Question 1

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be:

Accepted Answer

A)   An overstatement of equity.
B)   An overstatement of liabilities.
C)   An understatement of assets.
D)   An understatement of liabilities.
E)   An overstatement of assets.F) C) and D)
G) A) and D)

Question 2

The adjusted trial balance of Sara's Web Services follows:
  a. Prepare the closing entries for Sara's Web Services.
b. What is the balance of the retained earnings account after the closing entries are posted?

Accepted Answer

a.

Balance of reta...

Question 3

______________________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ______________________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Accepted Answer

The answer of ______________________ basis accounting means that revenues are...

Question 4

Which of the following statements regarding financial statement preparation is false?

Accepted Answer

A)   Financial statements can be prepared from information in the adjusted trial balance.
B)   The Sarbanes-Oxley Act requires that financial statements filed with the Securities and Exchange Commission include declarations by the CEO and CFO of the company.
C)   It makes sense to prepare the balance sheet first because it contains information needed on the income statement.
D)   When preparing financial statements an adjusted trial balance is easier to work with than the entire ledger.
E)   The income statement is prepared first.F) D) and E)
G) B) and E)

Question 5

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

Accepted Answer

A)   Debit Unpaid Salaries and credit Salaries Payable
B)   Debit Salaries Payable and credit Salaries Expense
C)   Debit Salaries Expense and credit Cash
D)   Debit Salaries Expense and credit Salaries Payable
E)   Debit Cash and credit Salaries ExpenseF) C) and D)
G) All of the above

Question 6

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

Accepted Answer

A) True 
 B)False

Question 7

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Accepted Answer

A)   Operating cycle of a business.
B)   Time period assumption.
C)   Going-concern principle.
D)   Matching principle.
E)   Accrual basis of accounting.F) A) and B)
G) All of the above

Question 8

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Accepted Answer

A) True 
 B)False

Question 9

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

Accepted Answer

The answer of On December 14 Bench Company received $3,700...

Question 10

Prepare an income statement from the adjusted trial balance of Hanson Storage.

Accepted Answer

The answer of Prepare an income statement from the adjusted...

Question 11

Match between columns
                        Premises: Used to record wages owed, but not paid.
Used to record revenue received in advance.
Used to record expiration of prepaid insurance.
Used to record revenue earned but not received.

Accepted Answer

The Answer of Prepaid expense and Accrued revenue and Unearned is...

Question 12

Based on the following information, what would be the ending balance in the Retained Earnings account, assuming all accounts have a normal balance?

Accepted Answer

A)   $15,847
B)   $13,718
C)   $13,155
D)   $13,284
E)   $13,847F) B) and C)
G) A) and B)

Question 13

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Accepted Answer

A) True 
 B)False

Question 14

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

Accepted Answer

A) True 
 B)False

Question 15

Before an adjusting entry is made to recognize expired insurance, Prepaid Insurance and Insurance Expense are both overstated.

Accepted Answer

A) True 
 B)False

Question 16

Interim statements report a company's business activities for a one-year period.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following accounts would be closed at the end of the accounting period?

Accepted Answer

A)   Accounts Receivable
B)   Unearned Consulting Fees
C)   Fees Earned
D)   Retained Earnings
E)   LandF) A) and D)
G) C) and D)

Question 18

Western Company has an annual reporting period that runs from July 1 through June 30. Based on this information, which of the following is a true statement?

Accepted Answer

A)   Western probably has little seasonal variation in their sales.
B)   Western has violated the time period principle.
C)   Western must prepare financial statements as of December 31 each year.
D)   Western has adopted a fiscal year.
E)   Western does not have an accountant.F) A) and B)
G) None of the above

Question 19

Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.

Accepted Answer

A) True 
 B)False

Question 20

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

Accepted Answer

A)   A debit to Cash and a credit to Salaries Payable.
B)   A debit to Cash and a credit to Prepaid Salaries.
C)   A debit to Salaries Payable and a credit to Cash.
D)   A debit to Salaries Payable and a credit to Salaries Expense.
E)   No entry would be necessary on January 5.F) B) and C)
G) A) and C)

Exam 3: Preparing Financial Statements

Interim statements report a company's business activities for a one-year period.

