Question 1

For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Accepted Answer

A)   Debit Income Summary $78,000; credit Retained earnings $78,000.
B)   Debit Retained earnings $37,000; credit Dividends $37,000.
C)   Debit revenues $187,000; credit Income Summary $187,000.
D)   Debit Income Summary $109,000, credit expenses $109,000.
E)   Debit Income Summary $187,000; credit revenues $187,000.F) C) and D)
G) C) and E)

Question 2

During the closing process,Retained Earnings is closed to the Dividends account.

Accepted Answer

A) True 
 B)False

Question 3

On January 1,Imlay Company purchases manufacturing equipment costing $95,000 that is expected to have a five-year life and an estimated salvage value of $5,000.Imlay uses the straight-line depreciation method to allocate costs,and only prepares adjustments at year-end.The adjusting entry needed on December 31 of the first year is:

Accepted Answer

A)   Debit Depreciation Expense, $9,000; credit Accumulated Depreciation, $9,000.
B)   Debit Depreciation Expense, $18,000; credit Accumulated Depreciation, $18,000.
C)   Debit Depreciation Expense, $90,000; credit Accumulated Depreciation, $90,000.
D)   Debit Depreciation Expense, $18,000; credit Equipment, $18,000.
E)   Debit Depreciation Expense, $9,000; credit Equipment, $9,000.F) A) and C)
G) A) and E)

Question 4

What is an adjusted trial balance? Why is it prepared?

Accepted Answer

An adjusted trial balance is a list of a...

Question 5

Profit margin is defined as:

Accepted Answer

A)   Revenues divided by net sales.
B)   Net sales divided by assets.
C)   Net income divided by net sales.
D)   Net income divided by assets.
E)   Net sales divided by net income.F) A) and B)
G) A) and E)

Question 6

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

Accepted Answer

A) True 
 B)False

Question 7

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Accepted Answer

A)   Debit Utilities Expense $215; credit Accounts Payable $215.
B)   Debit Accounts Payable $215; credit Utilities Expense $215.
C)   Debit Prepaid Utilities $215; credit Cash $215.
D)   Debit Utilities Expense $215; credit Prepaid Utilities $215.
E)   Debit Prepaid Utilities $215; credit Accounts Payable $215.F) D) and E)
G) A) and B)

Question 8

Which of the following types of businesses might have an operating cycle longer than one year?

Accepted Answer

A)   Ski resort.
B)   Clothing retailer.
C)   Florist.
D)   Wheat farmer.
E)   Commercial airplane manufacturer.F) C) and E)
G) A) and C)

Question 9

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Accepted Answer

A)   Debit Income Summary $55,200; credit Revenue accounts $55,200.
B)   Debit Revenue accounts $37,000; credit Retained earnings $37,000.
C)   Debit Revenue accounts $55,200; credit Retained earnings $37,000.
D)   Debit Revenue accounts $55,200; credit Income Summary $55,200.
E)   Debit Income Summary $37,000; credit Retained earnings $37,000.F) A) and E)
G) All of the above

Question 10

Profit margin measures the relation of debt to assets.

Accepted Answer

A) True 
 B)False

Question 11

Adjusting entries are designed primarily to correct accounting errors.

Accepted Answer

A) True 
 B)False

Question 12

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Accepted Answer

A) True 
 B)False

Question 13

On January 1,Eastern College received $1,200,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees.The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term.Assuming the college prepares adjustments monthly,what amount of tuition revenue should the college recognize on February 28?

Accepted Answer

A)   $300,000.
B)   $600,000.
C)   $800,000.
D)   $900,000.
E)   $1,200,000.F) B) and E)
G) B) and D)

Question 14

The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account?
  Net Income $42,500 Retained earnings 130,000 Dividends 12,000\begin{array} { l r } 	ext { Net Income } & \$ 42,500 \	ext { Retained earnings } & 130,000 \	ext { Dividends } & 12,000\end{array} Net Income  Retained earnings  Dividends ​$42,500130,00012,000​

Accepted Answer

A)   $75,500.
B)   $184,500.
C)   $99,500.
D)   $160,500.
E)   $130,000. F) A) and D)
G) A) and E)

Question 15

Plant assets are usually listed in order from most liquid to least liquid.

Accepted Answer

A) True 
 B)False

Question 16

Classified balance sheets commonly include the following categories:
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity.
Match the typical classification of each item below with its correct balance sheet category (A through G) .
-Accounts Payable

Accepted Answer

A)  G
B)  B
C)  A
D)  C
E)  FF) DG) EH) A) and G)
I) B) and G)

Question 17

Which of the following statements is incorrect?

