Question 1

Accrued revenues would appear on the balance sheet as

Accepted Answer

A)   assets
B)   liabilities
C)   capital
D)   prepaid expensesE) B) and C)
F) A) and D)

Question 2

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an example of a prepaid expense?

Accepted Answer

A)   Supplies
B)   Accounts Receivable
C)   Unearned Subscriptions
D)   Unearned FeesE) B) and D)
F) A) and B)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

What effect will this adjustment have on the accounting records?

Accepted Answer

A)   Increase net income
B)   Increase revenues reported for the period
C)   Decrease liabilities
D)   All of these are true.E) A) and B)
F) A) and D)

Question 6

All of the following statements regarding vertical analysis are true except:

Accepted Answer

A)   Vertical analysis may be prepared for several periods to analyze changes in relationships over time.
B)   In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets.
C)   In a vertical analysis of an income statement, each item is stated as a percent of total expenses.
D)   Major differences between a company's vertical analysis and industry averages should be investigated.E) A) and B)
F) All of the above

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

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Accepted Answer

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Question 9

Given the following account balances for Garry's Tree Service, prepare a trial balance.

Accepted Answer

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Question 10

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 11

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Accepted Answer

A)   decreases the balance of an owner's equity account
B)   increases the balance of a liability account
C)   increases the balance of an asset account
D)   decreases the balance of an expense accountE) A) and C)
F) A) and B)

Question 12

The systematic allocation of land's cost to expense is called depreciation.

Accepted Answer

A) True 
 B)False

Question 13

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Accepted Answer

A)   Adjust supplies inventory to actual
B)   Record purchase of supplies
C)   Reduce supplies expense
D)   Record sale of suppliesE) None of the above
F) A) and D)

Question 14

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) None of the above
F) C) and D)

Question 15

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) B) and C)
F) A) and C)

Question 16

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 D)
F) A) and C)

Question 17

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) A) and D)
F) C) and D)

Question 18

For the year ending June 30, Island Clinical Services mistakenly omitted adjusting entries for (1) $1,500 of supplies that were used, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. What is the combined effect of these errors on (a) revenues, (b) expenses, and (c) net income for the year ending June 30?

Accepted Answer

(a) Revenues were understated ...

Question 19

Which of the following is an example of an accrued expense?

Accepted Answer

A)   Salary owed but not yet paid
B)   Fees received but not yet earned
C)   Supplies on hand
D)   A two-year premium paid on a fire insurance policyE) A) and D)
F) C) and D)

Question 20

A fixed asset's market value is reflected in the Balance Sheet.

Accepted Answer

A) True 
 B)False

Exam 3: The Adjusting Process

Accrued revenues would appear on the balance sheet as

Correct Answer
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Using accrual accounting, expenses are recorded and reported only

Correct Answer
verified

What effect will this adjustment have on the accounting records?

Correct Answer
verified

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

Correct Answer
verified

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Correct Answer
verified
_TB2085_00...
View Answer

Prior to the adjusting process, accrued revenue has

Correct Answer
verified

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Correct Answer
verified

A fixed asset's market value is reflected in the Balance Sheet.

Correct Answer
verified

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

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

Correct Answer
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Given the following account balances for Garry's Tree Service, prepare a trial balance.

Correct Answer
verified
_TB2085_00...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Correct Answer
verified

Which of the following is an example of a prepaid expense?

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
verified

All of the following statements regarding vertical analysis are true except:

Correct Answer
verified

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
verified

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

The systematic allocation of land's cost to expense is called depreciation.

Correct Answer
verified

Exam 3: The Adjusting Process

Accrued revenues would appear on the balance sheet as

Correct AnswerverifiedShow Answer

Using accrual accounting, expenses are recorded and reported only

Correct AnswerverifiedShow Answer

What effect will this adjustment have on the accounting records?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

DogMart Company records depreciation to Office Equipment and Production Equipment. Depreciation for the period ending December 31 is $1,400 for Office Equipment and $2,650 for Production Equipment. Prepare two entries to record the Office Equipment and Production Equipment depreciation.

Correct Answerverified_TB2085_00...View AnswerShow Answer

Prior to the adjusting process, accrued revenue has

Correct AnswerverifiedShow Answer

An adjusting entry would adjust an expense account so the expense is reported when incurred.

Correct AnswerverifiedShow Answer

A fixed asset's market value is reflected in the Balance Sheet.

Correct AnswerverifiedShow Answer

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

Correct AnswerverifiedShow Answer

Which of the following is an example of an accrued expense?

Correct AnswerverifiedShow Answer

Given the following account balances for Garry's Tree Service, prepare a trial balance.

Correct Answerverified_TB2085_00...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account, which of the following describes the effect of the credit portion of the entry?

Correct AnswerverifiedShow Answer

Which of the following is an example of a prepaid expense?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All of the following statements regarding vertical analysis are true except:

Correct AnswerverifiedShow Answer

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

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

The systematic allocation of land's cost to expense is called depreciation.

Correct AnswerverifiedShow Answer

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(a) Revenues were understated ...
View Answer

Correct Answer
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