1. (Points: 2) All adjusting entries always involve1. at least one income statement account and one balance sheet account.2. the cash account.3. only income statement accounts.4. only balance sheet accounts.Save Answer2. (Points: 2) Which of the accounts below would appear on an adjusted trial balance but probably would not appear on the trial balance?1. Accounts Receivable2. Fees Earned3. Unearned Fees4. Depreciation ExpenseSave Answer3. (Points: 2) Prior to the adjusting process, accrued revenue has
1. not been earned but recorded as revenue2. been earned and cash received3. not been recorded as revenue but cash has been received4. been earned and not recorded as revenueSave Answer4. (Points: 2) Depreciation Expense and Accumulated Depreciation are classified, respectively, as1. revenue, asset2. asset, contra liability3. contra asset, expense4. expense, contra assetSave Answer5. (Points: 2) Adjusting entries are
1. rarely needed in large companies2. needed to bring accounts up to date and match revenue and expense3. optional under generally accepted accounting principles4. the same as correcting entriesSave Answer6. (Points: 2) Which of the following is an example of accrued revenue?1. Swimming pool cleaning that has been provided and paid on the same day.2. Swimming pool cleaning that has been provided but has not been billed or paid.3. Swimming pool cleaning that has been for three months in advance.4. An agreement has been signed for swimming pool cleaning for the next three months.Save Answer7. (Points: 2) At the end of the fiscal year, the usual adjusting entry for depreciation on equipment was omitted. Which of the following statements is true?
1. Total liabilities and total assets will be understated.2. Net income will be overstated for the current year.3. The balance sheet and income statement will be misstated but the retained earnings statement will be correct for the current year.4. Total assets will be understated at the end of the current year.Save Answer8. (Points: 2) The heading of an adjusted trial balance contains the heading "For the Month Ended December 31, 2008."1. True2. FalseSave Answer9. (Points: 2) The balance in the office supplies account on June 1 was $6,300, supplies purchased during June were $3,100, and the supplies on hand at June 30 were $2,500. The amount to be used for the appropriate adjusting entry is1. $5,7002. $3,7003. $11,9004. $6,900Save Answer10. (Points: 2) If there is a balance in the unearned subscriptions account after adjusting entries are made, it represents a(n)1. revenue2. accrual3. dividend4. deferralSave Answer11. (Points: 2) Deferrals are recorded transactions that delay the recognition of an expense or revenue.1. True
2. FalseSave Answer12. (Points: 2) The accrual basis of accounting requires revenue be recorded when cash is received from customers.1. False2. TrueSave Answer13. (Points: 2) If there is a balance in the prepaid rent account after adjusting entries are made, it represents a(n)1. liability2. accrual3. revenue4. deferralSave Answer14. (Points: 2) If the adjustment to recognize expired insurance at the end of the period is inadvertently omitted, the assets at the end of the period will be understated.1. False2. TrueSave Answer15. (Points: 2) The general term employed to indicate a delay of the recognition of an expense already paid or of a revenue already received is
1. accrual2. depreciation3. deferral
4. inventorySave Answer16. (Points: 2) The net income reported on the income statement is $85,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $800. Net income, as corrected, is1. $84,2002. $85,0003. $82,8004. $82,000Save Answer17. (Points: 2) If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.1. True2. FalseSave Answer18. (Points: 2) Which of the following is an example of an accrued expense?
1. Supplies on hand2. A two-year premium paid on a fire insurance policy3. Fees received but not yet earned4. Salary owed but not yet paidSave Answer19. (Points: 2) The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.1. True2. FalseSave Answer20. (Points: 2) How will the following adjusting journal entry affect the accounting equation?.Unearned Subscriptions 11,500 Subscriptions earned 11,5001. Increase liabilities, increase revenues2. Decrease liabilities, increase revenues3. Increase assets, increase revenues4. Decrease liabilities, decrease revenuesSave Answer21. (Points: 2) Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets.1. False2. TrueSave Answer22. (Points: 2) A work sheet heading is dated for a period of time.1. False2. TrueSave Answer23. (Points: 2) The fiscal year selected by companies 1. will change each year2. must always begin on January 1.3. is the same as the calendar year4. begins with the first day of the month and ends on the last day of the twelfth monthSave Answer24. (Points: 2) Real accounts are not permanent accounts.
