Question 1

Adjustments are needed to ensure that the accounting system records all of the revenues and expenses that relate to that period.

Accepted Answer

A) True 
 B)False

Question 2

Accumulated Depreciation:

Accepted Answer

A)  is an expense account.
B)  is a liability account.
C)  is a regular asset account
D)  is a contra-asset account.E) All of the above
F) B) and C)

Question 3

Which of the following statements is true?

Accepted Answer

A)  If revenues are less than expenses,the company has a net loss and retained earnings falls.
B)  If revenues are greater than expenses,the company has net income and contributed capital rises.
C)  If revenues are less than expenses,the company has a net loss and contributed capital rises to balance off the loss.
D)  If revenues are greater than expenses,the company has net income and retained earnings falls.E) A) and C)
F) C) and D)

Question 4

Recording an adjusting journal entry to recognize depreciation would cause which of the following?

Accepted Answer

A)  An increase in liabilities and expenses,and a decrease in shareholders' equity.
B)  A decrease in assets,and an increase in expenses.
C)  A decrease in assets,an increase in liabilities,and an increase in expenses.
D)  None of the answers are acceptable.E) B) and D)
F) A) and D)

Question 5

On December 31,2017,Purrfect Pets had retained earnings of $267,800 before making its closing entries.During 2017,the company had sales revenue of $168,100 and other revenue of $81,300.The company sold some investments for a total gain of $24,300.The company used supplies (mainly cat food and litter)during the year that cost $87,900.Administrative expenses were $16,400 and wages (paid in cash)were $18,300.Taxes were $13,700 and dividends declared and paid totalled $6,000.
Prepare T-accounts for the income statement accounts,dividends declared and retained earnings at the end of the year before closing.Then,enter the closing journal entries in the T-accounts and compute the ending balances of the T-accounts.

Accepted Answer

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Question 6

Accrual adjustments link:

Accepted Answer

A)  assets and revenues moving in the same direction or liabilities and expenses moving in the same direction.
B)  assets and expenses moving in the same direction or liabilities and revenues moving in the same direction.
C)  assets and revenues moving in the opposite direction or liabilities and expenses moving in the opposite direction.
D)  assets and expenses moving in the opposite direction or liabilities and revenues moving in the opposite direction.E) A) and D)
F) B) and C)

Question 7

An accrual adjustment that increases an asset will include an increase in an expense.

Accepted Answer

A) True 
 B)False

Question 8

Purrfect Pets had a beginning balance in its retained earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported retained earnings of $399,860.The company's net income for the year was:

Accepted Answer

A)  $14,260.
B)  $18,960.
C)  $9,560.
D)  none of the answers are acceptable. E) A) and B)
F) All of the above

Question 9

A company makes a deferral adjustment that reduces a liability.This must mean:

Accepted Answer

A)  an asset account is decreasing by the same amount.
B)  an expense account is increasing by the same amount.
C)  a revenue account is increasing by the same amount.
D)  a different liability account is decreasing by the same amount.E) A) and B)
F) None of the above

Question 10

When the future benefits of existing assets are used up in the ordinary course of business:

Accepted Answer

A)  an expense is recorded.
B)  a loss is recorded.
C)  a credit to a liability is recorded.
D)  a debit to assets is recorded.E) C) and D)
F) All of the above

Question 11

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Accepted Answer

A)  ensure that revenues and expenses are recognized during the period they are earned and incurred.
B)  ensure that all estimates of future activities are eliminated from consideration.
C)  ensure that revenues and expenses are recognized conservatively during the period they are paid.
D)  all of the answers are acceptable.E) A) and D)
F) None of the above

Question 12

The company's unadjusted trial balance includes the following account balances:

The following data are available to determine adjusting entries:
A)$4,350 of prepaid insurance expired during the period.
B)The company estimates depreciation expense of $8,150 for the period.
C)A count showed $85,700 of supplies on hand.
D)Interest earned and receivable on the outstanding notes receivable is $260 for the period.
Prepare the adjusting journal entries that should be recorded.Then,prepare an adjusted trial balance.

Accepted Answer

None...

Question 13

On the statement of retained earnings:

Accepted Answer

A)  dividends declared increase net income and are added to calculate the end-of-year balance of retained earnings.
B)  dividends declared are subtracted to calculate the end-of-year balance of retained earnings.
C)  dividends declared are not used to calculate the end-of-year balance of retained earnings.
D)  dividends declared are never reported.E) B) and D)
F) None of the above

Question 14

Restaurant equipment,which was estimated to last five years,has now been used for one month.The following accounts are impacted by the adjusting entry:

Accepted Answer

A)  Equipment and Depreciation Expense.
B)  Equipment and Accumulated Depreciation.
C)  Depreciation Expense and Accumulated Depreciation.
D)  Equipment,Depreciation Expense and Accumulated Depreciation.E) C) and D)
F) B) and C)

Question 15

Companies that make honest,but optimistic,adjusting entries that lead to a higher net income are said to:

