Question 1

For the year ending December 31, 2010, Nathan Clinical Supplies Co. mistakenly omitted adjusting entries for (1) $8,900 of unearned revenue that was earned, (2) earned revenue that was not billed of $10,200, and (3) accrued wages of $7,000. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for 2010.

Accepted Answer

(a) Revenues were understated ...

Question 2

By matching revenues and expenses in the same period in which they incur

Accepted Answer

A)   net income or loss will always be underestimated.
B)   net income or loss will always be overestimated.
C)   net income or loss will be properly reported on the income statement
D)   net income or loss will not be determined.E) A) and D)
F) A) and C)

Question 3

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 valueE) All of the above
F) A) and B)

Question 4

Using accrual accounting, expenses are recorded and reported only

Accepted Answer

A)   when they are incurred, whether or not cash is paid
B)   when they are incurred and paid at the same time
C)   if they are paid before they are incurred
D)   if they are paid after they are incurredE) A) and B)
F) A) and C)

Question 5

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Accepted Answer

A) True 
 B)False

Question 6

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Accepted Answer

A)   still on hand
B)   purchased
C)   used
D)   required for the next accounting periodE) B) and C)
F) A) and D)

Question 7

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Accepted Answer

A) True 
 B)False

Question 8

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Accepted Answer

A)   records revenues when they are earned and expenses when they are paid
B)   records revenues and expenses when they are incurred.
C)   records revenues when cash is received and expenses when they are incurred.
D)   records revenues and expenses when the company needs to apply for a loan.E) B) and C)
F) A) and D)

Question 9

Revenues and expenses should be recorded in the same period to which they relate.

Accepted Answer

A) True 
 B)False

Question 10

The type of account and normal balance of Accumulated Depreciation is

Accepted Answer

A)   asset, credit
B)   asset, debit
C)   contra asset, credit
D)   contra asset, debitE) C) and D)
F) All of the above

Question 11

Deferred expenses have

Accepted Answer

A)   not yet been recorded as expenses or paid
B)   been recorded as expenses and paid
C)   been incurred and paid
D)   not yet been recorded as expensesE) C) and D)
F) All of the above

Question 12

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:

Accepted Answer

A)   debit to Salary Expense of $8,000.
B)   debit to Salary Payable of $8,000
C)   credit to Salary Expense of $16,000
D)   credit to Salary Payable of $16,000E) All of the above
F) A) and D)

Question 13

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Accepted Answer

The answer of Ski Master Company pays weekly salaries of...

Question 14

On April 30, a business estimates depreciation on equipment used during the first year of operations to be $2,900. (a) Journalize the adjusting entry required as of April 30. (b) If the adjusting entry in (a) were omitted, which items would be erroneously stated on (1) the income statement for the year and (2) the balance sheet as of April 30?

Accepted Answer

The answer of On April 30, a business estimates depreciation...

Question 15

Which of the following is an example of accrued revenue?

Accepted Answer

A)   Swimming pool cleaning that has been paid for three months in advance.
B)   Swimming pool cleaning that has been provided but has not been billed or paid.
C)   An agreement has been signed for swimming pool cleaning for the next three months.
D)   Swimming pool cleaning that has been provided and paid on the same day.E) A) and C)
F) A) and B)

Question 16

The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Accepted Answer

A)   debit Supplies $1,500, credit Supplies Expense $1,500
B)   debit Supplies Expense $4,750, credit Supplies $4,750
C)   debit Supplies Expense $1,500, credit Supplies $1,500
D)   debit Supplies $4,750, credit Supplies Expense $4,750E) A) and B)
F) B) and C)

Question 17

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

Accepted Answer

A) True 
 B)False

Question 18

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

Accepted Answer

A) True 
 B)False

Question 19

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

Accepted Answer

A) True 
 B)False

Question 20

The adjusting entry to record the depreciation of equipment for the fiscal period is

Accepted Answer

A)   debit Depreciation Expense; credit Equipment
B)   debit Depreciation Expense; credit Accumulated Depreciation
C)   debit Accumulated Depreciation; credit Depreciation Expense
D)   debit Equipment; credit Depreciation ExpenseE) A) and D)
F) B) and C)

Exam 3: The Adjusting Process

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

Correct Answer
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A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

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

Correct Answer
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The balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Correct Answer
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The type of account and normal balance of Accumulated Depreciation is

Correct Answer
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Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Correct Answer
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Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Correct Answer
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A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:

Correct Answer
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Proper reporting of revenues and expenses in a period is due to the accounting period concept.

Correct Answer
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The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Correct Answer
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By matching revenues and expenses in the same period in which they incur

Correct Answer
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Which of the following is an example of accrued revenue?

Correct Answer
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Deferred expenses have

Correct Answer
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The adjusting entry to record the depreciation of equipment for the fiscal period is

Correct Answer
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(a) Revenues were understated ...
View Answer

Revenues and expenses should be recorded in the same period to which they relate.

Correct Answer
verified

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Correct Answer
verified

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Correct Answer
verified

Using accrual accounting, expenses are recorded and reported only

Correct Answer
verified

Exam 3: The Adjusting Process

The difference between deferred revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and deferred revenue has never been recorded.

Correct AnswerverifiedShow Answer

A company realizes that the last two day's revenue for the month was billed but not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.

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 balance in the supplies account, before adjustment at the end of the year is $6,250. The proper adjusting entry if the amount of supplies on hand at the end of the year is $1,500 would be

Correct AnswerverifiedShow Answer

The type of account and normal balance of Accumulated Depreciation is

Correct AnswerverifiedShow Answer

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies

Correct AnswerverifiedShow Answer

Vertical analysis compares each item in a financial statement with a total amount from the same statement.

Correct AnswerverifiedShow Answer

A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The adjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includes a:

Correct AnswerverifiedShow Answer

Proper reporting of revenues and expenses in a period is due to the accounting period concept.

Correct AnswerverifiedShow Answer

The cash basis of accounting records revenues and expenses when the cash is exchanged while the accrual basis of accounting

Correct AnswerverifiedShow Answer

By matching revenues and expenses in the same period in which they incur

Correct AnswerverifiedShow Answer

Which of the following is an example of accrued revenue?

Correct AnswerverifiedShow Answer

Deferred expenses have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The adjusting entry to record the depreciation of equipment for the fiscal period is

Correct AnswerverifiedShow Answer

Correct Answerverified(a) Revenues were understated ...View AnswerShow Answer

Revenues and expenses should be recorded in the same period to which they relate.

Correct AnswerverifiedShow Answer

Depreciation Expense is reported on the balance sheet as an addition to the related asset.

Correct AnswerverifiedShow Answer

Ski Master Company pays weekly salaries of $18,000 on Friday for a five-day week ending on that day. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Wednesday.

Correct AnswerverifiedShow Answer

Using accrual accounting, expenses are recorded and reported only

Correct AnswerverifiedShow Answer

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(a) Revenues were understated ...
View Answer

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Correct Answer
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