1. True2. FalseSave Answer25. (Points: 2) A post-closing trial balance should be prepared before the financial statements are prepared.
1. True2. FalseSave Answer26. (Points: 2) The most important output of the accounting cycle is the financial statements.
1. False2. TrueSave Answer27. (Points: 2) The amount of the net income for a period appears on both the income statement and the balance sheet for that period.1. True2. FalseSave Answer28. (Points: 2) Use the following information in the adjusted trial balance for Stockton Company to answer Questions 16-20.Stockton Company Adjusted Trial Balance For the Year ended December 31, 2010Cash $ 6,030 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation $ 1,100 Accounts Payable 1,900 Notes Payable 4,200 Capital Stock 12,940 Dividends 790 Fees Earned 8,750 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 85 Totals $28,890 $28,890Determine the net income (loss) for the period.1. Net Loss $5,5702. Net Loss $7903. Net Income $2,3904. Net Income $3,180Save Answer29. (Points: 2) The income statement columns in the worksheet show that debits are equal to $55,800 and credits are $62,705. What does this information mean to the accountant?1. The accounts are out of balance, indicating an error has been made.2. Net loss of $6,9053. The accounts have not been updated.4. Net income of $6,905
Save Answer30. (Points: 2) Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $5,400 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense and prepaid insurance during the closing process at the end of Amir’s first month of operations on March 31st?1. $450.2. $5,400.3. $540.4. $500.Save Answer31. (Points: 2) Use the following worksheet to answer Questions 50-54.Finley CompanyWorksheetFor the Year Ended December 31, 2010Adjusted Trial Balance Income Statement Balance Sheet Account Title Debit Credit Debit Credit Debit Credit Cash 48,000 48,000 Accounts Receivable 18,000 18,000 Supplies 6,000 6,000 Equipment 57,000 57,000 Accumulated Depr-Equip 18,000 18,000 Accounts Payable 30,000 30,000 Wages Payable 6,000 6,000 Capital Stock 4,000 4,000 Retained Earnings 29,000 29,000 Dividends 3,000 3,000 Fees Earned 141,000 141,000 Wages Expense 63,000 63,000 Rent Expense 18,000 18,000 Depreciation Expense 15,000 15,000 Totals 228,000 228,000 96,000 141,000 132,000 87,000 Net Income (Loss) 45,000 45,000 141,000 141,000 132,000 132,000Based on the preceding trial balance, the entry to close income summary would be:1. debit Income Summary $141,000; credit Retained Earnings $141,0002. debit Retained Earnings $45,000; credit Income Summary $45,0003. debit Income Summary $45,000, credit Retained Earnings $45,0004. debit Retained Earnings $9,000; credit Income Summary $9,000Save Answer32. (Points: 2) All income statement accounts will be closed at the end of the period.1. False2. TrueSave Answer33. (Points: 2) Closing entries1. need not be journalized if adjusting entries are prepared2. must be journalized and posted3. are not needed if adjusting entries are prepared4. need not be posted if the financial statements are prepared from the work sheetSave Answer34. (Points: 2) Which of the accounts below would be closed by posting a debit to the account?1. Rent Expense2. Fees Earned3. Dividends4. Unearned RevenueSave Answer35. (Points: 2) Journalizing and posting closing entries must be completed before financial statements can be prepared.1. False2. TrueSave Answer36. (Points: 2) Accumulated Depreciation appears on the1. income statement as an operating expense2. balance sheet in the current assets section3. balance sheet in the long-term liabilities section4. balance sheet in the property, plant and equipment sectionSave Answer37. (Points: 2) The trial balance may be listed on the work sheet instead of being prepared separately.1. True2. FalseSave Answer
38. (Points: 2) The income summary account is closed to the retained earnings account.1. True2. FalseSave Answer39. (Points: 2) The post-closing trial balance differs from the adjusted trial balance in that it
1. does not include income statement accounts2. does not take into account closing entries3. does not take into account adjusting entries4. does not include balance sheet accountsSave Answer40. (Points: 2) Which of the following accounts should be closed to Income Summary at the end of the fiscal year?1. Prepaid Insurance2. Accumulated Depreciation3. Unearned Rent4. Supplies Expense