Accepted Answer

A)  report "higher quality" earnings.
B)  report "lower quality" earnings.
C)  have "defensive" management.
D)  have "regressive" management.E) All of the above
F) C) and D)

Question 16

An adjusting journal entry that includes an increase to a contra-asset account would include an increase in a(n) :

Accepted Answer

A)  related asset account.
B)  liability account.
C)  revenue account.
D)  expense account.E) C) and D)
F) A) and C)

Question 17

An adjusted trial balance should be prepared immediately:

Accepted Answer

A)  after posting normal journal entries.
B)  before analyzing transactions.
C)  after posting adjusting journal entries.
D)  after posting closing journal entries.E) All of the above
F) None of the above

Question 18

Depreciation expense represents the use of part of the value of an asset until it has no remaining market value.

Accepted Answer

A) True 
 B)False

Question 19

Under IFRS and ASPE,companies are required to wait until the end of the accounting period to adjust their accounts.

Accepted Answer

A) True 
 B)False

Question 20

When closing journal entries are prepared,retained earnings is credited if a company has a net loss.

Accepted Answer

A) True 
 B)False

Exam 4: Adjustments, financial Statements, and Financial Results

An adjusted trial balance should be prepared immediately:

Correct Answer
verified

Under IFRS and ASPE,companies are required to wait until the end of the accounting period to adjust their accounts.

Correct Answer
verified

When the future benefits of existing assets are used up in the ordinary course of business:

Correct Answer
verified

Purrfect Pets had a beginning balance in its retained earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported retained earnings of $399,860.The company's net income for the year was:

Correct Answer
verified

Restaurant equipment,which was estimated to last five years,has now been used for one month.The following accounts are impacted by the adjusting entry:

Correct Answer
verified

Depreciation expense represents the use of part of the value of an asset until it has no remaining market value.

Correct Answer
verified

Companies that make honest,but optimistic,adjusting entries that lead to a higher net income are said to:

Correct Answer
verified

When closing journal entries are prepared,retained earnings is credited if a company has a net loss.

Correct Answer
verified

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Correct Answer
verified

Accumulated Depreciation:

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Recording an adjusting journal entry to recognize depreciation would cause which of the following?

Correct Answer
verified

Correct Answer
verified
None...
View Answer

Accrual adjustments link:

Correct Answer
verified

A company makes a deferral adjustment that reduces a liability.This must mean:

Correct Answer
verified

On the statement of retained earnings:

Correct Answer
verified

Correct Answer
verified
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View Answer

An adjusting journal entry that includes an increase to a contra-asset account would include an increase in a(n) :

Correct Answer
verified

Adjustments are needed to ensure that the accounting system records all of the revenues and expenses that relate to that period.

Correct Answer
verified

An accrual adjustment that increases an asset will include an increase in an expense.

Correct Answer
verified

Exam 4: Adjustments, financial Statements, and Financial Results

An adjusted trial balance should be prepared immediately:

Correct AnswerverifiedShow Answer

Under IFRS and ASPE,companies are required to wait until the end of the accounting period to adjust their accounts.

Correct AnswerverifiedShow Answer

When the future benefits of existing assets are used up in the ordinary course of business:

Correct AnswerverifiedShow Answer

Purrfect Pets had a beginning balance in its retained earnings account of $385,600.During the year,the company declared and paid a $4,700 dividend,and at the end of the year,it reported retained earnings of $399,860.The company's net income for the year was:

Correct AnswerverifiedShow Answer

Restaurant equipment,which was estimated to last five years,has now been used for one month.The following accounts are impacted by the adjusting entry:

Correct AnswerverifiedShow Answer

Depreciation expense represents the use of part of the value of an asset until it has no remaining market value.

Correct AnswerverifiedShow Answer

Companies that make honest,but optimistic,adjusting entries that lead to a higher net income are said to:

Correct AnswerverifiedShow Answer

When closing journal entries are prepared,retained earnings is credited if a company has a net loss.

Correct AnswerverifiedShow Answer

One of the major advantages of making adjustments in order to improve the quality of financial statements is that they:

Correct AnswerverifiedShow Answer

Accumulated Depreciation:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Recording an adjusting journal entry to recognize depreciation would cause which of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

Accrual adjustments link:

Correct AnswerverifiedShow Answer

A company makes a deferral adjustment that reduces a liability.This must mean:

Correct AnswerverifiedShow Answer

On the statement of retained earnings:

Correct AnswerverifiedShow Answer

Correct Answerverified_TB6814_00...View AnswerShow Answer

An adjusting journal entry that includes an increase to a contra-asset account would include an increase in a(n) :

Correct AnswerverifiedShow Answer

Adjustments are needed to ensure that the accounting system records all of the revenues and expenses that relate to that period.

Correct AnswerverifiedShow Answer

An accrual adjustment that increases an asset will include an increase in an expense.

Correct AnswerverifiedShow Answer

Correct Answer
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None...
View Answer

Correct Answer
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View Answer

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