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Exam 3: The Adjusting Process

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Question 41

Multiple Choice

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

A) A computer technician has 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 their invoice for payment.

E) None of the above
F) All of the above

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Question 42

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The financial statements are prepared from the unadjusted trial balance.

A) True
B) False

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Question 43

Multiple Choice

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At the end of the fiscal year, the usual adjusting entry to Prepaid Insurance to record expired insurance was omitted. Which of the following statements is true?

Accrued revenues would appear on the balance sheet as

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

Income statements for PS Enterprises are shown below. (a) Prepare a vertical analysis of PS Enterprises' income statements. (b) Does the vertical analysis indicate a favorable or unfavorable trend?

Fees receivable would appear on the balance sheet as a(n)

Accrued expenses are ordinarily reported on the balance sheet as

Depreciation Expense and Accumulated Depreciation are classified, respectively, as

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

What is the purpose of an adjusted trial balance? What types of errors does it detect? What types of errors does it not detect?

Unearned revenue is a liability.

Salaries of $6,400 are paid for a five-day week on Friday. Prepare the adjusting journal entry that is required if the month ends on Thursday.

Adjusting journal entries are dated on the last day of the period.

Revenue recognition concept requires that the reporting of revenue be included in the period when cash for the service is received.

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, is

Explain the difference between (a) Accrued revenues and unearned revenues. (b) Accrued expenses and prepaid expenses. (c) Give an example of each.

Which of the following is considered to be unearned revenue?

An adjusting entry would adjust revenue so it is reported when earned and not when cash is received.

The unexpired insurance at the end of the fiscal period represents