Question 1

Vertical analysis is useful for analyzing financial statement changes over time.

Accepted Answer

A) True 
 B)False

Question 2

Identify the effect (a through h)  that omitting each of the following items would have on the balance sheet.
-Interest earned on a note receivable was not recorded.

Accepted Answer

A)  Assets and owner's equity overstated
B)  Assets and owner's equity understated
C)  Assets overstated and owner's equity understated
D)  Assets understated and owner's equity overstated
E)  Liabilities and owner's equity overstatedF) Liabilities and owner's equity understatedG) Liabilities overstated and owner's equity understatedH) Liabilities understated and owner's equity overstatedI) A) and C)
J) C) and F)

Question 3

On March 1, a business paid $3,600 for a 12-month liability insurance policy. On April 1, the business entered into a two-year rental contract for equipment at a total cost of $18,000. Determine the following amounts:​
(a) Insurance expense for the month of March
(b) Balance in prepaid insurance as of March 31
(c) Equipment rent expense for the month of April
(d) Balance in prepaid equipment rental as of April 30

Accepted Answer

(a)$300
($3,600/12 = $300)
(b...

Question 4

Which of the following accounts would likely be included in an accrual adjusting entry?

Accepted Answer

A)   Insurance Expense
B)   Prepaid Rent
C)   Interest Expense
D)   Unearned RentE) B) and C)
F) None of the above

Question 5

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a (n)

Accepted Answer

A)   asset
B)   liability
C)   owner's equity account
D)   contra liabilityE) B) and D)
F) B) and C)

Question 6

A fixed asset's market value is reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Accepted Answer

Depreciation Expense...

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of accrued revenue?

Accepted Answer

A)   snow removal services that have been paid for three months in advance
B)   snow removal services that have been provided but have not been billed or paid
C)   an agreement that has been signed for snow removal services for the next three months
D)   snow removal services that have been provided and paid on the same dayE) A) and B)
F) None of the above

Question 10

Accumulated depreciation is reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a characteristic of the accrual basis of accounting?

Accepted Answer

A)   Revenues and expenses are reported in the period in which cash is received or paid.
B)   Revenues are reported on the income statement in the period in which they are earned.
C)   The accrual basis of accounting supports the matching concept.
D)   Expenses are reported in the same period as the revenues to which they relate.E) B) and D)
F) A) and D)

Question 12

Prior to the adjusting process, accrued revenue has

Accepted Answer

A)   been earned and cash received
B)   been earned and not recorded as revenue
C)   not been earned but recorded as revenue
D)   not been recorded as revenue but cash has been receivedE) All of the above
F) None of the above

Question 13

Match the type of account (a through e)  with the business transactions that follow.
-Provided tutoring for a student that will be invoiced next month.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of these choicesF) B) and C)
G) C) and D)

Question 14

Match the type of account (a through e)  with the business transactions that follow.
-Paid for one year's insurance policy.

Accepted Answer

A)  Prepaid expense
B)  Accrued expense
C)  Unearned revenue
D)  Accrued revenue
E)  None of these choicesF) A) and B)
G) None of the above

Question 15

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Accepted Answer

A)   $56,700
B)   $58,000
C)   $55,800
D)   $54,500E) A) and B)
F) A) and C)

Question 16

Which of the following is considered to be an accrued expense?

Accepted Answer

A)   A computer technician installed the latest software updates and was paid on the same day.
B)   A computer technician has been paid in advance to install software updates as they become available.
C)   A computer technician has just signed an agreement with you regarding pricing for future work.
D)   A computer technician has installed the latest software updates, but you have not received an invoice or made payment.E) A) and C)
F) C) and D)

Question 17

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Accepted Answer

$22,800/24 = $950 pe...

Question 18

For the year ending December 31, Beard Clinical Supplies Co. mistakenly omitted adjusting entries for 
(1) $9,800 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.

Accepted Answer

(a) Revenues were understated ...