Accepted Answer

A)   Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.
B)   Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
C)   Adjusting entries can be used to record both accrued expenses and accrued revenues.
D)   Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.
E)   Adjusting entries affect only balance sheet accounts.F) C) and D)
G) All of the above

Question 18

A company's ledger accounts and their end-of-period balances before closing entries are posted are shown below.What amount will be posted to Retained earnings in the process of closing the Income Summary account? (Assume all accounts have normal balances.) 
  Retained earnings $7,000 Dividends 9,600 Revenus 29,000 Rent expense 3,600 Salaries expense 7,200 Insurance expense 920 Depr. Experise-equipment 500 Accum depr.-equiprnent 1,500\begin{array} { l r } 	ext { Retained earnings } &\$ 7,000 \	ext { Dividends } & 9,600 \	ext { Revenus } & 29,000 \	ext { Rent expense } & 3,600 \	ext { Salaries expense } & 7,200 \	ext { Insurance expense } & 920 \	ext { Depr. Experise-equipment } & 500 \	ext { Accum depr.-equiprnent } & 1,500\end{array} Retained earnings  Dividends  Revenus  Rent expense  Salaries expense  Insurance expense  Depr. Experise-equipment  Accum depr.-equiprnent ​$7,0009,60029,0003,6007,2009205001,500​

Accepted Answer

A)   $16,780 debit.
B)   $7,180 credit.
C)   $16,780 credit.
D)   $18,280 credit.
E)   $23,780 credit. F) C) and D)
G) D) and E)

Question 19

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

Accepted Answer

A)   Debit Unpaid Salaries and credit Salaries Payable.
B)   Debit Salaries Payable and credit Salaries Expense.
C)   Debit Salaries Expense and credit Cash.
D)   Debit Salaries Expense and credit Salaries Payable.
E)   Debit Cash and credit Salaries Expense.F) C) and D)
G) A) and B)

Question 20

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Exam 3: Adjusting Accounts for Financial Statements

Which of the following statements is incorrect?

Correct Answer
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During the closing process,Retained Earnings is closed to the Dividends account.

Correct Answer
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The following information is available for the Higgins Travel Agency.After closing entries are posted,what will be the balance in the Retained earnings account? $\begin{array} { l r } \text { Net Income } & \$ 42,500 \\\text { Retained earnings } & 130,000 \\\text { Dividends } & 12,000\end{array}$

Correct Answer
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Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

Correct Answer
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The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Correct Answer
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Which of the following types of businesses might have an operating cycle longer than one year?

Correct Answer
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Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Correct Answer
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Profit margin is defined as:

Correct Answer
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What is an adjusted trial balance? Why is it prepared?

Correct Answer
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An adjusted trial balance is a list of a...
View Answer

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Correct Answer
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Correct Answer
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Profit margin measures the relation of debt to assets.

Correct Answer
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Correct Answer
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Correct Answer
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Adjusting entries are designed primarily to correct accounting errors.

Correct Answer
verified

Correct Answer
verified

Plant assets are usually listed in order from most liquid to least liquid.

Correct Answer
verified

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

Correct Answer
verified

For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Correct Answer
verified

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Correct Answer
verified

Exam 3: Adjusting Accounts for Financial Statements

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

During the closing process,Retained Earnings is closed to the Dividends account.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Earned but uncollected revenues are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account.

Correct AnswerverifiedShow Answer

The accounting cycle refers to the sequence of steps used in preparing the work sheet.

Correct AnswerverifiedShow Answer

Which of the following types of businesses might have an operating cycle longer than one year?

Correct AnswerverifiedShow Answer

Net income for a period will be understated if accrued revenues are not recorded at the end of the accounting period.

Correct AnswerverifiedShow Answer

Profit margin is defined as:

Correct AnswerverifiedShow Answer

What is an adjusted trial balance? Why is it prepared?

Correct AnswerverifiedAn adjusted trial balance is a list of a...View AnswerShow Answer

The Retained earnings account has a credit balance of $37,000 before closing entries are made.Total revenues for the period are $55,200,total expenses are $39,800,and dividends are $9,000.What is the correct closing entry for the revenue accounts?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Profit margin measures the relation of debt to assets.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adjusting entries are designed primarily to correct accounting errors.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Plant assets are usually listed in order from most liquid to least liquid.

Correct AnswerverifiedShow Answer

The adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:

Correct AnswerverifiedShow Answer

For the year ended December 31,a company had revenues of $187,000 and expenses of $109,000.$37,000 in dividends were paid during the year.Which of the following entries could not be a closing entry?

Correct AnswerverifiedShow Answer

On December 31,Carmack Company received a $215 utility bill for December that it will not pay until January 15.The adjusting entry needed on December 31 to accrue this expense is:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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An adjusted trial balance is a list of a...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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