Question 1

Before the closing entries are prepared,the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account:

Accepted Answer

A)   at the beginning of the period.
B)   after adding revenues and subtracting expenses but before subtracting dividends.
C)   at the end of the period.
D)   at the beginning of the next period.E) A) and B)
F) A) and C)

Question 2

Bearskin Inc.has recorded all the year-end adjustments.Its revenue accounts total $190,000 and its expense accounts total $130,000.The closing entry to close the income statement accounts for the year will debit the various:

Accepted Answer

A)   expense accounts for a total of $130,000, debit Retained Earnings for $60,000, and credit the various revenue accounts for a total of $190,000. .
B)   revenue accounts for a total of $190,000, credit the various expense accounts for a total of $130,000, and credit Retained Earnings for $60,000.
C)   expense accounts for a total of $130,000, credit the various revenue accounts for a total of $190,000, and credit Retained Earnings for $60,000.
D)   revenue accounts for a total of $190,000, debit Retained Earnings for $60,000, and credit the various expense accounts for a total of $130,000.E) A) and B)
F) A) and C)

Question 3

When it paid its rent in advance,a company recorded Prepaid Rent.As of the end of the accounting year,the prepayment had expired.If no adjustment is made to record this expiration,which of the following will occur?

Accepted Answer

A)   Assets will be understated and expenses will be overstated.
B)   Assets will be overstated and expenses will be understated.
C)   Assets and expenses will be overstated.
D)   Assets and expenses will be understated.E) C) and D)
F) B) and D)

Question 4

A company purchases software; it has an estimated useful life of three years.The adjustment to recognize amortization for the use of software would cause which of the following?

Accepted Answer

A)   An increase in liabilities, an increase in expenses, and a decrease in stockholders' equity
B)   A decrease in assets, a decrease in stockholders' equity, and an increase in expenses
C)   A decrease in assets, an increase in liabilities, and an increase in expenses
D)   An increase in assets, an increase in liabilities, and a decrease in expensesE) A) and B)
F) C) and D)

Question 5

A company makes a deferral adjustment that decreased a liability.This must mean that a(n) :

Accepted Answer

A)   expense account was decreased by the same amount.
B)   expense account was increased by the same amount.
C)   revenue account was increased by the same amount.
D)   revenue account was decreased by the same amount.E) None of the above
F) A) and D)

Question 6

A new Chief Executive Officer (CEO)was hired by a company on December 10,2015.The CEO has been promised a significant bonus if 2016 net income is 10% more than 2015 net income.The CEO is considering taking the following actions:
A) Overstating the cost of machinery purchased in 2016
B) Prepaying 2016 expenses in 2015
C) Deferring 2016 expenses to 2017 and accruing revenues in 2016 that do not exist
D) Recording revenues earned in 2016 as unearned revenues
Required:
Explain how each of these actions would impact the 2016 net income amount and decide if the action is ethical.

Accepted Answer

A)Overstating the cost of machinery purc...

Exam 4: Adjustments,financial Statements,and Financial Results

A company purchases software; it has an estimated useful life of three years.The adjustment to recognize amortization for the use of software would cause which of the following?

Correct Answer
verified

When it paid its rent in advance,a company recorded Prepaid Rent.As of the end of the accounting year,the prepayment had expired.If no adjustment is made to record this expiration,which of the following will occur?

Correct Answer
verified

A company makes a deferral adjustment that decreased a liability.This must mean that a(n) :

Correct Answer
verified

Before the closing entries are prepared,the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account:

Correct Answer
verified

Correct Answer
verified
A)Overstating the cost of machinery purc...
View Answer

Bearskin Inc.has recorded all the year-end adjustments.Its revenue accounts total $190,000 and its expense accounts total $130,000.The closing entry to close the income statement accounts for the year will debit the various:

Correct Answer
verified

Exam 4: Adjustments,financial Statements,and Financial Results

A company purchases software; it has an estimated useful life of three years.The adjustment to recognize amortization for the use of software would cause which of the following?

Correct AnswerverifiedShow Answer

When it paid its rent in advance,a company recorded Prepaid Rent.As of the end of the accounting year,the prepayment had expired.If no adjustment is made to record this expiration,which of the following will occur?

Correct AnswerverifiedShow Answer

A company makes a deferral adjustment that decreased a liability.This must mean that a(n) :

Correct AnswerverifiedShow Answer

Before the closing entries are prepared,the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA)Overstating the cost of machinery purc...View AnswerShow Answer

Bearskin Inc.has recorded all the year-end adjustments.Its revenue accounts total $190,000 and its expense accounts total $130,000.The closing entry to close the income statement accounts for the year will debit the various:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A)Overstating the cost of machinery purc...
View Answer

Correct Answer
verified