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Deferred expenses (prepaid expenses) are initially recorded as assets,but over time are expected to become


A) liabilities.
B) other assets.
C) revenues.
D) expenses.

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

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One major difference between deferral and accrual adjustments is:


A) deferral adjustments involve previously recorded transactions and accruals involve previously unrecorded events.
B) deferral adjustments are made after taxes and accrual adjustments are made before taxes.
C) deferral adjustments are made annually and accrual adjustments are made monthly.
D) deferral adjustments are influenced by estimates of future events and accrual adjustments are not.

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

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The office equipment depreciates at a rate of $1,000 per year.The adjusting entry would include


A) a debit to accumulated depreciation for $1,000.
B) a credit to office equipment for $1,000.
C) a credit to depreciation expense for $1,000.
D) a credit to accumulated depreciation for $1,000.

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

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On June,30,2013,a company purchased a two-year insurance policy for $18,000,paying cash and debiting Prepaid Insurance for the entire two-year premium amount.The adjusting entry on December 31,2013 includes a


A) credit to Prepaid Insurance $4,500.
B) credit to Insurance Expense $4,500.
C) credit to Prepaid Insurance $9,000.
D) debit to Insurance expense $9,000.

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

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Which of the following statements regarding the trial balance is correct?


A) The adjusted trial balance is prepared after the financial statements to verify that the numbers are accurate.
B) The primary purpose of the post-closing trial balance is to see whether revenues are greater than expenses.
C) The adjusted trial balance is a check that the accounting records are still in balance after posting all adjustments to the accounts.
D) The post-closing trial balance debit column total is the amount to be shown as Total Assets on the Balance Sheet.

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

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Which of the following is not a term for the value at which an asset is reported on a financial statement?


A) Carrying value.
B) Book value.
C) Equipment,net.
D) Accrual value.

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

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An example of an accrued expense is


A) Services performed,but not yet billed.
B) Accumulated interest on a note payable.
C) Prepaid insurance.
D) Depreciation.

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

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Which of the following statements is true?


A) Expenses are listed before revenues on the income statement.
B) Operating income is listed before net income on the income statement.
C) The income statement is prepared after the balance sheet.
D) Dividends declared are listed on the income statement.

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

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


A) an expense is recorded.
B) unearned revenue is recorded.
C) an accrual is recorded.
D) a prepaid expense is recorded.

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

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In a trial balance a contra-account appears:


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

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

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Starbellies Tattoo Parlor LLC is completing the accounting process for its year ended 12/31/14.The transactions for the year have been journalized and posted.Information for adjusting entries appears below. a.The supplies account shows a balance of $900.A count of supplies revealed $400 on hand at 12/31/14. b.A one-year insurance policy was purchased for $1,200 on 12/1/14.It was recorded as Prepaid Insurance at that time. c.Office equipment depreciates at a rate of $1,000 per year.The equipment has been owned all year. d.A client paid $10,000 in advance for services to be rendered later,which was recorded as unearned revenue.Of this amount,30% was earned as of 12/31/14. e.Employees earn $5,000 for a 5-day work week.December 31,2014 falls on a Tuesday. f.Starbellies has completed $500 of work for which it has neither received cash nor billed the client. A)For each of the adjusting items (a-f)prepare the adjusting journal entry that would be required at 12/31/14. B)For each of the adjusting items (a-f)indicate the amount and the direction of effects of the adjusting journal entry on the elements of the balance sheet and income statement. Using the following format,indicate + for increase,- for decrease,and NE for no effect. Starbellies Tattoo Parlor LLC is completing the accounting process for its year ended 12/31/14.The transactions for the year have been journalized and posted.Information for adjusting entries appears below. a.The supplies account shows a balance of $900.A count of supplies revealed $400 on hand at 12/31/14. b.A one-year insurance policy was purchased for $1,200 on 12/1/14.It was recorded as Prepaid Insurance at that time. c.Office equipment depreciates at a rate of $1,000 per year.The equipment has been owned all year. d.A client paid $10,000 in advance for services to be rendered later,which was recorded as unearned revenue.Of this amount,30% was earned as of 12/31/14. e.Employees earn $5,000 for a 5-day work week.December 31,2014 falls on a Tuesday. f.Starbellies has completed $500 of work for which it has neither received cash nor billed the client. A)For each of the adjusting items (a-f)prepare the adjusting journal entry that would be required at 12/31/14. B)For each of the adjusting items (a-f)indicate the amount and the direction of effects of the adjusting journal entry on the elements of the balance sheet and income statement. Using the following format,indicate + for increase,- for decrease,and NE for no effect.

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You mistakenly include a contra account of $20,000 in the same column of your trial balance as the account it offsets.All other things equal,your debit and credit column totals will differ by $40,000.

A) True
B) False

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Which of the following statements regarding financial statements and the trial balance is correct?


A) Financial statements are prepared only after the adjusted trial balance has shown that debits equal credits.
B) A post-closing trial balance should be prepared before temporary accounts are closed.
C) An adjusted trial balance reflects the amount of retained earnings to be shown on the Balance Sheet.
D) A post-closing trial balance lists all the accounts that are shown on the Income Statement.

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

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Two types of closing journal entries are posted to retained earnings at year-end.These are entries to:


A) transfer revenues and expenses to retained earnings.
B) transfer assets and liabilities to retained earnings.
C) transfer net income (or loss) and dividends declared to retained earnings.
D) close permanent and temporary accounts.

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

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If the total amount that should have been debited to insurance expense is mistakenly debited to prepaid insurance,what will be the effect on the financial statements for the year?


A) Revenues will be overstated.
B) Assets will be overstated.
C) Stockholders' equity will be understated.
D) Expenses will be overstated.

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

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The insurance policy covers four years and was purchased by Sneetch on 1/1/13.The adjusting entry on December 31,2013 would include


A) a debit to prepaid insurance for $1,200.
B) a credit to prepaid insurance for $1,200.
C) a debit to insurance expense for $3,600.
D) a credit to prepaid insurance for $3,600.

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

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Which of the following is the usual last step in the accounting cycle?


A) Preparing the adjusted trial balance.
B) Preparing the financial statements.
C) Preparing a post-closing trial balance.
D) Preparing an unadjusted trial balance.

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

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Which of the following statements about dividends is not true?


A) Dividends Declared has a debit balance.
B) Dividends reduce retained earnings.
C) Dividends Declared is an expense.
D) Dividends Declared is a balance sheet account.

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

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Your business purchased a certificate of deposit on April 1 that will pay $90 interest three months from that date.On April 30,which of the following adjusting entries would be made?


A) Debit Interest Receivable for $90;credit Interest Revenue for $90.
B) Debit Interest Revenue for $30;credit Interest Receivable for $30.
C) Debit Interest Receivable for $30;credit Interest Revenue for $30.
D) Debit Interest Revenue for $90;credit Interest Receivable for $90.

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

Correct Answer

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Permanent accounts:


A) are not permitted under GAAP.
B) have their balances zeroed-out at the end of each accounting year.
C) do not have their year-end balance carried into the next year.
D) are Balance Sheet accounts.

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

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Showing 21 - 40 of 147

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