjusted trial balance?

Accepted Answer

A)  Utilities Expense
B)  Insurance Expense
C)  Supplies Expense
D)  Depreciation Expense-EquipmentE) None of the above
F) C) and D)

Question 10

Which of the following accounts would likely not need to be adjusted at year end?

Accepted Answer

A)  Equipment
B)  Prepaid Insurance
C)  Supplies
D)  Owner's WithdrawalsE) B) and C)
F) B) and D)

Question 11

Which of the following is correct regarding accrual accounting?

Accepted Answer

A)  Adjusting the accounts is a technique used to accomplish accural accounting.
B)  Revenues are recorded when received.
C)  Expenses are recorded when earned.
D)  Net income is the difference between cash receipts from customers and cash payments for expenses.E) A) and C)
F) All of the above

Question 12

In accounting,depreciation refers to the decline in fair value of a plant asset.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an example of an accrual?

Accepted Answer

A)  Debit Office Supplies Expense,credit Office Supplies
B)  Debit Wages Expense,credit Wages Payable
C)  Debit Rent Expense,credit Prepaid Rent
D)  Debit Unearned Revenue,credit Service RevenueE) None of the above
F) B) and C)

Question 14

Due to the recording of adjusting entries,the dollar amount of Cash on the trial balance is usually less than the dollar amount of Cash on the adjusted trial balance.

Accepted Answer

A) True 
 B)False

Question 15

The intentional preparation of misleading financial statements is referred to as fraudulent financial reporting.

Accepted Answer

A) True 
 B)False

Question 16

Direct cause-and-effect relationships between revenues and costs can usually be demonstrated.

Accepted Answer

A) True 
 B)False

Question 17

Office Supplies was $1,800 at the end of January and $2,280 at the end of February.During February,Office Supplies Expense equaled $560.How much cash was paid for office supplies during February?

Accepted Answer

A)  $440
B)  $2,840
C)  $3,440
D)  $1,040E) A) and B)
F) All of the above

Question 18

Which of the following situations is not an example of a deferral?

Accepted Answer

A)  Recording supplies consumed.
B)  Recording unrecorded,earned revenues.
C)  Recording depreciation.
D)  Recording the portion of prepaid rent that has expired.E) A) and D)
F) All of the above

Question 19

Almost every revenue or expense account on the income statement has one or more related accounts on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

A revenue for which the service has been performed but that has not been recorded is a deferred revenue.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting the Accounts

Which of the following is an application of accrual accounting?

Correct AnswerverifiedShow Answer

Due to the recording of adjusting entries,the dollar amount of Cash on the trial balance is usually less than the dollar amount of Cash on the adjusted trial balance.

Correct AnswerverifiedShow Answer

As an asset's depreciation is recorded,its carrying value decreases.

Correct AnswerverifiedShow Answer

Which of the following accounts would likely not need to be adjusted at year end?

Correct AnswerverifiedShow Answer

Almost every revenue or expense account on the income statement has one or more related accounts on the balance sheet.

Correct AnswerverifiedShow Answer

A revenue for which the service has been performed but that has not been recorded is a deferred revenue.

Correct AnswerverifiedShow Answer

Prepaid Rent was $800 at the end of May and $1,300 at the end of June.Rent Expense for June was $720.How much cash was paid for rent during June?

Correct AnswerverifiedShow Answer

Which of the following accounts most likely would be found on both a trial balance and an adjusted trial balance?

Correct AnswerverifiedShow Answer

Which of the following is an example of an accrual?

Correct AnswerverifiedShow Answer

The intentional preparation of misleading financial statements is referred to as fraudulent financial reporting.

Correct AnswerverifiedShow Answer

The heading of an adjusted trial balance might contain the line "For the Month Ended May 31,20xx."

Correct AnswerverifiedShow Answer

Which of the following situations is not an example of a deferral?

Correct AnswerverifiedShow Answer

Which of the following is correct regarding accrual accounting?

Correct AnswerverifiedShow Answer

Failure to adjust for expired prepaid insurance at year end will result in an

Correct AnswerverifiedShow Answer

Office Supplies was $1,800 at the end of January and $2,280 at the end of February.During February,Office Supplies Expense equaled $560.How much cash was paid for office supplies during February?

Correct AnswerverifiedShow Answer

Direct cause-and-effect relationships between revenues and costs can usually be demonstrated.

Correct AnswerverifiedShow Answer

An adjusting entry would not include which of the following accounts?

Correct AnswerverifiedShow Answer

In accounting,depreciation refers to the decline in fair value of a plant asset.

Correct AnswerverifiedShow Answer

Equipment might be depreciated over 15 years because

Correct AnswerverifiedShow Answer

Accrual accounting recognizes revenues and expenses at the point that cash changes hands.

Correct AnswerverifiedShow Answer

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