Saturday, June 11, 2011

Chapter 3

1.

The net income reported on the income statement is $85,000. However, adjusting entries have not been made at the end of the period for supplies expense of $2,200 and accrued salaries of $800. Net income, as corrected, is
Student ResponseValueCorrect AnswerFeedback
$85,000
$82,800
Student Response $82,000100%Student Response
$84,200
Score:1/1

2.

The unexpired insurance at the end of the fiscal period represents
Student ResponseValueCorrect AnswerFeedback
Student Response an accrued expense0%
a deferred expenseStudent Response
an accrued asset
an accrued liability
Score:0/1

3.

If the adjustment of the unearned rent account at the end of the period to recognize the amount of rent earned is inadvertently omitted, the net income for the period will be overstated.
Student ResponseValueCorrect AnswerFeedback
Student Response False100%Student Response
True
Score:1/1

4.

One of the accounting concepts upon which deferrals and accruals are based is
Student ResponseValueCorrect AnswerFeedback
price-level adjustment
matchingStudent Response
cost
Student Response conservatism0%
Score:0/1

5.

Data for an adjusting entry described as "accrued wages, $2,020" means to debit
Student ResponseValueCorrect AnswerFeedback
Accounts Receivable and credit Wages Expense
Student Response Dividends and credit Wages Payable0%
Wages Expense and credit Wages PayableStudent Response
Wages Payable and credit Wages Expense
Score:0/1

6.

As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
Student ResponseValueCorrect AnswerFeedback
equipment allocation
matching
accumulation
Student Response depreciation100%Student Response
Score:1/1

7.

When is the adjusted trial balance prepared?
Student ResponseValueCorrect AnswerFeedback
Before adjusting journal entries are posted
After the adjusting journal entries are journalized
Before the adjusting journal entries are journalized.
Student Response After adjusting journal entries are posted.100%Student Response
Score:1/1

8.

If the adjustment for depreciation for the year is inadvertently omitted, the assets on the balance sheet at the end of the period will be understated.
Student ResponseValueCorrect AnswerFeedback
Student Response False100%Student Response
True
Score:1/1

9.

Supplies are recorded as assets when purchased. Therefore, the credit to supplies in the adjusting entry is for the amount of supplies
Student ResponseValueCorrect AnswerFeedback
purchased
either used or remaining
Student Response used100%Student Response
that are in the ending balance
Score:1/1

10.

All adjusting entries always involve
Student ResponseValueCorrect AnswerFeedback
the cash account.
only income statement accounts.
Student Response at least one income statement account and one balance sheet account.100%Student Response
only balance sheet accounts.
Score:1/1

11.

The following adjusting journal entry was found on page 4 of the journal. Select the best explanation for the entry.

Wages Expense
2,150
Wages Payable
2,150
????????????????
Student ResponseValueCorrect AnswerFeedback
Record wages to be paid this month
Record wages paid in advance
Record the payment of wages
Student Response Record wages expense incurred and to be paid next month100%Student Response
Score:1/1

12.

The system of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred is called the cash basis of accounting.
Student ResponseValueCorrect AnswerFeedback
Student Response True0%
FalseStudent Response
Score:0/1

13.

A company does not realize that the last two day's revenue for the month was not recorded. The adjusting entry on December 31 is debit Accounts Receivable and credit Fees Earned.
Student ResponseValueCorrect AnswerFeedback
TrueStudent Response
Student Response False0%
Score:0/1

14.

Deferrals are recorded transactions that delay the recognition of an expense or revenue.
Student ResponseValueCorrect AnswerFeedback
False
Student Response True100%Student Response
Score:1/1

15.

A company purchases a one-year insurance policy on June 1 for $1,260. The adjusting entry on December 31 is
Student ResponseValueCorrect AnswerFeedback
Student Response debit Insurance Expense, $735, and credit Prepaid Insurance, $735.100%Student Response
debit Prepaid Insurance, $630, and credit Cash, $630.
debit Insurance Expense, $525 and credit Prepaid Insurance, $525.
debit Insurance Expense, $630 and credit Prepaid Insurance, $630.
Score:1/1

16.

The balance in the supplies account, before adjustment at the end of the year is $725. The proper adjusting entry if the amount of supplies on hand at the end of the year is $300 would be
Student ResponseValueCorrect AnswerFeedback
Student Response debit Supplies Expense $425, credit Supplies $425100%Student Response
debit Supplies $425, credit Supplies Expense $425
debit Cash $300, credit Supplies $300
debit Supplies Expense $300, credit Supplies $300
Score:1/1

17.

The matching concept requires expenses be recorded in the same period that the related revenue is recorded.
Student ResponseValueCorrect AnswerFeedback
Student Response True100%Student Response
False
Score:1/1

18.

The general term employed to indicate a delay of the recognition of an expense already paid or of a revenue already received is
Student ResponseValueCorrect AnswerFeedback
depreciation
inventory
accrual
Student Response deferral100%Student Response
Score:1/1

19.

The balance in the prepaid insurance account before adjustment at the end of the year is $12,000. If the additional data for the adjusting entry is (1) "the amount of insurance expired during the year is $9,500," as compared to additional data stating (2) "the amount of unexpired insurance applicable to a future period is $2,500," for the adjusting entry:
Student ResponseValueCorrect AnswerFeedback
there is not enough information given to determine the correct accounts and amounts
the debit and credit amount for (1) would be the same as (2) but the accounts would be different
the accounts for (1) would be the same as the accounts for (2) but the amounts would be different
Student Response the accounts and amounts would be the same for both (1) and (2)100%Student Response
Score:1/1

20.

A contra asset account for Land will normally appear in the balance sheet.
Student ResponseValueCorrect AnswerFeedback
Student Response False100%Student Response
True
Score:1/1

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