Question 19

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

Accepted Answer

A) True 
 B)False

Question 20

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Accepted Answer

A)   debit Insurance Expense, $1,800; credit Prepaid Insurance, $1,800
B)   debit Insurance Expense, $1,500; credit Prepaid Insurance, $1,500
C)   debit Insurance Expense, $2,100; credit Prepaid Insurance, $2,100
D)   debit Prepaid Insurance, $1,800; credit Cash, $1,800E) B) and D)
F) A) and B)

Exam 3: The Adjusting Process

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Correct Answer
verified
$22,800/24 = $950 pe...
View Answer

Correct Answer
verified
(a)$300
($3,600/12 = $300)
(b...
View Answer

Which of the following is not a characteristic of the accrual basis of accounting?

Correct Answer
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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.

Correct Answer
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Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Interest earned on a note receivable was not recorded.

Correct Answer
verified

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

Correct Answer
verified

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

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

Correct Answer
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Which of the following accounts would likely be included in an accrual adjusting entry?

Correct Answer
verified

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Correct Answer
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Depreciation Expense...
View Answer

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

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

Vertical analysis is useful for analyzing financial statement changes over time.

Correct Answer
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Match the type of account (a through e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month.

Correct Answer
verified

Which of the following is considered to be an accrued expense?

Correct Answer
verified

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a (n)

Correct Answer
verified

Accumulated depreciation is reported on the income statement.

Correct Answer
verified

Prior to the adjusting process, accrued revenue has

Correct Answer
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A fixed asset's market value is reflected on the balance sheet.

Correct Answer
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Match the type of account (a through e) with the business transactions that follow. -Paid for one year's insurance policy.

Correct Answer
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Exam 3: The Adjusting Process

On January 1, DogMart Company purchased a two-year liability insurance policy for $22,800 cash. The purchase was recorded to Prepaid Insurance. Prepare the January 31 adjusting entry.

Correct Answerverified$22,800/24 = $950 pe...View AnswerShow Answer

Correct Answerverified(a)$300 ($3,600/12 = $300)(b...View AnswerShow Answer

Which of the following is not a characteristic of the accrual basis of accounting?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Identify the effect (a through h) that omitting each of the following items would have on the balance sheet. -Interest earned on a note receivable was not recorded.

Correct AnswerverifiedShow Answer

The matching principle requires expenses be recorded in the same period that the related revenue is recorded.

Correct AnswerverifiedShow Answer

The net income reported on the income statement is $58,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $1,300. Net income, as corrected, is

Correct AnswerverifiedShow Answer

Which of the following is an example of accrued revenue?

Correct AnswerverifiedShow Answer

Which of the following accounts would likely be included in an accrual adjusting entry?

Correct AnswerverifiedShow Answer

The estimated amount of depreciation on equipment for the current year is $5,300. Journalize the adjusting entry to record the depreciation.

Correct AnswerverifiedDepreciation Expense...View AnswerShow Answer

Smokey Company purchases a one-year insurance policy on July 1 for $3,600. The adjusting entry on December 31 is

Correct AnswerverifiedShow Answer

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

Vertical analysis is useful for analyzing financial statement changes over time.

Correct AnswerverifiedShow Answer

Match the type of account (a through e) with the business transactions that follow. -Provided tutoring for a student that will be invoiced next month.

Correct AnswerverifiedShow Answer

Which of the following is considered to be an accrued expense?

Correct AnswerverifiedShow Answer

Prepaid rent, representing rent for the next six months' occupancy, would be reported on the tenant's balance sheet as a (n)

Correct AnswerverifiedShow Answer

Accumulated depreciation is reported on the income statement.

Correct AnswerverifiedShow Answer

Prior to the adjusting process, accrued revenue has

Correct AnswerverifiedShow Answer

A fixed asset's market value is reflected on the balance sheet.

Correct AnswerverifiedShow Answer

Match the type of account (a through e) with the business transactions that follow. -Paid for one year's insurance policy.

Correct AnswerverifiedShow Answer

Correct Answer
verified
$22,800/24 = $950 pe...
View Answer

Correct Answer
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(a)$300
($3,600/12 = $300)
(b...
View Answer

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Depreciation Expense...
View Answer

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

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