Correct Answer
verified

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

Correct Answer
verified

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Correct Answer
verified

Prepare an income statement from the adjusted trial balance of Hanson Storage.

Correct Answer
verified

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

Correct Answer
verified

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

Correct Answer
verified

Based on the following information, what would be the ending balance in the Retained Earnings account, assuming all accounts have a normal balance?

Correct Answer
verified

Before an adjusting entry is made to recognize expired insurance, Prepaid Insurance and Insurance Expense are both overstated.

Correct Answer
verified

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be:

Correct Answer
verified

Which of the following accounts would be closed at the end of the accounting period?

Correct Answer
verified

Match the following types of accounts with each of the following transactions.

Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.

Correct Answer
verified

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Correct Answer
verified

Which of the following statements regarding financial statement preparation is false?

Correct Answer
verified

The adjusted trial balance of Sara's Web Services follows: a. Prepare the closing entries for Sara's Web Services. b. What is the balance of the retained earnings account after the closing entries are posted?

Correct Answer
verified
a.
Balance of reta...
View Answer

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Correct Answer
verified

Western Company has an annual reporting period that runs from July 1 through June 30. Based on this information, which of the following is a true statement?

Correct Answer
verified

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

Correct Answer
verified

basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

Correct Answer
verified

Exam 3: Preparing Financial Statements

Interim statements report a company's business activities for a one-year period.

Correct AnswerverifiedShow Answer

On December 14 Bench Company received $3,700 cash for consulting services that will be performed in January. Bench records all such prepayments in a liability account. Prepare a general journal entry to record the $3,700 cash receipt.

Correct AnswerverifiedShow Answer

A broad principle that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:

Correct AnswerverifiedShow Answer

Prepare an income statement from the adjusted trial balance of Hanson Storage.

Correct AnswerverifiedShow Answer

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

Correct AnswerverifiedShow Answer

The adjusting entry to record the earned but unpaid salaries of employees at the end of an accounting period is:

Correct AnswerverifiedShow Answer

Based on the following information, what would be the ending balance in the Retained Earnings account, assuming all accounts have a normal balance?

Correct AnswerverifiedShow Answer

Before an adjusting entry is made to recognize expired insurance, Prepaid Insurance and Insurance Expense are both overstated.

Correct AnswerverifiedShow Answer

A publishing company records the subscriptions paid in advance by its customers in an account called Unearned Subscription Revenue. If the company fails to make the end-of-period adjusting entry to record the portion of the subscriptions that have been earned, one effect will be:

Correct AnswerverifiedShow Answer

Which of the following accounts would be closed at the end of the accounting period?

Correct AnswerverifiedShow Answer

Match the following types of accounts with each of the following transactions.

Earned but uncollected revenues that are recorded during the adjusting process with a credit to a revenue account and a debit to an expense account are referred to as accrued expenses.

Correct AnswerverifiedShow Answer

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

Correct AnswerverifiedShow Answer

Which of the following statements regarding financial statement preparation is false?

Correct AnswerverifiedShow Answer

The adjusted trial balance of Sara's Web Services follows: a. Prepare the closing entries for Sara's Web Services. b. What is the balance of the retained earnings account after the closing entries are posted?

Correct Answerverifieda. Balance of reta...View AnswerShow Answer

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

Correct AnswerverifiedShow Answer

Western Company has an annual reporting period that runs from July 1 through June 30. Based on this information, which of the following is a true statement?

Correct AnswerverifiedShow Answer

Net income for a period will be overstated if accrued salaries are not recorded at the end of the accounting period.

Correct AnswerverifiedShow Answer

______________________ basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. ______________________ basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct AnswerverifiedShow Answer

Accumulated depreciation is shown on the balance sheet as a subtraction from the cost of an asset.

Correct AnswerverifiedShow Answer

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a.
Balance of reta...
View Answer

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basis accounting means that revenues are recognized when cash is received and that expenses are recorded when cash is paid. basis accounting means that the financial effects of revenues and expenses are recorded when earned or incurred.

Correct Answer
verified

Correct Answer
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