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The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to:


A) Interest Payable and credit to Interest Expense
B) Interest Expense and credit to Interest Payable
C) Interest Receivable and credit to Interest Receivable
D) Interest Expense and credit to Notes Payable

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

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A contra-account:


A) increases the original value of the account to which it relates.
B) always appears in the same column of the trial balance as the account to which it relates.
C) offsets, or reduces, another account.
D) reduce the asset to its fair value.

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

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When a company pays its rent in advance,an asset is reported on the balance sheet.

A) True
B) False

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Accrued revenues recorded at the end of the current year:


A) often result in cash receipts from customers in the next period.
B) often result in cash payments in the next period.
C) are also called Unearned Revenues.
D) are recorded in the current year when cash is received.

E) None of the above
F) A) and B)

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The accrual adjustment recorded to adjust for revenues earned but not yet collected will cause:


A) assets to increase
B) assets to decrease
C) liabilities to increase
D) liabilities to decrease

E) A) and D)
F) All of the above

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After adjusting entries are prepared and posted,but before closing entries are prepared and posted,the balance in Retained Earnings is equal to:


A) zero.
B) the difference between total assets and total liabilities.
C) the amount that is to be reported in the current year's balance sheet.
D) the amount that was reported on the previous year's balance sheet.

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

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Which of the following statements about the post-closing trial balance is correct?


A) The post-closing trial balance will be distributed to investors and other stakeholders along with the financial statements.
B) The post-closing trial balance is an internal report prepared at the end of the accounting cycle.
C) The post-closing trial balance is a report prepared before the adjustments and the financial statements to prove that debits equal credits.
D) The post-closing trial balance proves that all entries have been made correctly and accurately during the accounting period.

E) All of the above
F) B) and C)

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After posting the adjusting entry to record revenues earned but not yet collected,which account will be increased?


A) Accounts Receivable
B) Unearned Revenue
C) Prepaid Revenue
D) Accounts Payable

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

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If an expense has been incurred but will be paid later,then:


A) nothing is recorded on the financial statements.
B) a liability account is created or increased and an expense is recorded.
C) an asset account is decreased or eliminated and an expense is recorded.
D) a revenue and an expense are accrued.

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

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Antel is a tenet of Baber.On July 1,Antel paid Baber $1200 for 3 months of rent.On July 31,Baber's adjusting entries will include a debit to:


A) Unearned Revenue for $1200 and a credit to Rent Revenue for $1200.
B) Cash for $1200 and a credit to Unearned Revenue for $1200.
C) Unearned Revenue for $400 and a credit to Rent Revenue for $400.
D) Rent Expense for $400 and a credit to Prepaid Rent for $400.

E) A) and C)
F) None of the above

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Which of the following statements is correct regarding the use of the cash account in deferral and accrual adjustments at the end of the accounting period?


A) The Cash account can only be used in an accrual adjustment, but not in a deferral adjustment.
B) The Cash account can only be used in a deferral adjustment, but not in an accrual adjustment.
C) Transactions involving cash are often included in both accrual and deferral adjustments at the end of the accounting period.
D) Cash is never involved in end-of-period deferral or accrual adjustments.

E) None of the above
F) B) and C)

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The asset account Office Supplies has a balance of $800 at the beginning of the year.The amount on hand at the end of the year is $500.The company has calculated the Supplies Expense for the year to be $3,500.Based on this information,what amount of office supplies was purchased during the year?


A) $0
B) $4,000
C) $3,200
D) $3,000

E) All of the above
F) B) and C)

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An example of an account that could be included in an accrual adjustment for revenue is:


A) Interest Receivable.
B) Interest Payable.
C) Unearned Revenue.
D) Cash.

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

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When a trial balance is prepared,a contra-account appears immediately:


A) before the account it offsets but in the opposite column.
B) after the account it offsets and in the same column.
C) after the account it offsets but in the opposite column.
D) before the account it offsets and in the same column.

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

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Which of the following statements about the presentation of a trial balance is correct?


A) The adjusted trial balance shows the end-of-year balance for Retained Earnings.
B) An adjusted trial balance presents account balances in the same level of detail as in the presentation of the financial statements.
C) The order of accounts on a trial balance is as follows: assets, liabilities, stockholders' equity, dividends, revenues and expenses.
D) The adjusted trial balance shows all the debit and credit postings to all the ledger accounts.

E) B) and D)
F) A) and C)

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Accrual adjustments involve increasing:


A) assets and revenues or increasing liabilities and expenses.
B) assets and expenses or increasing liabilities and revenues
C) assets and decreasing revenues or increasing liabilities and decreasing expenses
D) assets and decreasing expenses or increasing liabilities and decreasing revenues

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

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Antel is a tenet of Baber.On July 1,Antel paid Baber $1,200 for 3 months of rent.On July 31,Antel's adjusting entries will include one with a debit to:


A) Rent Expense for $1200 and a credit to Prepaid Rent for $1,200.
B) Prepaid Rent for $1200 and a credit to Cash for $1,200.
C) Rent Expense for $400 and a credit to Prepaid Rent for $400.
D) Prepaid Rent for $400 and a credit to Rent Expense for $400.

E) B) and D)
F) None of the above

Correct Answer

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Oklahoma Company has a fiscal year ending on December 31,2015.The following information has been gathered so that the company could prepare adjustments: A) The company had $4,000 of office supplies on hand on January 1, 2015, purchased $6,300 of supplies during the year, and had $1,200 of supplies were on hand on December 31, 2015. B) On October 1, 2015, a three-year insurance premium of $27,000 was paid for coverage beginning on that date. The payment was recorded in the Prepaid Insurance account. C) A delivery vehicle was purchased for $30,000 on April 1, 2015. The vehicle has a 5-year useful life and no salvage value. Depreciation is estimated to be $6,000 per year or $500 per month. D) The company rents some of its unused factory space to a small manufacturer. The lease required an advance payment of $18,000 for six months' rent on November 1, 2015, and the lease term began that day. The advance payment received from the tenant was recorded as Unearned Revenue when it was received. E) Employees work five days per week and are paid $75,000 every other Friday; each pay period includes ten week days. The last payday during the company's fiscal year was properly recorded on Friday, December 26, 2015. The employees worked on December 29, 30, and 31, 2015; they will not be paid for that work until Friday, January 9, 2016. F) The Accounting Department sends bills to customers every Friday and records the revenue earned at that time. Customers were billed and the related revenue was properly recorded on Friday, December 26, 2015. Since then, services were performed on December 29, 30, and 31, 2015; those services totaled $29,000. This amount has not been recorded. Required: Prepare the adjusting entry that is required for each of the situations described above. Assume that you are adjusting the related accounts as of the end of the year and that no adjustments have been made since the dates provided above.

Correct Answer

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In a deferral adjustment for revenues collected in advance that are now earned:


A) a liability is decreasing because cash is being paid for an expense incurred at the time of the adjustment
B) the liability recorded when cash was received is increased by the adjustment for the revenue being earned
C) the liability recorded when cash was received is decreased by the adjustment for revenue being earned
D) a liability is increasing because cash will be paid for an expense in the future

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

Correct Answer

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After preparing adjusting entries,the equality of recorded debits and credits is checked by preparing a(n) :


A) post-closing trial balance
B) adjusted trial balance.
C) income statement.
D) balance sheet.

E) C) and D)
F) B) and D)

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Showing 201 - 220 of 246

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